Final answer:
Backshoring is when a company reverses the process of Offshoring by bringing IS capabilities that were previously outsourced back in-house. It can be a strategic decision influenced by several factors including cost, quality control, and logistics. 'Backshoring' is the correct term to describe this process.
Step-by-step explanation:
When a company brings Information Systems (IS) capabilities that were previously outsourced back in-house, this process is known as backshoring. Backshoring is a response to various factors such as the need for greater control over quality and intellectual property, rising costs abroad, or dissatisfaction with the services provided by the outsourcers. Companies may engage in backshoring as part of a strategy to reintegrate critical competencies and protect competitive advantages.
Outsourcing is the process by which a company hires outside contractors to perform tasks that were once performed internally. On the other hand, offshoring is when a company moves some of its operations to foreign locations to take advantage of cheaper labor markets or other efficiencies. When these companies decide to bring these operations back to their original country, this reverse of offshoring is termed backshoring. The backshored operations are typically reinstated within the company to regain management control and reduce dependency on external service providers.
The decision to backshore can be a strategic move influenced by a range of factors, including rising labor costs in previously cheap markets, changes in exchange rates that make offshoring less economical, logistical challenges, poor service quality from the outsource provider, or the realization of the strategic importance of certain processes. It might also be driven by consumer preferences for products and services that are 'made at home' as well as tariff and trade considerations. Simply put, backshoring can be part of a company's measures to enhance operational efficiency and customer satisfaction.