The sourcing of application development is becoming increasingly complex. While much prior work has investigated sourcing in a homogeneous marketplace, sourcing choices have increased in complexity, with a myriad of choices ranging from insourcing to domestic outsourcing to engaging Application Service Providers (ASP) to offshoring . In this study, based upon four organizational theories (Transaction Cost, Resource-Based View, Resource-Dependence View, and the Knowledge-Based View of the Firm), we suggest 10 attributes that firms consider when deciding upon outsourcing of applications. We tested the attributes’ strength by performing conjoint analysis on data collected from 84 IS executives. We constructed profiles, which are combinations of attributes having different levels. Each executive responded to 18 such distinct profiles and selected corresponding outsourcing choices. Our results found that the three most significant drivers of an IT application service choice were cost, risk, and vendor capability. However, the importance of these drivers varied across the different sourcing options. Based upon this, we offer implications for decision-makers and researchers, along with directions for future research.
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