Control of relational risk in offshore accounting and finance outsourcing: Case evidence from UK and India

Many companies in USA and Western Europe are taking advantage of developments in information technology and outsourcing parts of the accounting process to vendors in other parts of the world. Offshore outsourcing of accounting presents some unique risks, control problems and challenges. In this paper we focus on the control of relational risk, a form of risk concerned with the potential for an outsourcing partner's opportunistic behaviour. Drawing on multiple case studies of global outsourcing relationships involving India based vendors and clients in UK, this paper identifies relational risks and the controls adopted by vendors and clients. It is argued that the findings have more general implications for the management of offshore outsourcing of administrative functions.