IT outsourcing risks and how to mitigate them

If your organisation wants the benefits of IT outsourcing but is concerned about risks, read on. In this post we explore the key IT outsourcing risks and how to mitigate them.

Let’s first look at the key risks outsourcing IT can present:

Operational risks – where if something goes wrong with IT outsourcing a transaction or operational process is impacted. For example an order isn’t dispatched or a customer can’t complete a transaction.

Data security risks – giving a 3rd party access to your organisation’s IT infrastructure has inherent risks. Any additional users increases the risk of a data breach, particularly when accessing systems remotely.

Compliance risks – data security risks go hand-in-hand with compliance risks. All organisations need to comply with data protection regulations like GDPR but some organisation have additional compliance requirements.

Business continuity risks – what happens if the IT service provider is affected by an incident such as a power outage, natural disaster, fire or flood? Their business continuity and disaster recovery plans will have a knock on effect on your organisation.

Reputational damage – if the service your organisation receives from an IT service provider falls short it can damage your organisation’s reputation, particularly if they have a customer-facing role such as providing technical support to your customers.

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How to mitigate these IT outsourcing risks

Planning is the key to militating against any security risk. When outsourcing to a new IT service provider, start the process early to ensure you don’t overlook any detail that could exposure your organisation to unnecessary risk.

The following steps can help:

Conduct a risk assessment. Assess the IT service required against each risk and the business impact if something goes wrong. From this assessment you’ll be able to identify the most critical factors and carry out appropriate due diligence.

Understand the processes the IT outsource provider uses. Due diligence should include a thorough understanding of all the processes employed and how these impact on your organisation. A site visit is highly recommended, although not always feasible if you’re exploring outsourcing to an offshore IT service provider.

Explore how resilient the IT provider’s business is. Get a clear idea of how the provider’s business continuity and disaster recovery processes protect their customers and what processes are in place to minimise disruption to other businesses. Also explore the company’s financial resilience and business plans, if they go under or sell to another company how does that affect your organisation?

Test different risk scenarios with the provider. Just as you would test your business continuity plans internally with key members of staff, test different risk scenarios with the IT service provider. This will help you identify any factors that leave your business vulnerable.

Get guarantees and ask providers to sign up to your standards. Most IT service providers will have quality standards certifications like ISO 27001 for information security. They may also have developed their own standards and processes, aligning them with their customers’ requirements. If not, ask them to sign up to your standards, such as the way they vet staff and handle staff leaving their employment. You can also ask for guarantees that they have the right physical and virtual security protection and processes in place.

Don’t let the security risks associated with IT outsourcing put you off this model! With the right preparation and the right provider you can get all the benefits while mitigating the risks.

For more advice on IT outsourcing please get in touch for an informal chat about your requirements.

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