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00 (2017) 000–000
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Available online at www.sciencedirect.com
Procedia Computer Science 00 (2017) 000–000
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ScienceDirect
CENTERIS - International Conference on ENTERprise Information Systems / ProjMAN -
Procedia Computer Science 121 (2017) 716–723
International Conference on Project MANagement / HCist - International Conference on Health
and Social Care Information Systems and Technologies, CENTERIS / ProjMAN / HCist 2017, 8-10
November 2017, Barcelona, Spain
CENTERIS - International Conference on ENTERprise Information Systems / ProjMAN -
International Conference on Project MANagement / HCist - International Conference on Health
Sourcing
and Social Trends
Care Information Predictions
Systems – An CENTERIS
and Technologies, Analysis/ of Regions
ProjMAN and
/ HCist 2017, 8-10
NovemberStrategies
2017, Barcelona, Spain

Sourcing Trends Predictions

Björn Johansson*, Oskar Hallén, – An Analysis
Andreas Persson, Rasmus of Regions Tarlandand
Strategies
Department of Informatics, School of Economics and Management, Lund University, Ole Römersväg 6, Lund SE-223 63, Sweden

Abstract Björn Johansson*, Oskar Hallén, Andreas Persson, Rasmus Tarland

Department of Informatics, School of Economics and Management, Lund University, Ole Römersväg 6, Lund SE-223 63, Sweden
This paper aims to highlight historical trends regarding information systems (IS) sourcing, as well as glimpsing into the subject’s
future. Depending on economic growth, industrialization and changes in the political climate, certain countries have become either
less or more attractive as destination countries for IS sourcing. As outsourcing strategies becomes more mature, especially in the
Abstract
IS sector, organizations are choosing different paths and regions for their endeavours. In the recent years the trend in IS sourcing
has
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operations closer to
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trends and nearshoring has been
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systems optionas
(IS) sourcing, of well
choice
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glimpsing post
into the subject’s
termination of their offshore ventures. Regarding sourcing trends will we most likely see an increase of a multisourcing
future. Depending on economic growth, industrialization and changes in the political climate, certain countries have become either strategy
which
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countries for ISincluding
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As outsourcing for interdependent
becomes moreservices. In reality
mature, this means
especially in the
that organizations will be using a strategy that combines outsourcing, insourcing, offshoring, nearshoring and cloud
IS sector, organizations are choosing different paths and regions for their endeavours. In the recent years the trend in IS sourcing services such
as software as a service, and that implies that multisourcing and how to configure the multisourcing option will
has been to move IT operations closer to home and nearshoring has been the strategy option of choice for many organizations post be a crucial task
for many organizations in the near future.
termination of their offshore ventures. Regarding sourcing trends will we most likely see an increase of a multisourcing strategy
© 2017could
which The Authors. Published
be labelled by Elsevier
as outsourcing as a B.V.
service, including multiple vendors for interdependent services. In reality this means
Peer-review under responsibility of the scientific
that organizations will be using a strategy that combinescommittee of the CENTERIS
outsourcing, - International
insourcing, Conference and
offshoring, nearshoring on ENTERprise
cloud services such
Information Systems / ProjMAN - International Conference on Project MANagement / HCist - International
as software as a service, and that implies that multisourcing and how to configure the multisourcing option will Conference on task
be a crucial
Health and Social Care Information
for many organizations in the near future.Systems and Technologies.
© 2017 The Authors. Published by Elsevier B.V.
© 2017 The Authors.
Peer-review Published by
under responsibility of Elsevier B.V. committee of the CENTERIS - International Conference on ENTERprise
the scientific
Peer-review under responsibility of the scientific committee of the CENTERIS - International Conference on ENTERprise
Information Systems / ProjMAN - International Conference on Project MANagement / HCist - International Conference on
Information Systems / ProjMAN - International Conference on Project MANagement / HCist - International Conference on
Health
Health and
and Social
Social Care
Care Information
Information Systems
Systems and
and Technologies.
Technologies.

* Corresponding author. Tel.: +46 046 222 80 21; fax: +46 46 222 45 28.
E-mail address: bjorn.johansson@ics.lu.se

1877-0509 © 2017 The Authors. Published by Elsevier B.V.

