Revisiting IT outsourcing risks: Analysis of a survey of Australia’s Top 1000 organizations

IT outsourcing strategy has the potential for substantial benefits, but also the likelihood of significant risks. The literature has not fully explored the probability of encountering IT outsourcing risks, and, conversely, the probability of success, leaving open the possibility that many decision-makers enter into IT outsourcing with unwarranted optimism. This paper reports on the experiences of 240 Australian organizations engaged in IT outsourcing taken from a survey of the largest 1000 sites in the country. The survey revealed some surprising findings. Certain widely promoted benefits of outsourcing were observed (access to skilled staff, positive vendor service and improved business flexibility), but a range of benefits that were similarly promoted were reported by only a minority of respondents. These included strategic benefits, cost savings, economies of scale, and technology benefits. Only around a third (36%) of respondents reported satisfaction with their outsourcing arrangement(s) and a range of risks were more prevalent, and less manageable than has previously been reported