Risk management of information system outsourcing

In this study, transaction cost theory and agency theory are applied to build the fundamental models of IT outsourcing risk management. In order to investigate how the attributes of organizations influence IT outsourcing risk, we integrates such attributes i.e., asset specificity, uncertainty, measurement problems, promixity of core competencies, top management involvement, outsourcing experiences, choice of suppliers, strategy importance and IT capability, which organizations need to take into account. Furthermore, we separate the risk into three parts: the risk models of environmental factors, mutual relationship between both parities, and IT safety.
There are 1,287 private sector and corporate were selected to conduct the survey. 172 questionnaires were returned, 5 of them were incomplete. The percentage of return rate is 13.4% and the valid returned questionnaires is 12.9 %.
We adopt questionnaire to implement this empirical study. The results reveal the following characteristics:
(1) In the risk model of environmental factors: the higher the uncertainty of IT outsourcing, the more risky the IT outsourcing.
(2) In the model of mutual relationship between both parities: the higher the asset specificity, the more risky the IT outsourcing.
(3) In the model of IT safety: the higher the IT capability, the more risky the IT outsourcing.