Peer-review under responsibility of the scientific committee of the CENTERIS - International Conference on ENTERprise Information Systems /
* Corresponding
ProjMAN author.Conference
- International Tel.: +46 046 222 80 MANagement
on Project 21; fax: +46 46/ 222 45-28.
HCist International Conference on Health and Social Care Information Systems
E-mail address:
and Technologies. bjorn.johansson@ics.lu.se

1877-0509 © 2017 The Authors. Published by Elsevier B.V.

Peer-review under responsibility of the scientific committee of the CENTERIS - International Conference on ENTERprise Information Systems /
ProjMAN - International Conference on Project MANagement / HCist - International Conference on Health and Social Care Information Systems
and Technologies.

1877-0509 © 2017 The Authors. Published by Elsevier B.V.

Peer-review under responsibility of the scientific committee of the CENTERIS - International Conference on ENTERprise Information
Systems / ProjMAN - International Conference on Project MANagement / HCist - International Conference on Health and Social
Care Information Systems and Technologies.
10.1016/j.procs.2017.11.093
 Björn Johansson et al. / Procedia Computer Science 121 (2017) 716–723 717
2 Author name / Procedia Computer Science 00 (2017) 000–000

Keywords: Sourcing; global sourcing; sourcing trends; sourcing strategy; information system sourcing.

1. Introduction

After the emergence of IT outsourcing post Kodak’s venture with IBM in 1989 an ever longing search for markets
suitable for outsourcing knowledge work started [1]. In the early 2000’s, Brazil, Russia, India and China (BRIC
countries) seemed to be the leaders in the race for high skill and low wage workers in both information technology
outsourcing (ITO) and business process outsourcing (BPO) [2]. However, the further we have moved into the 21th
century these BRIC countries began to have problems with keeping wages down [3] with a new emerging middle
class that demanded a better living for themselves. With cost saving being one of the primary forces for outsourcing
operations to lower wage countries in response to this the outsourcing industry has been witnessing an increased
amount of backsourcing or choosing options closer to home such as nearshoring/onshoring or rural sourcing to gain
control with insignificant cost increase. Proposing a new target region has been an issue for the outsourcing industry:
Africa has been the target for Chinese outsourcing expansion, but this region will not suit all types of outsourcing.
Regions with high skill and low wage workers are few and far between. Further, regions that are categorized as low
wage countries often face civil, economic and political unrest from time to time. Hence these countries have been
deemed to have too many risk factors present for long term ITO outsourcing but are commonly exploited in BPO
outsourcing – most frequently in manufacturing outsourcing.
In the sourcing and outsourcing literature and publications it is common to see the authors making predictions not
only of the next region that will supposedly dominate in sourcing ventures but also which supposed sourcing strategy
organizations will use for the next years. In this paper we aim to explore publications ranging from the 1989 Kodak
case up until 2016 to find common trends that have held up over time in order to analyze and discuss reasons why
some predictions did not pan out as the authors intended or did not facilitate as trends in sourcing at all.
In the next section we provide definitions on some sourcing terms, followed by presenting the approach we had
doing the research which mainly was a study on literature aiming at identifying trends and predictions on next sourcing
trend. Section 3 present the results of the review on sourcing literature focusing on regions and strategies related to
sourcing trends. In section 4 we analyze and discuss our findings, which we then in the final section suggest some
concluding remarks on. In the final section we also suggest some directions for future research.

2. Sourcing definitions and research approach researching sourcing trends

Sourcing, when mentioned in mass media often refers to a specific type of sourcing – namely that of offshoring –
a word that often is used in a negative sense which in turn has led to sourcing having mainly negative connotations.
The word sourcing is a catch-all word which encapsulates multiple sub phenomena or models; each is different from
the last while keeping a common denominator; sourcing always involves a client who employs a service over a specific
amount of time.
Lockström [4] defines sourcing as: “the process of searching, selecting and managing suppliers as a means for
securing a continuous supply of factor inputs for the value creation mechanism.” When defining sourcing, one might
use a definition in line with the above quote in order to encapsulate all the areas that can be sourced by an organization.
In order to avoid further confusion, we shortly present definitions of some relevant subcategories below:
Domestic outsourcing: A client company ‘A’ contracts a vendor company ‘B’ who is located in the same nation as
the client in order to provide A with a specific service over a specific time frame, for a specific cost, all defined in the
contract written between A and B [5].
Offshore outsourcing: Similar to the above scenario. In this model, however, the vendor organization is located in
another country in reference to the client organization.
Domestic insourcing: An organization relocates manpower to a specific unit within the organization (intermurally)
in order to develop or provide the organization with a certain service over a specific time frame.
Backsourcing: Relocating a previously outsourced service or function back from the vendor organization to the
client organization.
Multisourcing: One client organization sourcing functions to multiple vendor organizations.
 Author name / Procedia Computer Science 00 (2017) 000–000 3
718 Björn Johansson et al. / Procedia Computer Science 121 (2017) 716–723

