We conducted a comprehensive review of the outsourcing
literature focused on identifying determinants of outsourcing.
Based on theoretical considerations of a firm’s propensity to
outsource (Smith et al. 1998), we focus on variables that serve
as indicators of business performance, of cash flow, of variability
in business conditions, and of the performance of the
internal IT organization, all of which have been found to be
drivers of IT outsourcing. Ultimately, we included six variables
in the selection equation.21 These are sales efficiency,
cost inefficiency, leverage, sales fluctuation, volatility of the
labor-IT ratio and internal IT intensity (see Table 2 for a
detailed description of these variables).