Outsourcing risks are ignored

13 February 2008
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13 February 2008 | Jake Kanter

Firms must assess the risks of outsourcing services more carefully if they are to avoid fraud and theft.

A white paper published by consultancy Deloitte found buyers should be aware of the "significant" risks at different stages of the outsourcing and offshoring process.

It said companies are in danger of choosing suppliers incapable of carrying out services or in volatile political or economic infrastructures because they are not assessing risks effectively. In turn this could leave firms exposed to fraud or theft, and result in ineffective relationships.

The report recommended that buyers should be more aware of risks across the whole outsourcing process. It added it is important to understand what resources your organisation needs and factor long-term costs into strategies at the start of the process. It also said firms need to monitor supplier performance more closely.

"Many outsourcing and offshoring initiatives fail to live up to their potential or the expectations of the parties. Even worse, a fair number of them fail outright, leading the company to either pull the operations back in-house or to start anew in the search for a reliable, mutually beneficial partner," said Peter Lowes, outsourcing advisory services leader at Deloitte. "A 'risk intelligent' approach can help organisations realise the expected benefits and improve relationships."



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