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This case describes the design and implementation of an IT-multi-sourcing strategy at a large global sportswear company, the adidas Group, which is headquartered in Germany. To help increase the benefits and reduce the risks of its sourcing arrangements, adidas carefully selected two tier-2 vendors to work with its primary tier-1 vendor, a large Indian outsourcing firm that it had worked with closely for over a decade. The management of the multi-sourcing arrangement is posing a number of challenges. The Chief Information Officer is considering a number of options to ensure the continued success of the multi-sourcing strategy, including restructuring the IT group, developing the skills of its staff, and starting a captive center.

Information systems (IS) backsourcing is a business practice in which a company takes back in-house assets, activities, and skills that are part of its information systems operations that were previously outsourced to one or more outside IS providers. Backsourcing often represents a response to the problems with the outsourcing arrangement as well as to new opportunities generated by internal or environmental changes in the business situation. The problems are manifested in escalating costs, poor service quality, loss of control over outsourced activities, and a know-how mismatch on the part of the provider. Opportunities arise from internal organizational changes such as new executives and redefinition of the role of IS as well as environmental changes such as mergers, acquisitions, and divestitures. This article provides insights into reasons for backsourcing, possible responses to the problems and opportunities associated with it, and offers suggestions for managing a smooth transition to in-house operations.

The conventional wisdom is that companies should never outsource core functions. This study of 34 large companies that outsourced for at least two years demonstrates that outsourcing can be successful even when information systems are viewed as core functions. However, outsourcing negotiations must reflect the role of the company performing the outsourced functions and the nature of the outsourced work. A critical key to success in outsourcing arrangements lies in having tight contracts, even when the outsourcing vendor is viewed as a strategic partner or the IS function is considered to be core. This article offers prescriptions for writing contracts and creating balanced arrangements to enhance outsourcing success.