• Title, Summary, Keyword: Risks of Outsourcing

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The Effect of Strategic Recognition and Risks of IT Outsourcing on the Degree of Outsourcing (IT 아웃소싱에 대한 전략적 인식과 위험이 아웃소싱의 정도에 미치는 영향)

  • 문용은
    • Journal of the Korean Operations Research and Management Science Society
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    • v.27 no.3
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    • pp.21-40
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    • 2002
  • Recently, IT outsourcing has become a very important management strategy which implements information systems in organizations. This paper investigates the risks and strategic recognition as a key factors affecting on the degree of IT outsourcing. Specifically the risks of IT outsourcing and its four components-risk of control, risk of economical, risk of technical, risk of relational - are examined to be a negative effect on the degree of outsourcing. And strategic recognition about outsourcing is examined how to affect en the risks and the degree of IT outsourcing. To empirically test these relationships, data ere gathered from senior IT managers in 86 corporations. Results of this study show that the degree of outsourcing is strongly influenced by risk of control, risk of economical, risk of relational. But risk of technical does not influence on the degree of outsourcing. And strategic recognition about outsourcing is found that is negative effect on the risks of IT outsourcing and positive effect on the degree of IT outsourcing. The results provide a good framework to minimize the risks for IT outsourcing success.

The Effect of IT Service Outsourcing Project Risks on the Intention of Purchasing Real Options based on Transaction Cost Theory (IT서비스 아웃소싱 프로젝트 위험과 실물옵션 유형간 적합성에 관한 연구)

  • Nam, SeungHyeon;Ahn, JoongHo;Yang, Hee-Dong
    • Asia pacific journal of information systems
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    • v.23 no.2
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    • pp.41-66
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    • 2013
  • IS outsourcing has an important meaning to the Korean SME's (Small and Medium Enterprises) which want to use the IS Services. The objective of this research is to manage IT risks occurred during IS outsourcing project process. This study tries to identify these risks using real option methodology. In order to perform this objective, this study set up the research model which is composed of two main concepts. The first one is the risk factors occurred during IS outsourcing project process: User's Risks, Supplier's Risks and Transaction's Risks. All of these risks are based on Transaction Cost Theory. The second one is the intention to get (or buy) Real Options to manage the risks. In the research model, two types of real option are included: option to abandon (put option) and option to defer (call option). This study uses questionnaires and statistics methodology (PLS) to analyze the hypotheses proposed in the research model. Compared with prior studies, this study is different in two ways. First, this study restricts the range of IT risks. Prior researches of IT Risk management in MIS area cover various range of IT risks, but this study focuses on the Korean SME's IT outsourcing risks on the basis of Transaction Cost Theory. This study tests the relationship between the risks and real option types. Second, this study tries to test the moderating effect of user's risks and supplier's risks on the relationship between transaction's risks and real option types. In IT outsourcing research area, almost studies focus on the direct relationships between IT risks and outsourcing success. But in reality, the co-relationship among IT risks may occur. There are some findings according to the research analysis. First, risks related with user's risks have strong causal relationships with the intention to get option to abandon (put) and option to defer. But risks related with supplier's risks have causal relationships only with option to abandon (put). Second, user's risks and supplier's risks have no moderating effect on the relationship between transaction's risks and real option types. According to the research results, this research have some important and interesting implications on the IS outsourcing business area. First, this study identifies the effective types of real option to minimize the risks occurred during the IT outsourcing projects. So IS outsourcing service users can manage (or minimize) effectively the risks, which occurred during outsourcing projects, using real options. Second, real option gives benefits to suppliers and users at the same time (i.e., win-win strategies between IS outsourcing service providers and users). Vendors (:IS outsourcing service providers) can offer users the real options which can minimize the occurrence of risks in time. "IN TIME" means that before the IS outsourcing project starts, vendors can offer users the opportunity to buy real options in appropriate prices to manage the possibility of the risks of IS outsourcing project. And users also have chance to minimize the IT outsourcing risks occurred during the project process using real options.

