Business Case Development Risks in On and Offshore IT Outsourcing

Abstract

Outsourcing of IT-supported business processes (systems development; customer relationship management; helpdesk, etc.) has become increasingly common in Western economies since the late 1990s. Such outsourcing is totally dependent on the provision of inter-organizational information systems (IOSs), which act as the “glue” to link vendor(s) and client(s). Hence understanding the importance of IOSs, and conversely, the downsides or risks they embody, is a critical part of ensuring that outsourcing arrangements are successful. In this chapter the theory behind outsourcing is unpacked, and readers are alerted to sometimes-overlooked aspects of the IOSs on which outsourcing depends. These raise the risks, and reduce the benefits, of outsourcing if they are not well thought through. Decision makers are advised to explicitly include the notion of risk in their outsourcing business cases, including those risks associated with the IOSs that support outsourcing arrangements.