Outsourcing has been used by companies across various industries for many decades as a key business strategy (Ghodeswar and Vaidyanathan, 2008). Harmancioglu (2009) argues that several successful companies depend on outsourcing to remain responsive to market changes and to expand their operations globally. He further stated that outsourcing has been perceived and used primarily to reduce costs, however recently it has become a prevalent and essential tool for gaining competitive advantage. There are various reasons that lead companies to outsource some of their functions, including: cost reduction, entry into new markets and concentration on core activities (Ghodeswar and Vaidyanathan, 2008). Wright (2004) mentions a number of functions that a company can outsource, including: human resources, customer service and information technology functions. Despite the growing concern in outsourcing relationships, there are also growing indications of failure in its organization (Langfield-Smith and Smith 2003). Lee et al (2011) argue that due to the recent emphasis on risk management in the supply chain, companies are identifying the importance of including risk measures in outsourcing decisions. Outsourcing is exposed to a high level of risks as it involves discretion and relationships with third parties (Auzair et al, 2013). After consulting various articles on the topic, the author will provide a brief definition of what outsourcing is and the types of activities that companies procure outside the confines of their company. The author will also talk about the risks faced by both the client and the service provider in case of outsourcing and will also talk about the control measures of... half of the paper... on outsourcing. According to Rothaermel et al., (2006) as cited in Broedner et al, (2009), companies that follow a carefully balanced strategy of simultaneously practicing vertical integration and strategic outsourcing when managing innovation improve product portfolio of a company and the success of the product, and therefore increases the company's competitive advantage and overall performance (Rothaermel et al., 2006). Risks in Outsourcing Relationships There are high levels of risks in outsourcing as confidentiality and the relationship with third parties are involved. (Auzair et al, 2013). Das Aundhe and Mathew (2009) argue that when an outsourcing contract fails, both the customer and the server provider are affected. They also state that outsourcing contracts are planned based on certain rules and therefore carry inherent risks due to a limited understanding of the future.