A Framework for Evaluating Outsourcing Risk

Abstract

This chapter provides a framework for evaluating and mitigating the risks associated with IT outsourcing projects. Outsourcing projects have been met with successes and many failures. The causes of such failures must be systematically investigated in order to provide managers guidance to avoid future risks from outsourcing projects. This chapter discusses the outsourcing relationship, highlighting the primary causes of project successes and failures, then offers a framework for evaluating vendor relationships to avoid contingencies that may lead to failure. The authors hope this framework will serve as a guide for managers of firms seeking to outsource various IT functions, as well as managers of vendor firms who seek success in these relationships.