Application systems outsourcing is an important part of IT outsourcing services. Application systems outsourcing costs is determined by service levels of outsourcers. Recent researches show there is a strong need to build industry-specific cost estimation models. In this study, an industry-specific application systems operation cost estimation model is suggested. We reviewed operation cost models of previous researches, and proposed a cost estimation model for security industry. Industry-specific service factors are defined and service levels are determined by Interviews with experts. The proposed model is tested and adjusted with empirical data. The new model shows more accurate prediction than previous general models. Future research will be needed to develop outsourcing cost estimation models for other industries and to refine cost models developed in this study.
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