Abstract
This paper examines the decision to backsource IT functions. Even though outsourcing is a popular means of meeting internal IT needs, press reports suggest that backsourcing is becoming increasingly common. When organizations implement a backsourcing strategy, they incur high rebuilding fees and expensive contract termination fees. Reverting back to the once abandoned strategy also reflects negatively on the organizations’ previous strategic decision and judgment. Still, many organizations choose to undertake the challenge of internalizing the once-outsourced functions. An interesting question, therefore, is what factors drive organizations towards backsourcing. Based on press reports of actual backsourcing cases, factors that lead to backsourcing decision were identified. Just as outsourcing decision, organizations choose backsourcing to capitalize on strategic opportunities. Organizations also backsource due to internal power and politics interplay and the failure of outsourcing contract in meeting expectation. Changes in vendor organization and vendor strategy may also trigger backsourcing decision.