Understanding Risk in IT Outsourcing: A Conceptual Fuzzy Framework

Mathew, Saji K (2006) Understanding Risk in IT Outsourcing: A Conceptual Fuzzy Framework. TAPMI, Manipal.


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Driven by the rapid advances in information and communication technology and liberalization, a new era of outsourcing has dawned. Foundations of the outsourcing model lie in the economic and strategic literature, encompassing transaction cost theory, theories of comparative advantage, resource based view, core competence etc. Research into the decision process of outsourcing provide an analytic hierarchical process view, starting with the decision of the business process to be outsourced, down through the mode of outsourcing, location(s) to outsource, choice of outsourcing partner(s), and finally performance management of the outsourcing engagement. Each decision variable in the hierarchy carries risk to a successful outsourcing partnership. This paper develops a conceptual risk assessment framework for IT outsourcing decisions using a fuzzy approach. The sources of risk in IT outsourcing contracts are identified based on the decision phases of outsourcing. A fuzzy rule base make connections among the sources of risk and maps the input space to an output risk category based on expert business knowledge of the domain. Demonstration of the framework is carried out for offshore software development using two fuzzy variables and four generally known business rules. Simulation of this model showed that the system could infer and quantify risk in a reasonable way. Such a system would support IT outsourcing decision making through improved understanding of the risks involved in partnerships. This will in turn enable effective risk management by appropriate design of contracts.

Item Type: TAPMI Working Papers
Uncontrolled Keywords: Outsourcing, information technology (IT), decision Process, risk, contract, fuzzy
Subjects: Management Information Systems
Divisions: Operations and Information Science
Depositing User: Ms. Vanitha K
Date Deposited: 15 Nov 2018 10:45
Last Modified: 20 Nov 2018 06:53
URI: http://tapmi.informaticsglobal.com/id/eprint/310

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