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This paper explores information system insourcing in selected government agencies in Malaysia and discusses the challenges and barriers that have impeded its implementation. The paucity of similar projects and limited literature has resulted in this study that considers a post outsourcing context following the decision to insource a major Malaysian Government Information System in 2011. A qualitative research method was conducted in a selected government agency to obtain empirical evidence from 55 semi‐structured interviews with government servants from top management to clerical staff including the users of the government information system. By using a combination of institutional theory and the capability approach to analyse the data, we found that insourcing reduced costs, provided a means to access new technologies and enhanced skills in the internal development team, despite challenges such as data centralization, HRMIS technical training and skill, resources for training, perception, government policies and regulations, and lack of expertise These findings will be of interest to the information system research community interested in insourcing information system support.

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Since the beginning of the 21st century, numerous organizations have extensively implemented information technology into their operations. With regard to this, it captures the interest of researchers, practitioners, academicians, and policymakers to comprehend the role of organization dynamic capability in information technology and the role of digital leadership in enhancing organizational performance and enabling the information technology process. There was limited study on the impact of technology on the performance of government agencies. Therefore, this research focuses on government agencies in Malaysia. This study was conducted to seek the true role of information technology in organizational performance and the impact of information technology on organizational performance. Through an analysis of the 131 randomly selected workers, this paper investigates the impact of information technology on organizational performance. This study examines the effects of IT Operation, IT Knowledge, and IT Competence on the performance of an organization. In this research, SPSS was used for normality and reliability analysis, as well as descriptive organization multiple regression analysis. The result revealed that only IT Competence has a positive impact on organizational performance.  The finding also revealed that the impact of information technology on the performance of an organization is minimal and contributes a minor impact.