Internal markets as a sourcing option for the delivery of IS services: improving outsourcing and insourcing

Abstract

The delivery of IS services is very resource consuming in all organizations. In an era in which management optimization is one of the bases for competitive advantage, sourcing options must be judged carefully. Traditionally, the dilemma has been considered in terms of make (insourcing) or buy (outsourcing). But both of these options have shown a certain amount of problems. Although outsourcing has allowed firms to concentrate on their core competencies, it has also shown several issues that prove it is not a panacea. Insourcing, on the other hand, does not allow a great deal of flexibility and we also find that it is every time more frequent that firms do not want their amount of staff to grow. Between both options, the internal mechanism has arisen. Its use entitles the creation of an intermediate society between the organization and the market. This article shows two cases of organizations from different environments in which the sourcing process involved the creation of an intermediate organization to act as the described buffering mechanism. Both processes were related to the IS/ICT function, one in Spain and another one in Italy. The study of the two cases has helped us identify and confirm empirically a number of features achieved by this internal mechanism use.