Information Technology/Systems Offshore Outsourcing: Key Risks and Success Factors

The operation of information technology and information systems (IT/IS) offshore outsourcing is being increasingly practiced among firms that are focusing on core competencies and cost effectiveness. With the increase in offshore IT/IS operations, a growing number of companies are encountering negative experiences and unpredicted results. The analysis performed in this article reveals the possible risks and perceived success factors of companies outsourcing IT/IS operations offshore. The major points of interest are operational and strategic risks; legal contracts; cultural, security, and financial issues; and noted success factors by companies that participate in offshore outsourcing. The research indicates the importance of risk identification and the formulation of strategic plans that include preventive, detective, and corrective control methods of implementation and evaluation. Effective methods and metrics for measuring the success or failure of IT/IS offshore outsourcing operations is expected to be a continuing development with the increasing growth of this phenomenon.

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