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A Study on the Relationship between Outsourcing Risks and Performance for Contractors (수주자 관점에서의 정보기술 아웃소싱 위험요소와 성과와의 관계에 관한 연구)

  • Yang, Kyung-Sik;Kim, Hyun-Soo
    • Asia pacific journal of information systems
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    • v.13 no.4
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    • pp.119-145
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    • 2003
  • Recently, IT outsourcing has been one of the major concerns of many companies. This study proposes a model which composed the outsourcing planning and operational risks affecting the outsourcing performance. Especially, this study focused on the contractors perspective, because the outsourcing risk relative researches are recently performed on the service receivers perspective, contractors perspective researches were relatively lacked. The result of this study, outsourcing planning risks had not affected the outsourcing performance but it had positively affected the operational risks. And also, the outsourcing operational risks had negatively affected the outsourcing performance. For this reason, It is necessary to reduced planning risk induction for the outsourcing performance improvement. Because the planning risks positively affect the operational risks, it is necessary to reduced planning risk induction for the outsourcing performance improvement.

The Effect of Risks and Strategic Recognition on the Degree of IT Outsourcing (IS 아웃소싱의 위험과 아웃소싱의 정도에 관한 연구)

  • 문용은;박유진
    • The Journal of Information Systems
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    • v.11 no.1
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    • pp.1-28
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    • 2002
  • Today, IT outsourcing has become a very important management strategy of implementing information systems in organizations. This paper investigates the risks and strategic recognition as a key factors effecting on the degree of outsourcing, Specifically the risks of outsourcing and its four components-control risk, economical risk, technical risk, relational risk-are examined to be a negative effect on the degree of outsourcing. And strategic recognition about outsourcing is examined to be a mediator factor between the risks and the degree of outsourcing. To empirically test these relationships, data are gathered from senior IT managers in 62 corporations. Results of this study show that the degree of outsourcing is strongly influenced by control risk, economical risk, relational risk. But technical risk does not influence on the degree of outsourcing. And strategic recognition about outsourcing is found that is mediator concern with the risks and the degree of outsourcing. The results indicate to provide a good framework to minimize the risks for IT outsourcing success.

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An Exploratory Study on the Information Technology Outsourcing Risk Factors: An IPO Perspective (IPO 관점에서의 정보기술 아웃소싱 위험요인에 관한 탐색적 연구)

  • Yang Kyung sik;Kim Hyun soo
    • Journal of Information Technology Applications and Management
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    • v.11 no.3
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    • pp.35-62
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    • 2004
  • Recently, IT outsouricng has been one of the major concerns of many companies. This paper explores the relationship between information technology outsourcing risk factors and outsourcing performance. It is based upon a three-phase process utilizing IPO (Input-Process-Output) system. The first phase means the outsourcing planning risks t~at arise from overall environment of outsourcing, organizational refuse, and wrong contracts. The second phase implies outsourcing operational risks, which are occurred while out-sourcing perform and consist of organizational acceptances of outsourcing, partnership and hidden costs. The last phase is outsourcing performance based on four perspective of BSC(Blanced Scored Card). The survey was performed on the IT/IS firms, and the data was collected from 53 service receivers. The result of the analysis are as follows. First, Outsourcing planning risks positively affects the operational risks. Second, Outsourcing operational risks negatively affects the Outsourcing Performance.

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An Empirical Study on the Control Mechanism of ASP Outsourcing Risks using Real Option Approach (ASP Outsourcing 위험의 효율적인 통제를 위한 실물옵션 적용 가능성에 대한 연구)

  • Nam, Seung-Hyeon;Yang, Hui-Dong
    • Proceedings of the Korea Society for Industrial Systems Conference
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    • pp.365-384
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    • 2008
  • Many studies on ASP outsourcing area have focused on the Critical Success Factors(CSFs) of ASP outsourcing projects or on the service quality of ASP Service. But these studies have limitations to explain how to succeed in doing ASP outsourcing project. The objective of this research is to overcome this limitation by using the concept of "IT Risk" in Outsourcing. The effective control of the risks-caused during the IS outsourcing process-gives (ASP service using) users a powerful tool to minimize the risks and thus maximizes the possibility of ASP outsourcing project success. In order to perform this objective, this research set up the research model which is composed of three concepts. The three concepts are 1. Undesirable Outcomes(:UO) as IT outsourcing Risks, 2. The Source of Risks(:SOR) influencing the UO, and 3. the intention to get/execute Real Option Portfolio to control the risk level of SORs and UOs. This research has some important and interesting implications on the ASP outsourcing area. First, this research classifies the risk factors as three concepts and finds the interactions among them. Second, Using Real Option portfolio can control the risks effectively occurred during outsourcing projects. Third, Vendors(ASP service providers) can offer users IN TIME the options which can minimize the occurrence of risks.

