Backsourcing of IT with focus on software development — A systematic literature review

Context: Backsourcing is the process of insourcing previously outsourced activities. Backsourcing can be a viable alternative when companies experience environmental or strategic changes, or challenges with outsourcing. While outsourcing and related processes have been extensively studied, few studies report experiences with backsourcing. Objectives: We summarize the results of the research literature on backsourcing of IT, with a focus on software development. By identifying practically relevant experience, we present findings that may help companies considering backsourcing. In addition, we identify gaps in the current research literature and point out areas for future work. Method: Our systematic literature review (SLR) started with a search for empirical studies on the backsourcing of IT. From each study, we identified the context in which backsourcing occurred, the factors leading to the decision, the backsourcing process, and the outcomes of backsourcing. We employed inductive coding to extract textual data from the papers and qualitative cross-case analysis to synthesize the evidence. Results: We identified 17 papers that reported 26 cases of backsourcing, six of which were related to software development. The cases came from a variety of contexts. The most common reasons for backsourcing were improving quality, reducing costs, and regaining control of outsourced activities. We model the backsourcing process as containing five sub-processes: change management, vendor relationship management, competence building, organizational build-up, and transfer of ownership. We identified 14 positive outcomes and nine negative outcomes of backsourcing. We also aggregated the evidence and detailed three relationships of potential use to companies considering backsourcing. Finally, we have highlighted the knowledge areas of software engineering associated with the backsourcing of software development. Conclusion: The backsourcing of IT is a complex process; its implementation depends on the prior outsourcing relationship and other contextual factors. Our systematic literature review contributes to a better understanding of this process by identifying its components and their relationships based on the peer-reviewed literature. Our results can serve as a motivation and baseline for further research on backsourcing and provide guidelines and process fragments from which practitioners can benefit when they engage in backsourcing.