The Impact of Digital Technologies on IT Sourcing Strategies in the German Automotive Industry

Abstract

For decades, the German automotive industry has benefitted from a process of IT-enabled transformation with the ongoing deployment of state-of-the-art IT. Despite the high relevance of IT for innovation and process efficiency, the industry has outsourced up to 80% of the IT budget to external IT providers as IT has generally not been seen as a core competence. In recent years, the phenomenon of digital transformation has emerged, along with the consequent disruptive impacts associated with digital technology deployment. One area of significance in the corporate environment is the current and potential impact of digital transformation on future IT sourcing strategies. Through an analysis of existing literature and a series of in-depth interviews with industry experts, the chapter examines how and why the German automotive industry is reviewing IT sourcing strategies in response to the anticipated implications of digital transformation. A change in the ratio between outsourcing and insourcing has a significant impact on in-house employment and third-party business operations.