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Differences Between Client's and Supplier's receptions of IT Outsourcing Risks (IT아웃소싱 위험에 대한 고객과 공급업체와의 인식 차이)

  • Kim, Kyung-Ihl
    • Journal of Convergence for Information Technology
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    • v.8 no.5
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    • pp.237-242
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    • 2018
  • Researchers have suggested successful risk management as a key factor in successful IT outsourcing projects implementation. The documented investigations, however, have mainly addressed risk management only from a single perspective of either clients or IT vendors. This study explored the potential perception inconsistency regarding the risks between the client and the vendor for IT outsourcing projects by using a quasi-Delphi approach. The analysis results indicated some inconsistencies in the risks perceived by the two parties: (1) the clients regarded (a) lack of vendor commitment to the project and (b) poor vendor selection criteria and process as top critical risks but the vendors didn't; and (2) on the other hand, the vendors perceived (a) unclear requirements and (b) lack of experience and expertise with project activities as significant risks but the clients didn't. Insights into how the client and the vendor perceive risks may help both parties determine how to partner and manage project risks collaboratively to succeed in outsourcing.

Management of ASP Outsourcing Project Risks using Real Option Approach (실물옵션 접근법을 활용한 ASP 아웃소싱 리스크 관리)

  • Nam, Seung-Hyeon
    • Journal of the Korea Academia-Industrial cooperation Society
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    • v.11 no.7
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    • pp.2396-2405
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    • 2010
  • Information System (IS) Outsourcing is one of the powerful alternatives to guarantee the competitive advantages in the rapidly changing business environment. Most studies on IS outsourcing area have focused on the Critical Success Factors(CSFs) influencing the Success of IS outsourcing or the performance measuring the success of IS outsourcing projects. The CSFs or the performances which measures the success of IS outsourcing project have limitations to explain how to succeed in doing IS outsourcing project. This study uses Real Options Approach to make IS outsourcing projects' success by recognizing and minimizing IS outsourcing risks.

Come fly with ME: The Impact of 3PLs within the aircraft Manufacturing, Repair and Overhaul Industry in the United Arab Emirates

  • Hassan, Fatima;Annabi, Carrie Amani
    • The Journal of Industrial Distribution & Business
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    • v.10 no.4
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    • pp.13-24
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    • 2019
  • Purpose - This research explores the impacts of third-party logistics (3PLs) within the aircraft Maintenance, Repair and Overhaul (MRO) industry in the United Arab Emirates (UAE) to explore the role of collaborative relationships for improving outsourcing. Globalization and time based competition have changed business environments and challenged the conventional management strategies that are related to core competencies and operational models. Organizations are forced to devise innovative practices in which logistics outsourcing to 3PLs offers significant advantages. Research design, data, and methodology - This case study was conducted within a leading global aircraft MRO organization whose reach spans across Europe, the Middle East, Asia and the Americas. The methods used face to face semi-structured interviews, validated through further focus group discussions. Results - These findings highlight the effectiveness of collaborative relationships on their role to improve outsourcing and also demonstrated that MROs gain several advantages from 3PL arrangements. However, any gaps in outsourcing management elevates potential risks to organizations as well, which could result in reputational, operational and financial losses. Conclusions - Although generalizability is not possible due to the case study approach, generality suggests that in order to reduce reputational, operational and financial risks, enhanced collaboration with 3PLs is recommended to optimize outsourcing arrangements.

A Descriptive Study of IT Outsourcing Risk Factors in the Korean Financial Industry (국내 금융업 IT 아웃소싱 수행의사에 영향을 미치는 위험요인에 관한 연구)

  • Lee, Moo-Seok;Lee, Jung-Hoon;Park, Jong-Sung
    • Journal of Information Technology Services
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    • v.7 no.1
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    • pp.151-166
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    • 2008
  • The Outsourcing Industry has grown at a swift pace and evolved over time, and the Global IT Outsourcing market has shown signs of a steady growth. In the Korean financial industry, however, IT Outsourcing is not active as that of the advanced countries and there is lack of literature to understand the characteristics of IT Outsourcing in the financial industry. This paper, therefore, analyze the outcomes surveying 40 financial companies in Korea to investigate how IT Outsourcing risk factors affects IT Outsourcing intention. Based on our literature reviews based on number of key articles, journals, and the focus group interviews, IT Outsourcing risk factors are proposed into four different domains: Transaction, Client, Vendor and Environmental perspective. It found that two risk factors (Client and Environmental perspective) are closely related to the IT Outsourcing intention of the Korean financial industry. Finally, this paper concludes that concrete SLAs (Service Level Agreements) of the clients and support of government agencies are important to mitigate the IT Outsourcing risks.