Risk Analysis for Outsourcing Decisions

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Abstract The purpose of this paper is to identify the possible risks to an organization in each of the following outsourcing situations: a) the use of an external service provider for your data storage; b) the use of an enterprise service provider for processing information systems applications such as a payroll, human resources, or sales order taking; c) the use of a vendor to support your desktop computers; and d) the use of a vendor to provide network support. The paper will include a risk mitigation strategy for each situation. Risk Analysis for Outsourcing Decisions "Outsourcing", as defined by Wikipedia, the free encyclopedia, is the contracting out of a business function to an external provider. In this sense, two organizations enter into a contractual agreement involving an exchange of services and payments. Paul Strassmann, in his paper "The Squandered Computer" would prefer the term "out-tasking" because one organization is utilizing the specialization of another organization. According to "Microsoft Business for Small and Mid-Size Companies", small business owners are outsourcing a range of services, from Human Relations to finance and accounting to customer services. Small businesses can now tap outside facilitators for a much greater range of services. As an example, entrepreneurs with strong sales often assume a full-time bookkeeper is needed to oversee the books. But, in fact, the company might not actually require a full-time bookkeeper; such services

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