Bringing IT Back: An Analysis of the Decision to Backsource or Switch Vendors

Whereas the decision to outsource information systems (IS) has been an important focus in IS research and practice, the decision to switch vendors or to backsource has received little attention. Evidence suggests that in practice, however, the decision to backsource or to switch vendors is becoming increasingly common as firms vie for ways to continue to cut information technology (IT) costs and improve IT service levels. This research specifically examines the factors associated with the decision to backsource or to switch vendors. Based on a sample of 160 IT managers involved with application development, we compare and contrast the perceptions of those who switched vendors, backsourced, or continued in an outsourcing relationship for application development. Our findings suggest that product quality, service quality, relationship quality, and switching costs are related to the decision to backsource application outsourcing. However, service and product quality did not influence the decision to switch vendors. Rather, firms that made the decision to switch vendors reported high levels of service and product quality but low levels of relationship quality and switching costs. Subject Areas: Backsourcing, Outsourcing, Product Quality, Relationship Quality, Service Quality, and Switching Costs.