Information Systems Backsourcing: Correcting Problems and Responding to Opportunities

Abstract

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 that were previously outsourced to one or more outside IS providers. Backsourcing often represents a response to the problems with the Outsourcing arrangement as well as to new opportunities 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 as well as environmental changes such as mergers, acquisitions and divestitures. This article provides insights into reasons for backsourcing, possible responses to the problems and opportunities associated with it, and offers suggestions for managing a smooth transition to in-house operations.

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