The risks of business process outsourcing: a two-fold assessment in the German banking industry
International Journal of Electronic Finance
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An outsourcing engagement is usually a long lasting and complex transaction which bears a considerable amount of risk. A well recognized way to mitigate the risk arising from the shift of responsibilities between outsourcer and service provider is the constitution of a joint governance structure. Although the need for governance has long been acknowledged in practice and academia, papers discussing an actual governance model are scarce. This work describes the governance model as deployed by one of the largest outsourcing service providers worldwide. The fundamental need for governance principles and strategic directions are discussed, as well as the necessary organizational structures, joint processes and relationship management functions. This paper offers insights into the practical answers to theoretically and empirically derived challenges and aims to foster discussions amongst scholars and practitioners on the important topic how to effectively govern an outsourcing relationship.