Risk evaluation of information technology outsourcing project: An integrated approach considering risk interactions and hierarchies

Abstract

Effective risk evaluation is necessary to guarantee the successful completion of an IT outsourcing (ITO) process. However, previous methods of ITO risk assessment omit the interrelationships between the risk factors and ignore the vagueness of the evaluations. Additionally, most of the approaches fail to show the complex interactions among the risk factors with an intuitive and clear structure diagram. Thus, a new method for ITO risk assessment and visualization is developed in this paper. The proposed method integrates the advantages of improved decision-making and trial evaluation laboratories (DEMATEL) method, to incorporate the vagueness of the evaluations flexibly and evaluate the interactions and internal strengths of risk factors, and the merits of interpretative structural modeling (ISM), to clarify the risk factor structure. To illustrate the practicality and validity of this approach, an ITO case study of a mineral company is used in the implementation section to demonstrate the method.