Understanding the Process of Backsourcing: Two Cases of Process and Product Backsourcing in Europe

Abstract

Backsourcing, defined generally as bringing services outsourced to a third party back in-house, is now a growing phenomenon. The decision to backsource has several significant implications for an organization, as it requires the organization to manage organizational change, reintegrate knowledge, and develop new capabilities and competences. Taking into account there is very limited empirical evidence of how to successfully accomplish the backsourcing process, two case studies included in this teaching case offer additional insight into the process of backsourcing. To prepare students for case analysis, this teaching case starts by describing the backsourcing phenomenon, followed by an overview of the backsourcing trend, and includes a brief review of the relevant literature that mainly focuses on backsourcing decisions and touches on critical success factors for implementing a backsourcing initiative. This is followed by two case studies that describe two essentially different examples of backsourcing. The first case study (MediaCorp) deals with the example of backsourcing IT hosting services, which is considered a business process, whereas the second case study (ITServCorp) talks about bringing an IT product development back in-house. However, regardless of the nature of the backsourced activity, analysis of these two cases allows deeper understanding of the process through which the backsourcing initiative has been implemented. Therefore, while each case can be used separately to analyze different aspects of backsourcing, they also can be analyzed in a comparative manner to better understand the process of backsourcing.