IT Offshoring Risks and Governance Capabilities

Abstract

IT offshoring or offshore outsourcing is a fast growing trend that is worldwide and continuing. Driven by the competitive pressure to reduce IT costs, firms in developed countries opt to buy IT services from offshore service providers in developing countries, which provide comparative advantage in lower labour costs and skilled workforce. While much has been written about its relative costs and benefits, there is a lack of comprehensive research on risks of IT offshoring. This research aims to identify IT offshoring risks based on a comprehensive review of the literature and content analysis. It also aims to map those risks to the extant IT outsourcing governance capabilities framework. The results show that the framework can be usefully extended to a different context of IT offshoring by including strategic management of risks and controls as a governance capability in order to address new and emerging risks in IT offshoring.