Subcontracting evolved into outsourcing when it added the strategic partnership element along with the ownership of processes. The first outsourcing engagement credited with implementing such a strategic partnership was between IBM and Kodak through their revolutionary deal.

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The key factor in common was that both organizations had a problem-solving objective that led to a more strategic partnership than that of a typical subcontractor/service provider relationship. The strategic partnership model birthed the multi billion dollar outsourcing industry which grew so much due to its cost take out benefits. However, organizations have began to over-outsource and many companies are beginning to bring back services to the home country.

Backsourcing is defined as a company process which was previously handled externally and has now been reassigned for internal ownership (Mederos 2018). Although often misused, it is not “insourcing” as that term could refer to a process that was never outsourced.

Laz Mederos
President
The Backsourcing Advisory