Digital transformation in the public sector involves leveraging digital technology to perform a profound change in both the services offered by public sector organizations and the activities and structures that provide them. Practitioners and researchers alike have called for this kind of transformation to meet citizens’ changing needs and expectancies. However, there is a lack of knowledge on how to operationalize and achieve digital transformations in the sector, given its institutional and organizational complexity. In this paper, therefore, we present a case study of the establishment of a cross-domain digital transformation unit in a Scandinavian municipality. We conceptualize the approach to digital transformation carried out in this unit as targeted insourcing. We contribute to Information Systems literature on public sector digital transformation through our conceptualization and discuss its implications.