The relationship between transaction costs and savings in offshoring information technology by large United States companies

The purpose of the this quantitative, descriptive, correlational study was to examine if a relationship exists between transaction costs and the total savings of an offshore strategy over a two-year period following the offshoring of information technology projects by large U.S. companies. Chief information officers of U.S. Fortune 1000 companies were surveyed using a 20-question Web-based survey. The data suggested 57% of the companies with over one-year offshoring experience were doing so for strategic reasons rather than just for cost savings. The second finding was that only 34% of the respondents have offshored any IT activities for at least one year. The third finding confirmed earlier research that the four most common IT software activities offshored were coding, testing, maintenance (bug fixing), and design. The data indicated that despite large transaction costs in the first two years of launch, a majority of the respondents realized positive net total savings during these two years.