Does the Outsourcing transaction increase the risk to the buyer of outsourced services?
Generally, outsourcing as an action reduces the overall risk inherent in performing the activities in scope. The rationale is that in the self-provision scenario, all risks are retained by the prospective buyer organization. A well balanced outsourcing arrangement ensures that (1) some of the risks are transferred to the vendor, and (2) the risks associated with the vendor performing according to the contract or not are transferred to the vendor.
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