ANTECEDENTS OF INFORMATION SYSTEMS BACKSOURCING

This dissertation examines backsourcing of corporate IS activities, and why IS outsourcing clients decide to backsource. 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 IS operations and were previously outsourced to one or more outside information service suppliers. Focusing on economic, strategic and relationship motives, a number of theoretical backsourcing factors is derived from transaction cost theory, agency theory, core competency perspective, IOR theory and marketing channels literature. To identify factors salient in IS backsourcing and to examine the process of backsourcing this dissertation employs exploratory case study methodology. Six outsourcing contracts within three client companies are analyzed. The evidence is collected using semi-structured interviews, archival records and company documents. Results of individual cases are reported and then triangulated to single out the primary backsourcing antecedents. Qualitative comparative analysis is employed to augment the findings. The findings indicate that service quality of the outsourcing arrangement, cost benefit of backsourcing, change in the role of IS, loss of control over the outsourcing arrangement, changes in the management and power of decision makers and other organizations impact backsourcing decisions. Strategic considerations, change in the role of IS and loss of control, dominate backsourcing decision even if costs or service quality suggest otherwise. The executives exert power through their structural position within organization and have a major influence on decisions. Executives' beliefs, prior experience and values impact their perception of backsourcing and play a role in backsourcing decisions. Additionally, the power of other organizations involved in the interorganizational relationships with the client company is important. These organizations use political maneuvering to impose their goals on the client company. While service quality and cost considerations are important deliverables in the outsourcing contract, these factors by itself do not justify the decision to backsource.