Abstract
Recently, a large number of firms outsource their information technology and systems. In general, there are two types of IS outsourcing : (1) a contract with a vendor and (2) setting up their own IS subsidiary. Especially, IS outsourcing by developing their own IS subsidiary is often adopted in the largest firms in Japan. However, the diversification of the arrangement of IS subsidiary is widely seen. In this paper, the current state of IS outsourcing is analyzed the first. Second, we apply two theoretical perspectives to explain the nature of IS outsourcing phenomenon, namely, transaction cost theory (TCT) and the resource-based view (RBV). Third, this paper presents a case study that analyzes some of the determinants that influence the decision making whether firms are increasing, decreasing, or keeping their current IS outsourcing level. And, implications of the study are discussed finally.
