Risk governance for IT outsourcing

IN TODAY'S digital age, information technology (IT) is a significant, if not an integral, part of the operations of most companies. Many businesses outsource part or all of their IT to third- party providers.

The most common types of IT outsourcing are in systems development and maintenance, data centre operations, network administration, disaster recovery services, application hosting, and cloud computing. The outsource function can involve the provision of IT capabilities and facilities by a single third party or multiple vendors located in Singapore or abroad.

The decision to outsource is often one based on cost-benefit analysis, but the important questions around risks and risk management should not be ignored. Many outsourcing deals that go awry can be traced to insufficient consideration of risk mitigation.