—IT outsourcing is the subcontracting of previous in-house IT activities to external IT vendors who can do them better and more efficiently because they possess more resources and higher experatise. Firms are driven to acquire IT outsourcing services because they expect these specialized firms to provide efficient services which lead to cost saving and increase in profit. However, only half of IT outsourcing contracts has delivered results as promised. In this research a conceptual framework is presented and tested to reveal the relationship between IT outsourcing risk factors and negative outcomes that occur from IT outsourcing. The result concluded that four risk factors “Measurement problem”, “Lack of expertise of vendor with outsourced activity”, “Uncertainty”, and “Interdependence of activities”, are significant predictors of negative outcomes in Thailand. The other risk factors which are “Lack of expertise of client with outsourced activity”, “Lack of expertise of client with outsourcing contract”, “Lack of expertise of vendor with outsourcing contract”, “Asset specificity”, and “Small number of vendors” do not have a significant relationship with negative outcomes. Finally, this research also provides several major recommendations that IT outsourcers must acknowledge and implement in order to manage IT outsourcing risks and get the most benefit from IT outsourcing as possible.
—Agency theory, IT outsourcing, IT outsourcing risks, negative outcomes, transaction cost theory.
T. Ongwattanasirikul is wih Siemens Group, Bangkok, Thailand (e-mail: email@example.com).
S.Malisuwan and N. K. Madan are with National Broadcasting and Telecommunications Commission Bangkok, Thailand (e-mail: firstname.lastname@example.org, email@example.com).
Cite:Thanapol Ongwattanasirikul, Settapong Malisuwan, and Navneet Madan, "Risk Analysis of IT Outsourcing Case Study on Public Companies in Thailand," Journal of Economics, Business and Management vol. 1, no. 4, pp. 365-370, 2013.