Abstract

System development outsourcing has become the important practices in many organizations which involve third parties contribution on IT implementation as well as software development. The reasons of the demanding in outsourcing implementation are because it reduces operation and development budget for Information Technology Department and improves service quality and operational efficiency. Although it comes with benefits to the organization, but there are risks that associated with it. The objectives of this study are: 1) to identify main risks in outsource software development, 2) to assess the outsourcing risks and 3) to test the risks related to supplier using AHP technique. A survey was conducted in Malaysia to identify main risks in software outsourcing and to access the risk’s level and severity. Then, the risks were analysed using Analytic Hierarchy Process (AHP) technique to evaluate the performance of the suppliers in outsourcing data collected in the organisation. In this study, the testing and evaluating method were carried out with the officers in The Rubber Industry Smallholders Development Authority or RISDA in Malaysia because this organization has experience in software developemt outsource for more than 15 years. They are considered as well experience and good knowledge in this area. Findings from this study suggest to the related organization the main risks identified during software development and risk analysis is used to manage risk effectively according to its severity and priority. One way to manage and control risk is by identifying risks associated with suppliers using multi criteria selection method.

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