The impact of IT vendor to firm’s IT outsourcing

This study seeks to better understand the impact of IT vendor to firm’s IT outsourcing in Korea. Using the event study methodology, we empirically analyze the impact of IT vendor in Korea. IT vendors’ characteristics (such as services with asset specificity, size, and nationality) that may affect the success of IT outsourcing are considered. We find that IT outsourcing announcements significantly increase firms’ market value in Korea. In terms of IT vendors’ characteristics, our study find that IT outsourcing announcements with large vendors are statistically significant while with small vendors are not. We also find that the market response to Korean IT vendor is significantly greater than to foreign vendor. However, unlike the US, the difference between IT outsourcing for high asset-specific service and for low asset-specific service is not found