Governance of Enterprise IT (CGEIT) Certification Practice Exam

What is a primary concern for management during the Operate phase if an outsourcing deal is failing?

1. High costs of corrective action

2. Difficulty in finding new suppliers

3. Employee dissatisfaction

4. Market competition

The correct answer is: High costs of corrective action

The primary concern for management during the Operate phase when an outsourcing deal is failing is the high costs of corrective action. When an outsourcing relationship is not performing as expected, managing costs becomes crucial. This includes potential expenses related to resolving issues, such as additional oversight, implementing changes, or transitioning back to in-house operations. These corrective actions can come with significant financial implications, as resources may need to be diverted to address the failure, and fixing problems can be resource-intensive and costly. In contrast, the other factors, while important, may not directly highlight the immediate financial impact associated with a failing outsourcing arrangement. Difficulty in finding new suppliers may pose a long-term challenge but doesn't necessarily address the pressing costs incurred during a failed operation. Employee dissatisfaction can be a symptom of an outsourcing failure but is typically a longer-term cultural issue rather than an immediate financial concern. Market competition is a constant factor in business strategy, but it does not relate directly to the specific financial drawbacks of a failing outsourcing deal. Overall, focusing on the costs associated with corrective actions is essential for management to navigate the immediate fallout of such failures.