Piracy, security breaches and intellectual property theft are some of the risks of outsourcing and off-shoring business functions, a Deloitte whitepaper has warned.
The worldwide information technology and business process outsourcing market is worth almost $500 billion, according to the global firm.
"Many outsourcing and off-shoring initiatives fail to live up to their potential or the expectations of the parties," Deloitte outsourcing advisory services leader Peter Lowes said.
"Even worse, a fair number of them fail outright, leading the company to either pull the operations back in house or to start anew in the search for a reliable, mutually beneficial partner.
"A risk intelligent approach can help organisations realise the expected benefits and improve relationships among constituents impacted by outsourcing/off-shoring."
A growing trend identified companies have greater reliance on offshore entities not just for specific projects and back-office functions, but for core business processes.
Risks identified included increased competition for global talent has contributing to shortages of qualified talent.
Volatile political environment in some popular offshore locations can hamper business, the paper warned.
Deloitte whitepaper "The Risk Intelligent Approach to Outsourcing" is available at www.deloitte.com/RiskIntelligence.
