The risks of business process outsourcing: a two-fold assessment in the German banking industry. (22nd March 2007)

• Record Type: Journal Article
• Authors: Gewald, Heiko; Franke, Jochen
• Is Part Of: International journal of electronic finance. Volume 1:Number 4(2007)
• Page Start: 420
• Page End: 441
• Publication Date: 2007-03-22
• Subjects: outsourcing -- risks -- business process outsourcing -- BPO -- information technology outsourcing -- ITO -- Germany -- banking -- electronic finance; Financial services industry -- Computer networks -- Periodicals; Electronic commerce -- Periodicals; 332.178
• Languages: English
• ISSNs: 1746-0069

Abstract

This paper tackles the question of whether the risks inherent in Business Process Outsourcing (BPO) differ significantly from the risks of Information Technology Outsourcing (ITO), and subsequently investigates which are the most salient risks inherent in BPO. By applying structured expert interviews and a quantitative survey among Germany's 200 largest banks, it turns out that the risk categories relevant to ITO and BPO are fundamentally the same, but differ in magnitude. Digging deeper into the risks associated with BPO, and using Perceived Risk Theory as a theoretical framework, we found that financial risks are most important to decision makers, followed by strategic and performance risks.