Thursday, July 07, 2005

Outsourcing results in increase of share prices

From: blogsource

The Centre for Economic and Business Research and IT services firm LogicaCMG has recently released a report indicating the positive and negative effects of outsourcing. The report indicated that share prices on average are 1.7 percent higher one month after the announcement that a company would contract with an outsourcing firm relative to the stock price of rivals. Firms that explained the rationale behind their outsourcing move saw even greater relative stock price increases. For this reason alone, many large companies might consider a small but public entry into outsourcing. However, the report warns that not all the effects of outsourcing are positive. Regarding the computer desktop support industry in particular, the long-term effects of outsourcing can be quite negative. Reports:
Outsourcers introduce formal processes for IT support and can even charge extra for some requests.

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