Today, hardly any organisation is able to function without service providers such as suppliers or outsourcing providers. When organisational units depend on service providers, failures of outsourced services may impair the ability of the organisation to perform its tasks. The partial or full failure of an outsourcing service provider or a supplier may have a major effect on business continuity, and especially on critical business processes. There are various different causes for these failures, such as bankruptcy, unilateral termination of the contract by the service provider or supplier, operational problems such as forces of nature or a shortage of personnel. Problems may also occur if the services rendered by the service provider do not meet the quality requirements of the customer.

It must also be noted that service providers also often use subcontractors in order to be able to provide the customer with their services. Malfunctions, defects in the quality and failures on the part of the subcontractors may therefore also indirectly result in impairments at the customer.

Failures of IT systems at the service provider or of the communication links to the service provider may also cause impairments of the customer's business processes.

Retrieval of outsourced processes, if necessary, may be very difficult, for example since the outsourced processes are not documented adequately or because the previous service provider does not support the return of the processes into organisation's own infrastructure.

Examples:

• One company installed its server in the computer centre of an external service provider. After a fire in this computer centre, the financial department of the company was unable to function. This resulted in significant financial losses to the company.
• The just-in-time production of a company was dependent on timely deliveries of supplies and materials by an external service provider. After one of the service provider's vans malfunctioned, the delivery of urgently needed parts was drastically delayed. Thus, it was not possible to supply a number of customers in a timely manner.
• A bank contracted a cash-in-transit company for all cash transports. The cash-in-transit company then unexpectedly declared bankruptcy. The contract negotiations and route planning with the new transportation company took several days. As a consequence, this led to serious problems and long delays in the transportation of cash to and from the branch offices of the bank.

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