Information Systems Backsourcing: Correcting Problems and Responding to Opportunities

by Carol Saunders, Natasha Veltri, C. Kavan

Fall 2008

Volume 51
Issue 1

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Based on published reports of backsourcing and the authors' own research, this paper examines the reasons for backsourcing. Information systems (IS) backsourcing is a business practice in which a company takes back in-house assets, activities, and skills that are part of its information systems operations and that were previously outsourced to one or more outside IS providers. The findings suggest that backsourcing can stem from problems with the outsourcing arrangement and opportunities that are generated by internal or environmental changes in the business situation. The problems are manifested in escalating costs, poor service quality, loss of control over outsourced activities and a know-how mismatch on the part of the provider. Opportunities arise from internal organizational changes such as new executives and redefinition of the role of IS. Opportunities are also created by environmental changes such as mergers, acquisitions and divestitures. The study provides insights into reasons for backsourcing, possible responses to problems and opportunities, suggestions for smooth transition in-house and future research.

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