Risk factors affecting future information system outsourcing decision

Pao Yue-kong Library Electronic Theses Database

Risk factors affecting future information system outsourcing decision

 

Author: Lau, Mei-bik Jessica
Title: Risk factors affecting future information system outsourcing decision
Degree: M.Sc.
Year: 1999
Subject: Electronic data processing departments -- Contracting out
Risk assessment
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Dept. of Computing
Pages: xi, 113, [104] leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1489540
URI: http://theses.lib.polyu.edu.hk/handle/200/4682
Abstract: This paper seeks empirically to explore what risk factors affect future information system (IS) outsourcing decision of outsourcing companies or having outsourcing plan of non-outsourcing companies. Based on the past theories and research related to concept of risk and risks associated with IS outsourcing, a research model to explain the influence of risk on future IS outsourcing decision is developed and twenty-nine hypotheses are derived for empirical testing. The model posits that risk factors have an indirect effect, through undesirable consequences related to IS outsourcing, as well as a direct effect on future IS outsourcing decision. Four risk factors including vendor attitude problem, vendor competence problem, coordination problem and in-house competence problem were considered. Five undesirable consequences including loss of corporate security, degradation of IS service, loss of control, high unexpected cost, and loss of in-house IS capability were considered. A survey of 600 Hong Kong companies resulted in 148 usable responses for the data analysis. LISREL was used for statistical testing. The analysis suggests that a reasonable model fit between the model and the data. The results indicate that degradation of IS service and the loss of control have a direct effect on future IS outsourcing decision while loss of corporate security, high unexpected cost and loss of in-house IS capability do not have a direct effect on future IS outsourcing decision. Both degradation of IS service and loss of control are affected by negative vendor attitude, vendor competence problem and in-house competence problem. Of the risk factors, the results indicate that vendor competence problem and coordination problem have a direct effect on future IS outsourcing decision. From these results, managerial implications and future directions for research are discussed.

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