Which of the Following Is a Risk of Outsourcing Information

question 9

Multiple Choice

Which of the following is a risk of outsourcing information systems?

• A) Vendors can gain access to critical knowledge of the outsourcing company.
• B) Vendors are not subject to a contractual agreement with the outsourcing company.
• C) The long-term costs of information systems are outweighed by their benefits.
• D) Organizations opting for outsourcing cannot gain economies of scale.

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Definitions:

Equity

Equity represents an owner's share in the assets of a company, remaining after deducting liabilities.

Debt

Debt is an amount of money borrowed by one party from another, under the condition that it is to be repaid at a later date, usually with interest.

Restrictive Covenants

Provisions in a contract or bond agreement that limit certain actions of the borrower, to protect the interests of the lender.

Corporate Taxes

Taxes imposed on the income or profit of corporations by the government.