Uncovering the Nature of the Relationship Between Outsourcing Motivations and the Degree of Outsourcing
RQ: What is the relationship between motivations to outsource and the degree of outsourcing?
9 motivation items tested: Cost reduction, focus on core competence, access to expertise, process improvements, scalability, rapid delivery, ease of use, fear of losing control (−), concern for security (−)
Context: Accounting outsourcing in 337 Finnish SMEs. DV = count of outsourced processes (1–22). Method: negative binomial regression.
| # | Motivation | Expected | Result | Estimate |
|---|---|---|---|---|
| H1 | Cost reduction | + | Supported | 0.044** |
| H2 | Focus on core competence | + | Supported | 0.121*** |
| H3 | Access to expertise | + | Reversed (−) | −0.153*** |
| H4 | Process improvements | + | Supported | 0.074** |
| H5 | Scalability | + | ns | — |
| H6 | Rapid delivery | + | ns | — |
| H7 | Ease of use | + | ns | — |
| H8 | Fear of losing control | − | Supported | −0.037* |
| H9 | Concern for security | − | ns | — |
Controls: Cloud-based IS (+), company age (−), multinational (−), services/manufacturing (+)
Access to expertise has the strongest effect — but in the opposite direction.
| Motivation | Marginal Effect |
|---|---|
| Focus on core competence | +1.05 processes |
| Access to expertise | −1.33 processes |
Why? Companies seeking external expertise lack internal competence for specific tasks — they complement resources narrowly. In contrast, efficiency-seeking (cost reduction, core focus) benefits from economies of scale, driving broader outsourcing. Two distinct mechanisms: efficiency (broad) vs. resource complementing (narrow).
Process-group analysis (probit): All seven positive motivations are important for every process group, but:
| Process Group | Key Motivation Pattern |
|---|---|
| Sales, Purchases, Payroll, Payments | All 7 motivations highly significant |
| Reporting | Only focus on core and access to expertise significant — reporting is too sensitive to outsource broadly |
Control variables: - Cloud-based IS (+): enables transparency, easier data sharing, optimal task allocation - Company age (−): younger firms outsource more — need to focus on growth - Multinational (−): possibly retain control across jurisdictions
Theoretical contributions: 1. Outsourcing motivations are dynamic, not static — efficiency motivations grow stronger with degree; expertise-seeking fades 2. Systemic influence: motivations can’t be studied at the process level alone — the whole-function view reveals relationships invisible at the task level 3. Outsourcing is not a binary choice — future research should model degree and configuration, not just the decision
Managerial implications: - Providers: segment customers by motivation type — expertise-seekers want narrow, high-value services; efficiency-seekers want broad, standardized offerings - Clients: align outsourcing scope with actual motivation — don’t outsource broadly if your real need is niche expertise
Citation: Asatiani, A., Penttinen, E., & Kumar, A. (2019). Journal of Information Technology, 34(1), 39–58. https://doi.org/10.1177/0268396218816255