This research builds mainly on a study of literature found by using the university’s search engine, which includes
a wide range of databases, such as AIS elibrary, EBSCOhost, ACM Digital Library, and many more as well as using
Google Scholar. When doing the search the aim was to identify articles that discuss ongoing trends but also made
predictions. Filtration of publications was done by using limiting parameters regarding publication year, and the year
of 1988 was chosen as a base value. This was done to narrow the search results and to get a more current perspective
on sourcing. This filtration also helped in searching for trends among sourcing strategies and regions regarding IT and
IS sourcing due to it not being a subject of importance before the late 1980’s. When searching for publications the
following keywords were used: Sourcing, global sourcing, trends, sourcing strategy, Kodak outsourcing, information
system sourcing, and Indian information system sourcing in different combinations. The results from the search were
then first analyzed from titles of publications and abstract. We also used both a forward and a backward approach from
interesting articles by looking into reference lists and what paper that has cited a specific publication.

3. Reviewing sourcing literature from trends

According to Willcocks and Lacity [8], Kodak was the first fortune 500 company that viewed its IT operations and
resources as a commodity which was more suitable to be handle by experts and professionals rather than doing it
internally in the organization. This is the primary reason why Kodak chose to outsource their IT operations and
resources to another organization. With this new perspective on IT as a commodity, IT lost its validity as a core
competence or a process that should be handled by the organization but rather by a skilled third party Willcocks and
Lacity [8]. With their outsourcing to IBM and other vendors in 1989, Kodak broke new ground and sparked a new
perspective that executives would have on IT assets; cost minimizing each area of IT [8].
One of the earlier mentions of global sourcing as a phenomenon was Arnold [6], where the phenomenon was
proposed to be a crucial component to any future strategy for increasing organizational competitiveness. Further,
Arnold [6] outlines what is required by an organization wanting to use global sourcing in their strategies. What Arnold
[6] implies when discussing the requirements for a global sourcing policy is that organizational structure and size has
large implications on the effectiveness of such a policy and that it is difficult for a smaller company to fully utilize
global sourcing and to expect gaining any competitive advantage should they employ the strategy.
In Quinn and Hilmer [7] the point of view of strategic outsourcing is brought up and the article seeks to provide
clarity on what an organization can afford to outsource without losing their competitive edge. What Quinn and Hilmer
[7] proposes as solution for this dilemma is that an organization should only keep what they call an organization’s core
competences internally. In defining core competences Quinn and Hilmer [7] advocates that only skills and knowledge
sets are the core competences in an organizations – not products or functions. The reasoning behind this is that
according to Quinn and Hilmer [7] knowledge-based activities generate most of the value in services and
manufacturing.
Already in 1996 a backlash towards the outsourcing trend was being seen in Earl [9] where questions regarding
viability of long term outsourcing of IT was brought to light. Further, Earl [9] proclaims that there was currently in
1996 a trend towards selective sourcing or what Earl [9] calls “smart” sourcing as an alternative sourcing strategy.
When it comes to the strategy in more formal terms Earl [9] means that insourcing IT operations is the best option for
most organizations if the IT operations are deemed to be sufficiently efficient. What Earl [9] highlights in this segment
is also that IT operation outsourcing is a diversion from other problems that organizations are facing and that the nature
of IT operations makes it more suitable for outsourcing than other activities in an organization. This adheres to the
pressure on management to increasingly cut costs and increase profit margins which Earl [9] points to being the
primary functions of any outsourcing deal.
As a result of when big organizations, who had invested in diverse business ventures, saw their profit margin
decrease in the 1970’s, the idea that companies should divest in business ventures not within their core competencies
started to take root in the early 1980’s. If a given function is not a core function, then it is a support function and by
outsourcing these functions, greater focus can be given to the organizations’ core functions. Examples of outsourcing
in the early 1980’s include IBM who outsourced the manufacturing of parts for their personal computer, which at first
gave them competitive advantages but later led to them being indistinguishable from the competition and thereby
losing huge market shares. Another example from the early 1980’s includes Hewlett Packard who outsourced some
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4 Author name / Procedia Computer Science 00 (2017) 000–000

