The Challenges of Backsourcing

ABSTRACT Public sector outsourcing sometimes ends in unexpected termination, forcing authorities to engage in backsourcing. The aim of this study is to identify the challenges posed by unexpected terminations of sourcing contracts in the public sector and analyze how actual practices in these situations diverge from theoretical expectations in the sourcing literature. A comparative analysis of three cases—spanning municipal, regional, and national levels—reveals that authorities face constraints such as legal obligations, limited provider options and built‐in interdependence with contractors. Combined with market limitations, these interdependencies often lead to opportunistic behavior and informal “silent contracts” with public authorities that display increased tolerance and relaxed oversight to ensure service continuity. Factors such as stringent contractual requirements, unplanned dependencies, and the absence of qualified replacements add to the complexity. This highlights a gap between market theories and the practical constraints of public sector outsourcing. This study contributes to sourcing literature by emphasizing the need for proactive planning and by providing a more profound understanding of silent contracts and informal dependencies that help explain and clarify backsourcing process.