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Last updated: August 18, 2011

What Does Backsourcing Mean?

Backsourcing is the arduous process of termination or expiration of an IT outsourcing contract that initiates the process of re-establishing IT operations in-house. This process has direct costs of operational disruption and penalty fees associated with indirect costs of damaging an organization's reputation and relationships with customers, employees, investors and corporate partners.

This term is also known as, or mis-spelled as, back-sourcing or back sourcing.


Techopedia Explains Backsourcing

The risks associated with backsourcing have caused some outsourcing organizations to have their customers sign pre-nuptial backsourcing agreements clearly describing the terms and conditions under which a contract may be terminated and the control of IT functions may be brought back in-house.

For establishing effective backsourcing process, it is essential to make sure that organizations continue to perform operations even though their outsourcing arrangements get failed.

A step-by-step guide to backsourcing entitled “Backsourcing: Why? When? And How To Do It,” by Jeff Kaplan, concludes by saying, “Outsource with backsourcing in mind."

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