manufacturing of parts for microwave equipment. Unlike IBM they maintained control of manufacturing key
components and could therefore maintain a leading market position. Seeing as IT is not perceived as a core activity by
many companies, even though it in some cases perhaps should, it has become an increasingly large outsourcing
business. In Lonsdale and Cox [10] article, "The historical development of outsourcing: the latest fad?", it is mentioned
that British Petroleum was in 1989 one of the first companies to outsource IT services and shared that as a result of
outsourcing IT, they managed to cut costs by more than a third from 360 million dollars to 132 million dollars in 1994.
In Carr’s [11] article “IT doesn’t matter”, Carr points out the fact that as the IT industry matured in the early 2000’s,
services, processing power and data storage became increasingly more affordable. Carr [11] further states that the
competitive advantages that IT had in the earlier decades are dwindling. The conclusion to Carr [11] article shaped the
IT industry for years to come: It is not important what kind of IT a company or organization possesses but rather what
they do with it that in turn creates value. Carr [11] might have been one of the catalyst in the search for large scale
cost savings endeavors especially regarding internal IT operations in multinational corporations in the years after the
publication of IT doesn’t matter.
Regarding what organizations should source in Gottfredson, Puryear and Phillips [12], the echo of Quinn and
Hilmer [7] research is heard. What Gottfredson, Puryear and Phillips [12] calls capability sourcing are an extension of
outsourcing where even operations and functions once deemed core competencies such as R&D, engineering,
manufacturing and marketing can be moved and handled by an external provider outside the organization and
Gottfredson, Puryear and Phillips [12] proclaims that it often should be handled that way. This is in accordance with
the recent development in outsourcing which has made outsourcing much more sophisticated than before. The
principles of capability sourcing in Gottfredson, Puryear and Phillips [12] is to question all parts of the value chain
and through analysis of activities determining which of the activities can and therefore should be outsourced. What is
also brought up in in Gottfredson, Puryear and Phillips [12] is that capability sourcing is also a tool for identifying
activities internally in the value chain that lacks capabilities but are deemed to be core to the integrity of the
organization and therefore should be sourced to further increase organizational capabilities. Hence Gottfredson,
Puryear and Phillips [12] strategy of capability sourcing is not primarily focused on cost saving but rather a
combination of increasing organizational capabilities and cutting capabilities in activities which are more than
sufficient currently in order to gain cost savings.
When it comes to bringing back outsourcing ventures in-house Whitten and Leidner [13] mention the famous case
of JP Morgan Chase & Co IT operation outsourcing to IBM in 2003-2004. A failure of that magnitude will shake any
industry to its core. Further, Whitten and Leidner [13] found that nearly one third of the IT executives surveyed had
been a part of outsourcing and later backsourced their application development. Furthermore, the reasons why
backsourcing occurred in many of the cases in Whitten and Leidner [13] seemed to have to do with how the
organization's perceived switching costs. The organizations that chose to backsource did not think that switching costs
associated with bringing back IT operation was significant [13].
In Oshri, Kotlarsky, Rottman and Willcocks [14], nearshoring is mentioned to be a strong trend in the global
sourcing market in the next coming years which is also proposed in Oshri, Kotlarsky and Willcocks [15]as the strongest
trend in global sourcing for the foreseeable future. Corporation and organization are seeking to gain control over their
outsourcing ventures in Asia, BRIC countries etc. and bringing them closer to home. Oshri, Kotlarsky, Rottman and
Willcocks [14] are discussing a region that is called the CEE region (Central Eastern Europe) as a middle ground
where many organizations will find a suitable vendor with the skills necessary to exploit high skill workers with lower
wages than their western European counterparts. The six factors that Oshri, Kotlarsky, Rottman and Willcocks [14]
states are the base criteria for selecting locations the CEE region further cements the thought of this region’s countries
as being a reliable option when it comes to transitioning from outsourcing offshore to nearshore sourcing, especially
for western European organizations. When these countries in the CEE region entered the European Union in the late
1990’s and early 2000’s several of the factors mentioned in Oshri, Kotlarsky, Rottman and Willcocks [14] became
less impactful as the region stabilized. Furthermore, the single market opportunities that the EU brought these countries
in term of easing of trade agreements and the overlapping of laws in commerce is mentioned as a reason for the rapid
movement towards outsourcing prospecting in this region by Oshri, Kotlarsky, Rottman and Willcocks [14].
Some of the problems facing the CEE region that are mentioned in Oshri, Kotlarsky, Rottman and Willcocks [14]
is that one of the six factors for selecting sourcing locations is cost. According to Oshri, Kotlarsky, Rottman and
Willcocks [14] the cost of living in the CEE region is steadily increasing at a significantly higher rate than in Western
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Author name / Procedia Computer Science 00 (2017) 000–000 5

