Conceptual Framework on Risk Management in IT Outsourcing Projects

Outsourcing is becoming a trend nowadays. Malaysia also takes this opportunity and embraces in IT outsourcing. As a result, Malaysia has been ranked as the third most attractive destination for outsourcing after India and China. Despite increasing number of organizations that involve in IT outsourcing, it should be noted that IT outsourcing is not a panacea. It comes together with risks. The risks, if not managed, will lead to outsourcing failure. Even though other areas have adopted risk management as their patching material, the application of risk management in IT outsourcing was not quite accomplished. Risk management should be conducted in IT outsourcing as it will foresee risks that might disturb the smooth flowing of IT outsourcing and prevent or reduce the impact of risks if they occur. It should be conducted at early stage and should be continuously performed until the end of outsourcing life cycle. This paper presents a conceptual framework to manage risk in IT outsourcing. The framework will cover the process in risk management in IT outsourcing as well as the risk management principle that should be conducted at each and every phases of IT Outsourcing life cycle. A set of questionnaire was distributed to organizations to validate the conceptual framework. The findings showed that the consequences of not practicing risk management would result in poor controlling and managing of IT outsourcing projects. Based on the findings, future empirical and exploratory survey will be conducted and risk management in IT outsourcing framework will be developed. Key-words: Risk Management, Malaysia, Analysis of Decision to outsource, Selection of Service Provider, Contract Management, On-Going Monitoring.