Evaluating the Risks of Outsourcing

Costs, quality and the relationship of IT to the overall business strategy are critical factors in deciding whether or not to outsource. But other nontangible risks must be factored into the business case as well. According to outsourcing consultancy Ventoro, they include: Employee impact Outsourcing can affect employee morale and productivity in the short and long term. Customer impact Decisions to outsource may have a negative effect on customer opinion and ultimately on revenue. Partner impact An outsourcing deal may force process and system changes on other vendors with whom you work. Laws and regulations Outsourcing can affect your ability to comply effectively with laws, regulations and other standards. Compliance in an outsourced model can also cost more. Security and intellectual property protection Outsourcing can impact system, facility and data security and may increase the potential for IP theft, fraud or other problems. Business continuity and termination An outsourcing deal that fails can interfere with day-to-day operations.

Performance and support Outsourcing can affect real-time systems performance, IT support costs and technology integration.

–S.O.