Assessing the Risk of IT Outsourcing

Benoit Aubert, Michel Patry and Suzanne Rivard

CIRANO Working Papers from CIRANO

Abstract: Outsourcing decisions, and contractual arrangements of the type required by an IT outsourcing deal, entail risks. This is not to say that outsourcing is bad in itself. It only means that, as in other risky business ventures such as new product development, capital investments, and IS projects, risk assessment and risk management are important contributors to the success of an IT outsourcing venture. This paper focuses on risk assessment. After providing a brief conceptual definition of risk, the paper reviews the empirical literature in order to identify the0501n undesirable outcomes that may result from an IT outsourcing deal. It then uses transaction cost and agency theory as a primary theoretical basis, and proposes a framework for categorizing risk factors which have been identified in the literature. Finally, the paper discusses the dynamics of risk, by examining how the various risk factors are linked to the undesirable outcomes Ce texte porte sur l'évaluation du risque d'impartition des services informatiques. Le risque est défini ici comme étant fonction d'événements indésirables pouvant résulter d'une décision d'impartir, et des facteurs pouvant mener à ces événements indésirables. La théorie des coûts de transaction et la théorie de l'agence servent de base théorique à l'identification des principaux facteurs de risque. Les événements indésirables sont identifiés à partir d'une recension des écrits sur l'impartition des services informatiques.

Keywords: Outsourcing of IS; agency theory; transaction cost economics; Sous-traitance des systèmes informatiques; théorie de l'agence; économie des coûts de transaction (search for similar items in EconPapers)
JEL-codes: L23 (search for similar items in EconPapers)
Date: 1998-05-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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