Europe. Housing and property prices have gone up drastically, especially in Prague during the last couple of years,
which will impact the transactional cost for starting captive centers in the Czech Republic and will therefore increase
the prices for services in the region according to Oshri, Kotlarsky, Rottman and Willcocks [14].
A strong trend in the last few years has been for western European companies to outsource data centers and data
warehousing to the CEE countries, mainly due to the vast improvements that have been made to the region’s
infrastructure during the last few years. This combined with the emergence of the skills needed for handling those IT
operations locally in the region is a product of improved educational programs. Many organizations do not deem these
IT operations as crucial or core competences hence these operations are at the top of most cost saving strategies. Hewitt
[16] attributes shift towards Eastern Europe and the CEE countries when it comes to nearshoring to the higher grade
of innovation and what Hewitt [16] references as system creativity. Since Eastern Europe and CEE region cannot
compete on price they have to offer something equally valuable from the client perspective when seeking a new
location or chose another sourcing strategy. This is according to Hewitt [16] one explanation as to why there is a trend
of locating and sourcing from Eastern Europe and the CEE region.
Rather than dwelling on the concept of large and long-lasting end-to-end outsourcing deals, Multisourcing
arrangements have been the latest fad in sourcing [17]. The term multisourcing was coined in 2005 by Gartner analysts,
and the concept behind it involves a single client organization outsourcing part (or parts) of its value chain to multiple
vendor organizations [18]. In doing so, the client organization gains the advantages of both operational and strategic
risk reductions, while also reducing costs. According to Levina and Su [18], by committing to few strategic partners,
the client organization may result in new business opportunities and even new markets being left undiscovered. There
are tradeoffs in multisourcing, however; one of them being that trust may become an issue since the vendor-client
relationships may become lacking in nature: The effects of having multiple clients or vendors might undermine the
level of commitment within the relationships [18], thereby affecting the level of trust negatively. While there are
strategic and operational advantages to be made with multisourcing, transaction costs when attempting to coordinate
and manage multiple suppliers are also likely to increase [18].
In response to the article by Sharma [19] - “Indian IT outsourcing industry: Future threats and challenges”,
Bhattacharjee and Chakrabarti [20] reassess four areas of concern, namely; availability of quality manpower, capability
of the industry to move up the value-chain, value of the domestic Indian market and capability to adapt to disruptive
technologies in the future. The authors find Indian graduates to have sufficient proficiency of the English language
whilst overall quality of education is above average of the BRIC-countries and conclude that it is unlikely that there
will be a lack of quality manpower in the future. Regarding the Indian outsourcing industry’s ability to move up the
value chain the authors find that vendors are steadily moving up the value-chain of IT-services by offering products
and services encompassing the entire value-chain as well as an increase in the number of firms that perform product
development and an increasing number of patents filed by IT firms, the authors conclusion is that the Indian IT-
outsourcing industry is innovative enough to continue climbing the value-chain. Where concerns were raised by
Sharma that the Indian domestic market is underdeveloped Bhattacharjee and Chakrabarti finds that both the
complexity and value of the domestic market is steadily rising and is therefore a very promising market for increasing
profitability of the Indian IT-firms. The authors show that the Indian IT outsourcing industry historically has handled
disruptive technologies very well by adapting business models as well as product and service offerings, their
conclusion is that there is no reason to believe the future to be any different. All in all their conclusion is that the Indian
IT outsourcing industry is fit to face the future and there is no reason to be concerned [20].

