Aspects of Client Vendor Relationship and the Risks Therein

Aspects of Client Vendor Relationship and the Risks Therein

Daisy Mathur Jain (National Law University, India)
DOI: 10.4018/978-1-4666-4209-6.ch009
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Abstract

Information Technology (IT) is an ever-growing industry. It, therefore, becomes imperative to understand what it entails, the key parties involved, and their relationship, along with the various risks involved. This chapter aims to delve into the underlying concept of service in the IT industry, the service receiver (client) and the service provider (vendor), which are the key parties, and the risks involved by taking a look at the main prevalent outsourcing models. Further, it nails out the major factors that can contribute in building a lasting relationship between the client and vendor. Through extensive literature review, it is observed that several studies have focused on the risks faced by service receivers, but there are very few that mention the risks that service providers also face. This chapter examines both aspects and aims to uncover the risks that service receivers and service providers face in outsourcing engagements. In addition, many articles talk about factors involved in building client-vendor relationship; however, they lack a comprehensive list of factors that, if taken care of, can lead to successful client vendor engagements. This chapter gives a comprehensive view of the main aspects of the IT industry covering the concept of service in IT Industry, the key parties, and the risks along with aspects that build into successful client vendor relationships.
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1. Introduction

IT Outsourcing helps companies to manage their IT requirements in the form of product or application development/maintenance by externally hiring IT professionals without the need to manage an in house team and go through the process of recruitment and people management. More and more companies are taking advantage of this convenience, which they can get at a lower cost apart from being able to focus on their key area. According to Gartners report the spending on IT outsourcing services in 2012 is predicted to be $251.7 billion which is 2.1% higher than the expenditure in 2011 (http://www.outsourceforcescam.com/374/worldwide-and-u-s-is-outsourcing-services-2009-2013-forecast-update-november-2009/)which are services taken up by a vendor on the basis of a contractual agreement. In Information Technology Onshore/Offshore Outsourcing Model Information Technology (IT) Outsourcing will continue to grow despite periods of recession due to increased international reliance for products and services as part of globalisation. Managing client vendor relationship is imperative to sustain the engagement.

This article introduces the concept of service and then defines Information Technology Outsourcing. The key parties namely the Client and the Vendor are described followed by the outsourcing models and their dimensions in order to understand the risks involved for both parties. Also since IT Outsourcing market is expected to grow, the aspects that lead to a successful client vendor relationship are derived from the dimensions of outsourcing models and enlisted.

Various studies have been done on client vendor relationship but there is no comprehensive study that lays down the factors affecting a client vendor relationship and how they can be used to build the relationship. This paper aims to fill that gap.

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