Introduction

The term "insourcing" is used in many different ways. In some instances it can refer to a company setting up another company in a new country to carry out specialized operations. In another context, a company may just use existing employees, retrain them to take on new tasks and keep jobs within the company instead of sending them to a third party outsourcer.

The more common use of the term among those of us who do large outsourcing deals though is in the context of reversing an outsourcing arrangement and repatriating previously outsourced tasks back into the customer's company.

With the huge volume of outsourcings that took place in the late 90's and early 2000's, a lot of companies rushed to send business processes, business functions and IT processing offshore or to third party outsourcing companies. Some of those companies are now either regretting that decision or determining that they want to bring their businesses back in-house in order to run it themselves.

Unfortunately, many of these companies did not plan for this type of repatriation or insourcing in their outsourcing arrangements and now may be struggling to get the kind of assistance, information and training they need from their outsourcer in order to successfully accomplish the insourcing process.

The best course of action is to plan for insourcing when you are doing the outsourcing and ensure that the agreement contains appropriate clauses that will enable you to bring the functions back into your company with a minimum of disruption - instead of trying to figure it out at the end of the outsourcing agreement term. This paper is focused mainly on what a customer may want to ask for and of course there are never any guarantees that the negotiations will be easy. Outsourcing companies tend to have their own view of these things!

However, even with all the back and forth that will be required, it is certainly easier to negotiate these provisions with an outsourcer looking forward to a revenue stream than to try and negotiate them at the end of that revenue flow when the outsourcer knows the business is leaving.