4. Analysis and discussion

The willingness to offshore by companies especially in western Europe and the united states can perhaps be
attributed to technological advances in combination with the sudden influx of new low wage countries that were in
desperate need of foreign investments. These aspects combined with the three global financial crisis that have occurred
in less than 25 years (1987, 2000/2001 and 2009) have forced many companies to cut costs to survive which probably
further pushed organizations to innovate in terms of how and where they source [21].
When Kodak decided to outsource all of their IT operations and resources they did it in a time where IT was still a
means of gaining large competitive advantages. The perspective of deeming IT as a commodity is validated almost 15
years later by Carr [11], but perhaps it wasn’t really truly the case in 1989. During that time the PC revolution had not
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6 Author name / Procedia Computer Science 00 (2017) 000–000

yet taken place and processing power and data storage was still very expensive. However, when Carr wrote IT doesn’t
matter in 2003 it was in a post PC-revolution landscape. As information technology gets more mature and increasingly
less expensive it becomes more of a commodity, it was a bold position to take in 1989 by executives and as time passes
it seems that they were right.
Viewing IT as a commodity seems to have spread beyond Kodak and academia overall. In the 1990’s we see large
scale outsourcing ventures with the end goal of getting rid of expensive internal IT divisions to instead focus on core
competences and processes. These cost saving journeys that many organizations took with offshore outsourcing or
onshore outsourcing did not seem to pan out. The clearest case of this is JP Morgan Chase & Co that terminated a
contract with IBM after 18 months in 2004/2005 worth five billion USD.
Backsourcing and near-shoring seems to be closely related in terms of trends in both; type of decisions, their
characteristics and the time that they correlated. Having control over ITO might have been underestimated in the early
2000’s and then realized as core competence in the late 2000’s. Still, a lot of organizations choose offshore outsourcing
as strategy. Bringing the knowledge back will be increasingly difficult the longer they are outsourced and endeavors
in offshore outsourcing prolongs this timeline. It is definitely a fact that saving money in the short term damages
organizational capabilities in the long term [9].
Considering that backsourcing is often the result of a failed relationship and/or contract between clients and
vendors, the delicacy of the situation often leaves the true reason(s) for the failure hard to uncover [22]. Uncovering
the reason for failure is an uncertain task due to the negative implications and negative publicity that may be the result
for parties involved. Kotlarsky and Bognar [22] mention that few companies are honest with their justifications for
choosing to backsource. However, according to Kotlarsky and Bognar [22], contractual issues, changes in the external
environment, and opportunities made from organizational changes are three defining categories of reasons for
backsourcing. Issues concerning costs have previously been marked at the main reason for backsourcing. The cost
issues, however, can be categorized together with the contractual issues category.
What could be labeled as “the sourcing cycle” seems to be influenced by big companies making drastic changes of
strategies like the case with JP Morgan Chase terminating a 5 billion USD contract with IBM and choosing to
backsource all ITO in-house. When contracts are up for re-negotiation or terminated (typically 4-5 year cycle) changes
happen in the sourcing industry. Many publications, is based on data, surveys and interviews made shortly after
momentous event such as the JP Morgan Chase & co case or something of a similar magnitude has occurred. Making
predictions posthumously to a case like that is fairly easy and it will likely be validated later by others in the field once
another “sourcing cycle” has happened due to organizations being aware of their environment and what their
competitors are engaging in.
The strategies mentioned in the more recent works are of similar characteristics. A trend that is brought up in Oshri,
Kotlarsky and Willcocks [15] is that organizations are increasingly bringing IT operations nearshore or onshore for
U.S based organizations. One suggested reason for this is to regain control and limit cultural differences and other
risks that are involved in offshoring. Another likely reason is that wages, especially in India and China, are increasing
at faster rate due to both countries’ rapidly increasing productivity levels [23] in comparison to western Europe and
The United States where (male) wages have stagnated in the last few years [24]. Hence the transitional costs associated
with offshoring IT has become a burden for many organizations. What was once proposed costs savings are in fact
becoming cost increases. The transitional costs are also called “hidden costs” in the field of sourcing which has been
a focus in academia for quite some time [25]. These are probably now being felt by organizations when offshore
operations are reporting cost increases on the balance sheet with increased cost for captive centers, cost of hire, taxes
etc. This was not seen in earlier stages of offshoring and was once not deemed a threat is now becoming the primary
reasons for bringing operations away from especially Asia.
In the latter part of the 20th century a flurry of new countries emerged from the collapse of the Soviet Union and
the republic of Yugoslavia. These events spurred a massive increase in the number of possible low wage sourcing
opportunities available. This in combination with China opening up its economy to foreign investment, trade and
allowing of foreign controlled manufacturing have contributed to the globalization of sourcing in the last decades.
The success of the CEE region is probably been on the expense of outsourcing ventures in Asia made by western
European organizations and multinational corporations. What the CEE countries bring to the table when it comes to
sourcing from them is a deal they cannot refuse. Having locations for outsourcing closer to home within the European
union brings down the transitional cost for travel, communication and makes it in many cases unnecessary to make a
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Author name / Procedia Computer Science 00 (2017) 000–000 7

