Abstract
Understanding and addressing risks are fundamental to partnership success in offshore IT outsourcing. This paper develops and demonstrates a fuzzy risk assessment framework to effectively assess risk for a client as well as a service provider prior to entering into a formal contract. The sources of risk in IT outsourcing were extracted based on industry survey and prior research. A fuzzy inference engine which embeds human expert knowledge expressed through natural language gives a superior capability to this approach. The case of offshore software development simulated using the fuzzy framework showed that this method could capture imprecise perceptions about risk factors and quantify them effectively. It also showed that human knowledge embedded as intelligence could effectively map and quantify sources of risk into different categories. This assessment could enable objective comparison of different projects and informed design of contracts and thus lead to partnership success in outsourcing.
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