Manufacturers need a risk-intelligent approach to IT outsourcing

It finds the global IT and business process outsourcing market approaching $500 billion and still growing rapidly as companies respond to today’s global economy. However, the giant business consultancy is concerned that some are facing “dramatically increasing risks” as they rely more than ever on third parties, including offshore entities, for a growing number of business and IT processes. Deloitte makes the point that: companies increasingly rely on other parties and/or offshore entities, not just for projects and back-office functions, but for core business processes; increased competition for global talent is contributing to shortages; and regulatory developments have increased exposure to liability for non-compliance. It also suggests that: piracy, security breaches and theft of information can erode brand value, intellectual property and other key assets; volatile political environments and infrastructure limitations can negatively impact efficient operations; and outsourcing relationships often morph into de facto partnerships, but without adequate analysis, reporting, visibility and control. “To deal with such complex and dynamic risks, companies must employ a ‘risk intelligent’ approach to guide decision making throughout the outsourcing or off-shoring life cycle,” says Mark Layton, global leader for Deloitte’s Enterprise Risk Services practice. “Aligning objectives, risks and controls throughout the outsourcing and off-shoring lifecycle enables organisations to identify, assess, prioritise and mitigate outsourcing and off-shoring risks at the right stage,” he adds. Deloitte has now published a whitepaper on the subject entitled ‘The Risk Intelligent Approach to Outsourcing and Offshoring,’ which, it says, identifies the more worrying trends and addresses in detail the issues around each. It’s available free at www.deloitte.com/RiskIntelligence.