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Managing the Risks of IT Outsourcing (Computer Weekly Professional)

Buy
Buyers or suppliers of IT outsourcing services are constantly tormented
by the prospect of having to deal with the vicissitudes of
risks in their projects. In today’s business environment, the
precipitous rates of technological change have outpaced the ability
of many organizations to support the IT function. These organizations
are faced with the ‘usual’ challenge to maintain an IT
function and to simultaneously manage in an environment of
brisk change and perpetual uncertainty. All of this, however, in
addition to the vagaries of risk and its effects, makes managing the
IT function an exceptionally challenging task for many managers.
As a result, these managers and the organizations they represent
succumb by using outsourcing as an opportunity to de-focus from
the IT function, something that is, commonly, also not an activity
of core competence (Prahalad and Hamel, 1990). IT outsourcing
promises to lower operating costs, lower risk exposure and take
advantage of best practices that are introduced when working
with the supplier of IT services. These organizations plan to transfer
the IT function outside the organization and also to reap the
payback of the IT function, through the use of outsourcing.

The term outsourcing conjures up several different meanings
depending on how it is viewed. To potential and existing users of
this concept, it may contain a connotation of a loss of control; and
a fear that a third party would take over jobs, work and responsibility
for what used to be an internal function. To others, it carries
suggestions of a takeover; and to yet another group, outsourcing
implies additional work that will be required to supervise additional
personnel that are brought ‘on-board’. Many managers, it
seems, attempt to seek consolation by rejecting the concept of
outsourcing altogether. Further, ideas are devised and thoughts
rationalized to address this feeling of trepidation through commonly
heard reasons not to outsource. Common reasons that may
inadvertently or unintentionally be used to reinforce these concerns
include, for example, ‘IT outsourcing results in an unacceptable
loss of control’, ‘intolerable increases in security issues [e.g.
loss of corporate information]’ or just ‘undesirable increases in
operational risk’.
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