From the outsourcer’s perspective, the IS outsourcing literature emphasizes the importance of contracts and risk awareness for managing outsourcing ventures. However, there is a lack of proven and tested outsourcing management concepts in theory and practise incorporating contractual designs to effectively counter risk. By extending the risk model of Bahli and Rivard (2001) we investigate the influence of risk analysis on contract quality and their interrelation with outsourcing success. Using multiple case studies within the German banking industry our Research-In-Progress paper aims at answering the following questions: (1) ‘How does the contract contribute to outsourcing success from a risk mitigation perspective?’ and (2) ‘How does risk analysis affect the risk mitigation quality of the contract?’. Our research provides insights on how the conduction of a thorough risk analysis can improve contract quality. We show that involving business staff as well as IT staff in an outsourcing project helps to optimize contract clauses. In addition, we demonstrate how the design of contract contents such as pricing schemes, service level agreements, and penalty-reward-systems can ensure the expected cost savings and thereby contribute to outsourcing success.
Gellings, C and Wuellenweber, Kim, "Successfully implementing it outsourcing strategy in German banks: the role of contract design and risk analysis" (2006). ECIS 2006 Proceedings. 51.