Information Technology Outsourcing Risk: Trends in China
Technology is developing at a rapid pace, outstripping the rate of growth in population (which we hope is slowing down), the economy (which we hope is increasing at a controlled rate), and culture (which we want to speed up). Every year we see at least on
- PDF / 90,896 Bytes
- 14 Pages / 439.37 x 666.142 pts Page_size
- 1 Downloads / 184 Views
Information Technology Outsourcing Risk: Trends in China D. Wu, D.L. Olson, and D. Wu
Introduction Technology is developing at a rapid pace, outstripping the rate of growth in population (which we hope is slowing down), the economy (which we hope is increasing at a controlled rate), and culture (which we want to speed up). Every year we see at least one significant advance in computer speed and computer system storage capacity. Every year we purchase a new iPod, expecting it to be outdated in a year. Every year we expect last year’s cell phone to be an antique, and that Intel will build a faster chip, leading to a new generation of personal computers. This makes long term investment in technology problematic. It is hard to have a rational long-term business plan if the conditions concerning product availability are going to be completely revised. That is one of the factors of life that make the future interesting. We need to learn to keep up with new developments, which lead to new opportunities. It has always been the case that we need to adapt – but now we need to adapt much faster. The Committee of Sponsoring Organizations of the Treadway Committee (COSO) is an organization formed to improve financial reporting in the U.S. COSO decided enterprise risk management (ERM) was important for accurate financial reporting in 1999 (Levensohn, 2004).1 COSO emphasized in its ERM framework the importance of IT risk, involving treating IT risk as one of eight key steps. Outsourcing has evolved into a way for IT to gain cost savings to organizations. Outsourcing is attractive to many types of organizations. Outsourced IT work from corporate America over the past 5 years has grown from $5.5 billion to over $17.6 billion. Currently India has 80% of this lucrative market.2 However, according to the 2005 CIO Insight Outsourcing Survey, China is beginning to offer compelling advantages over India since India’s original cost benefits are reaching wage and capacity limits.3
Information Systems Risk Risks in information systems can be viewed from two perspectives. There is a need for information technology security, in the sense that the system function properly when faced by threats from physical (flood, fire, etc.), intrusion (hackers and other malicious D.L. Olson, D. Wu (eds.) New Frontiers in Enterprise Risk Management, © Springer-Verlag Berlin Heidelberg 2008
223
224
D. Wu et al.
invasions), or function (inaccurate data, reporting systems not providing required information to management and/or operations). Physical security is usually dealt with by one group of people, while IT personnel are usually responsible for risks involving intrusion or function. Anderson called for converging IT and physical security under the direction of a single strategic leader, allowing focus on organizational business objectives.4 He suggested focus on each organization’s unique characteristics considering company size, industry regulations, liability, technical complexity, culture, and risk tolerance. Convergence of physical and IT securit
Data Loading...
