The move to outsourced IT projects: key risks from the provider perspective

Abstract

As the number of outsourced IT projects increases, the identification of risks that may impact during project implementation has become increasingly important. There has been extensive research into the risk factors that impact on IT projects, typically focusing on in-house development although, more recently, some researchers have investigated risks for out-sourced projects from the client perspective. The question of the risks involved from the perspective of the outsource provider, however, has received little attention, but is becoming increasingly important with the present trend to outsourced projects. The research reported here describes key risks identified by a group of Hong Kong project managers working for vendor IT firms who offered package implementation solutions both locally and overseas. A number of new risks from the vendor perspective have been identified, which indicate that vendor project managers typically have a broader focus on risks than their in-house counterparts. In addition to risks to the project success itself, vendor project managers must be constantly vigilant for threats to their own firms from competitors and from potential damage to their firm's reputation if the customer is dissatisfied with either the outcomes or the process of the project. The increasing trend towards multinational outsourced projects also adds additional location-specific risks that must be addressed. The findings are of interest to all managers involved in offshore outsourcing projects.