What are some of the overlooked risks in IT outsourcing?
The human element aspect. People are not perfect. It’s not the machines that usually cause the issues; it’s the people that you’re dealing with. The firm you’re going to hire—what’s the caliber of their people, what’s their knowledge base, what’s their background, what’s their expertise? And more importantly, what’s the financial stability of the company that you’re going to outsource to?

Another risk is ignoring the impact on your associates as well as the users, the people who are actually using the technology, whether that’s your in-house associates or your customers. You need to understand their needs and concerns, what impact it has on the efficiency of the organization, and get buy-in and feedback from the actual users. It should truly deliver something that’s useful to the end user. By ignoring the users, you’re really doing yourself a disservice.

Are there other concerns within the organization?
If companies only look at the bottom line, they may forget about the transfer of knowledge. You’re taking a big piece of your organization and eliminating that. If you’re going to outsource the running of your networks or database management, you’re losing that knowledge base. You’re transferring your knowledge on your systems and how you operate to somebody else.

Many companies forget that when they outsource it’s a major organizational change. I’ve seen senior management just doing it for cost savings measures, and they don’t understand the implications: What does it mean to the organization and the users, and what are the true costs involved? Not just the hard costs, but also the soft costs.

People are blasé about the risk factors, the technical risk factors, and the human risk factors. They don’t prioritize those risks. They may only think about cost saving, and it’s not necessarily cost saving. They need to be more cautious.