fully independent subsidiary in the country due to the trade and tax legislations of being a member state of the E.U.
Combine this with lower wages than Western European counterparts for services such as call centers, software
development, data centers, manufacturing etc. The CEE region has with all these aspects a complete package when it
comes to nearshoring and that is not including cultural similarities and language proficiency. However, Oshri,
Kotlarsky, Rottman and Willcocks [14] also mentions that there are some obstacles that this region will faces in the
near future, such as increases in living costs. According to Oshri, Kotlarsky, Rottman and Willcocks [14] pricing for
housing in Prague has increased at a drastic rate. For an economy to grow at a steady pace the wages of workers need
to increase at the same rate of the cost of living in addition to inflation. This phenomenon will probably happen in
other regions that are identified as suitable for outsourcing as well.
If this is true, these regions need to compete on other aspects other than costs. Some will push for innovation while
others will push for quality of service. Innovation is a tricky aspect to compete on due to the subjective nature of
innovation. It also needs education, capital and infrastructure at a higher than sufficient level to occur and to be
implemented. This is a double edged blade where you need education and infrastructure for innovation to facilitate but
this also comes at a cost. This is a challenge that will face not just the CEE region but many of the other regions that
it competes with. Finding equilibrium between innovational capabilities and cost competitiveness will be detrimental
for these regions in the future.

5. Conclusions

With the economic landscape settling in the recent years and while more countries are deemed as industrialized,
predicting the next booming region for sourcing is becoming increasingly difficult. Countries that have not
industrialized have risk factors associated with them such as political and economic instability, insufficient
infrastructure, lack of educated and skilled workers, climate and environmental factors. Locality of the original
organization will have an impact for which region will be trending in sourcing. The locations of choice will probably
not be the same for US based organizations as Western European based ones. Sourcing strategies trends seems to be
dependent on events that have happened in recent times. If a market leading actor in a specific industry makes sudden
and drastic changes the likelihood of other actors making changes to their strategies seems to go up when contracts
are reaching their ends.
Nearshoring, especially IT operations, rather than offshoring is a strategic trend we think will continue for the
foreseeable future due to the increasing wages in particular India and China which will deter some organization from
offshoring due to increased costs. Regarding regions for future prospected sourcing opportunities in IS/IT, these seem
to be strongly connected to the locations of the original organizations. For Western European organizations this might
be countries adjacent to the European Union but that are not member states such as Turkey, Albania and Serbia if the
nearshoring trend stands. This can be attributed to the rising cost of living in the CEE region and therefore at some
point wages must adjust to this change. Hence the countries in the CEE region will probably have difficulties
competing from a cost perspective. Therefore, organizations still focused on cost saving aspects of sourcing will
choose an option like countries that are adjacent to the EU for sourcing.
In this paper we did a historical investigation on literature with the aim of identifying predictions on trends and
strategies for sourcing. A follow up research of this by doing a retrospective case study on an organization that has
been doing business during the time period investigated would be very interesting. That would also provide insights
in how practitioners has dealt with and discussed the trends that we have discussed in the paper, and also from that we
could increase our knowledge on what the next region and strategy would be.
One avenue that not yet is explored a lot is the concept of multisourcing. What can be said is that this is something
that is of high interest at the moment and most likely will be even more interesting in the future. Most likely will we
see an increase in the adoption of a multisourcing strategy when organizations adopt this strategy which could be
labelled as outsourcing as a service, including multiple vendors for interdependent services. In reality this means that
organizations will be using a strategy that combines outsourcing, insourcing, offshoring, nearshoring and cloud
services such as software as a service, and that implies that multisourcing and how to configure the multisourcing
option will be crucial for many organizations in the near future.
 Björn Johansson et al. / Procedia Computer Science 121 (2017) 716–723 723
8 Author name / Procedia Computer Science 00 (2017) 000–000

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