Quantifying the Risk of Intellectual Property Loss in Analytics Outsourcing

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The safety of a company's secrets and proprietary competitive practices becomes an important concern when the company is involved in outsourcing. This concern becomes even more critical when the company is engaged in analytics outsourcing where the company shares proprietary data about the internal processes. While there is a growing concern about the larger costs and risks of the wholesale outsourcing of analytics functions in the business press, there are no statistics on the risks or a sense of how big they might be. This paper attempts to fill this gap by building a mathematical model of the vendor-client interaction that will allow some baseline quantification of the risks that are inherent in analytics outsourcing. The paper also discusses the implications of these ideas for companies that work with outsourcing vendors and closes with some ideas for further research.



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