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Managing risks in information systems outsourcing: an approach to analyzing outsourcing risks and structuring incentive contracts

Version 2 2024-06-13, 10:42
Version 1 2017-07-21, 10:53
journal contribution
posted on 2024-06-13, 10:42 authored by KM Osei-Bryson, OK Ngwenyama
Information systems outsourcing is now almost standard practice for many companies. Outsourcing the information processing activities is a complex issue that entails considerable implications for the strategy of the firm. An important mechanism for managing the performance of outsourcing vendors is incentive contracts. But to develop an outsourcing contract the IS manager must quantify risks and benefits. However methods and tools for analyzing and quantifying outsourcing risks that IS managers have at their disposal are rudimentary. In this paper we offer a method and some mathematical models for analyzing risks and constructing incentive contracts for IS outsourcing. We are aware that most managers do not like to use mathematical models, consequently we have minimized the technical discussion and have illustrated how this model could be implemented using spreadsheet software for ease of use.

History

Journal

European journal of operational research

Volume

174

Pagination

245-264

Location

Amsterdam, The Netherlands

ISSN

0377-2217

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2005, Elsevier B.V.

Issue

1

Publisher

Elsevier

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