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Across different industries, companies are intensifying their digital transformation activities to increase their readiness for future, often technology-driven trends (Columbus, 2018). For example, the large conglomerate General Electric (GE) which struggled with legacy information technology (IT) systems, reliance on manual IT processes, and a largely outsourced IT support decided to transform the organization by employing state-of-the art technology to improve employee experience, create costs efficiencies and increase automation (Florentine, 2019). As part of their initiative, GE also increased internal IT resources and decreased the dependence from external IT vendors (Florentine, 2019). For a long period of time, companies mostly followed an outsourcing approach to satisfy their need for IT services at the lowest possible costs (Han & Mithas, 2013). However, results from a recent survey with nearly 4,000 IT leaders by the consulting companies HarveyNash and KPMG (2018) show that the intention behind IT outsourcing has shifted lately from saving costs to providing access to skills which are not available in house. Moreover, companies are more and more considering to not further increase outsourcing spend and rather retain or bring back technology in-house (HarveyNash & KPMG, 2018). These recent examples demonstrate that the IT sourcing market is changing fundamentally compared to previous periods in which companies largely focused on the cost aspect when deciding for IT outsourcing (Han & Mithas, 2013). Or, as Claudine Ogilvie, CIO of the Australian-based Jetstar Airways states: “Multi-year IT projects that also take years to deliver any value are dead” (HarveyNash & KPMG, 2018).
Consequently, companies which are aiming to digitally transform their organization are also adjusting their IT sourcing strategies, for example by adopting a multi-sourcing approach with a larger number of smaller but highly specialized vendors (Könning, Westner, & Strahringer, 2018), by increasing the application of cloud-based solutions (Hentschel, Leyh, & Baumhauer, 2019) and also by terminating or not renewing existing IT outsourcing contracts with the intention to perform the services in scope internally (Thakur-Wernz, 2019). The latter option is called backsourcing and describes either a situation where previously outsourced services are completely performed internally, or as an intermediate step towards readjusting the IT sourcing strategy of a company (Bary & Westner, 2018). For example, after the termination of a contract, all affected services could be brought back. Then, some services could be re-outsourced afterwards, e.g., based on their strategic importance or general guidelines defined in an overarching digital transformation initiative at the company. A backsourcing decision can be caused, for example, by unsatisfactory service quality, higher than expected costs or a bad relationship with the vendor (Bary & Westner, 2018). An additional reason for a change in the sourcing strategy and a potential backsourcing decision could be a change at the CIO position, for example due to the new CIO's previous experiences and thus his or her preferences (Barney, Moe, Low, & Aurum, 2009; McLaughlin & Peppard, 2006). A participant of a recent survey conducted by the authors states the motivation for backsourcing as follows: