The Effects of Risk and Size of Company on Business Performance in Information Technology Outsourcing

Information technology (IT) outsourcing is a practical way to transfer information technology by industries of different firms. The problem occurs when companies outsource services to domestic and international data centers as network security issues arise. This leads to competition between companies causing the size of the company to become more of a concern. Effects may differ based on the company size of the business outsourcing. This study views the effect of both size and security on IT outsourcing. Significant numbers of U.S. business leaders across a range of industries have adopted information technology (IT) outsourcing strategies, and extensive literature exists on the IT practices and outsourcing strategies of different firms. This nonexperimental quantitative study evaluated the relationship between business performance as defined in the study (criterion variable) and the two predictor variables of risk levels of IT services (low or high) within network security systems and company size (large or small) outsourcing their information technology. The actual sample was comprised of 98 participants, a convenience sample of both IT managers and employees who worked with network security, data security, and outsourcing at small and large size organizations. The primary survey variables were outsourcing size and risk as affecting business performance. The main effect of the risk category was found to be significant [F (1, 94) = 72.947, p < .001]. The interaction effect of size and perceived risk was found to be not significant [ F (1, 94) = 0.406, p = .526]. As risk significantly affects performance, future research could include a concept plan to be followed for IT outsourcing by companies of all sizes as supported by non-significance of the interaction found between size and risk. Also the inclusion of a higher sample or a shorter test measure could increase the power of the results. The original power analysis resulted in 128 participants, however 98 completed the survey. A future suggestion is to reduce the length of the test while ensuring validity and reliability. Future research could include a larger sample size for greater power and a more detailed size distribution to confirm the study's conclusions.