Offshoring decision based on a framework for risk identification

Abstract

Offshoring has been a growing practice in the last decade. This involves transferring or sharing management control of a business process (BP) to a supplier in a different country. Offshoring implicates information exchange, coordination and trust between the overseas supplier and the company that means to assume risk. In this paper categories and types of risk have been hierarchically classified using a new approach with the aim to propose a multilevel reference model for Supply Chain Risk evaluation. This classification has been used to analysis the offshoring decision taking into account not only operational and financial risks but other aspects as strategic, compliance, reputation and environmental. The proper risk identification can help to take the correct decision whether or not to bet on offshoring or maintain all the processes in the country of origin. © IFIP International Federation for Information Processing 2013.