Posted in Operations and Supply Chain Terms, Total Reads: 312
Definition: Back Sourcing
It is the process of bringing back previously outsourced activities in house. It should not be confused with Insourcing as it is equivalent to Insourcing + Outsourcing – Outsourcing.It includes direct costs of disruption and penalty too as it reduce the organization reputation and relationship with its clients, customers, shareholders and investors.
It has led to few of the organizations sign pre agreement back sourcing agreements where they agree on certain terms such as cancellation of the contract and control being given back to In house.
Back sourcing comes into play when there are higher than expected costs or there is change in management of the company. Poor service also results in back sourcing. Mergers and acquisitions are also one of the factors responsible for back sourcing.