There is broad evidence indicating that the adoption of ICT has significantly contributed to the productivity growth of industrialized economies. In general, the use of ICT allows firms to reshape their internal organization and to introduce new products and services. In some circumstances, this process of reorganization at the firm level has been accompanied by the outsourcing of ICT-related processes. However, ICT outsourcing strategies also imply costs associated with the increasing complexity of ICT solutions. Therefore, it is not surprising that the demand for ICT consulting services has evidenced a steady growth in the last years.
This project studied the relationship between external ICT consulting and the decision to outsource ICT-related processes for a representative sample of German firms, using a detailed business survey (ZEW ICT Survey) carried out for the years 2003 and 2006 by the ICT research group of the ZEW. In particular, the project considered the role of ICT consulting as a determinant of ICT outsourcing decisions. Moreover, the project specifically analyzed the joint impact (i.e. complementarity) of ICT consulting and ICT outsourcing decisions on the firms’ labor productivity.
The results show that contracting ICT consulting in 2003 represented an important determinant of the firms’ ICT outsourcing intensity in 2006. This finding suggests that ICT consulting provides the information and knowledge about the ICT solutions needed inside the firm, and this knowledge permits to define the ICT outsourcing strategy. Moreover, the results also show that, even though the outsourcing of the installation of hardware and software positively influenced the firms’ labor productivity if contracted jointly with ICT consulting, ICT outsourcing decisions in general do not exhibit any complementarity with ICT consulting in their impact on labor productivity. However, these results are specific to the time period analyzed (i.e. 2003-2006) and suggest that the firms might actually require a longer horizon in order to benefit from this type of complementarity.