Optimizing Outsourcing Decisions in the Service Sectors and Businesses: A Comprehensive DSS Model for Effective Ranking and Selection

Subject Areas : Decision theory

Moezodin  Mazaheri Tirani ¹ (Industrial Engineering Department, Islamic Azad University of Najaf Abad Branch, Najafabad, Iran)
Mahdi  Karbasian ² (Industrial Engineering Department, Islamic Azad University of Najaf Abad Branch, Najafabad, Iran)
hadi  shirouyehzad ³ (Industrial Engineering Department, Islamic Azad University of Najaf Abad Branch, Najafabad, Iran)

Received: 2023-09-16 Accepted : 2024-06-30 Published : 2024-06-30

Keywords: Service-Outsourcing, DSS Model, WASPAS, BWM, Fuzzy logic,

Abstract :

Outsourcing is a key strategy in many industries and service sectors and businesses. Choosing the right outsourcing subject can boost productivity while choosing the wrong one can cause problems. Thus, a scientific model to support outsourcing decisions is needed. Especially, a specific model for the service sectors and businesses. We aim to make a comprehensive model to rank outsourcing options in the service sectors and businesses. This model covers different fields and can be used universally. We used a comprehensive library study, a questionnaire, and the CVR analysis to find and validate outsourcing decision indicators, these comprehensive indicators are one of the advantages of this article. Then, we used Kano’s model to divide them into functional and basic categories for better analysis. Next, we used the fuzzy best-worst model to weigh the indicators. Finally, we used the fuzzy WASPAS model to rank the outsourcing options. We applied the model to a case study at a Hospital as a service business unit. We considered and evaluated and ranked four sectors for outsourcing: "Restaurant", "Pharmacy", "Maintenance and Repair" and "Finance and Accounting".

References:

Abdel-Basset, M., Gunasekaran, M., Mohamed, M., & Chilamkurti, N. (2019). A framework for risk assessment, management and evaluation: Economic tool for quantifying risks in supply chain. Future Generation Computer Systems, 90, 489-502.
Adler, P. S. (2003). Making the HR outsourcing decision. MIT Sloan Management Review, 45(1), 53.
Akbari, M. (2024). Outsourcing in Supply Chain Management. In The Palgrave Handbook of Supply Chain Management (pp. 845-871): Springer.
Akhtar, M. (2023). Logistics services outsourcing decision making: a literature review and research agenda. International Journal of Production Management and Engineering, 11(1), 73-88.
Alawadi, J. f., Abbasi, G. Y., & Al-Refaie, A. (2023). Prioritization of factors influencing outsourcing maintenance decisions in thermal power plants – A case study. Journal of Quality in Maintenance Engineering, 29(4), 863-876. doi:10.1108/JQME-07-2022-0040
Ali, A., Cao, M., Allen, J., Liu, Q., Ling, Y., & Cheng, L. (2023). Investigation of the drivers of logistics outsourcing in the United Kingdom's pharmaceutical manufacturing industry. Multimodal Transportation, 2(1), 100064.
Alrwashdeh, M., Adaileh, M. J., & Ali, H. (2022). THE IMPACT OF OUTSOURCING ON OPERATIONAL PERFORMANCE: A FIELD STUDY IN INDUSTRIAL COMPANIES IN JORDAN. Journal of Management Information & Decision Sciences, 25.
Alvarez-Suescun, E. (2010). Combining transaction cost and resource-based insights to explain IT implementation outsourcing. Information Systems Frontiers, 12(5), 631-645.
Añón Higón, D. (2023). The persistence and cross-persistence of R&D outsourcing: onshore and offshore strategies. Economics of Innovation and New Technology, 32(8), 1087-1113.
Aragão, J. P. S., & Fontana, M. E. (2022). Outsourcing Strategies in Public Services under Budgetary Constraints: Analysing Perceptions of Public Managers. Public Organization Review, 22(1), 61-77. doi:10.1007/s11115-021-00517-5
Arif, J., Azzouz, K., & Benboubker, M. B. (2023). Towards mathematical modeling for selecting logistics service providers: case of moroccan LSP. Journal of optimization in industrial engineering, 1(1), 39.
Assaf, S., Hassanain, M. A., Al‐Hammad, A. M., & Al‐Nehmi, A. (2011). Factors affecting outsourcing decisions of maintenance services in Saudi Arabian universities. Property management, 29(2), 195-212.
Bolumole, Y. A., Frankel, R., & Naslund, D. (2007). Developing a theoretical framework for logistics outsourcing. Transportation journal, 35-54.
Charles, M., & Ochieng, S. B. (2023). Strategic outsourcing and firm performance: a review of literature. International Journal of Social Science and Humanities Research (IJSSHR) ISSN 2959-7056 (o); 2959-7048 (p), 1(1), 20-29.
Deng, S., & Xu, J. (2023). Manufacturing and procurement outsourcing strategies of competing original equipment manufacturers. European Journal of Operational Research, 308(2), 884-896.
Diana, M. L. (2009). Exploring information systems outsourcing in US hospital-based health care delivery systems. Health care management science, 12(4), 434-450.
Dibbern, J., Chin, W. W., & Heinzl, A. (2012). Systemic determinants of the information systems outsourcing decision: A comparative study of German and United States firms.
Dorasamy, M., Marimuthu, M., Jayabalan, J., Raman, M., & Kaliannan, M. (2010). CRITICAL FACTORS IN OUTSOURCING OF ACCOUNTING FUNCTIONS IN MALAYSIAN SMALL MEDIUM-SIZED ENTERPRISES (SMEs).
Dubinsky, A. J., & Loken, B. (1989). Analyzing ethical decision making in marketing. Journal of Business Research, 19(2), 83-107.
Ejechi, J. O., & Oshodin, E. A. (2019). Business Process Outsourcing Strategy on Competitive Advantage and Organizational Performance. INTERNATIONAL JOURNAL OF ACADEMIC RESEARCH IN BUSINESS AND SOCIAL SCIENCES, 9(6).
Enayati, M., Asadi-Gangraj, E., & Paydar, M. M. (2021). Scheduling on flexible flow shop with cost-related objective function considering outsourcing options. Journal of optimization in industrial engineering, 14(2), 53-72.
Flannery, B. L., & May, D. R. (2000). Environmental ethical decision making in the US metal-finishing industry. Academy of Management journal, 43(4), 642-662.
García-Vega, M., & Huergo, E. (2019). The role of international and domestic R&D outsourcing for firm innovation. Journal of Economic Behavior & Organization, 157, 775-792.
Gerbl, M., McIvor, R., Loane, S., & Humphreys, P. (2015). A multi-theory approach to understanding the business process outsourcing decision. Journal of World Business, 50(3), 505-518.
Gonzales, A., Dorwin, D., Gupta, D., Kalyan, K., & Schimler, S. (2004). Outsourcing: past, present and future. Unpublished paper.
Graf, M., & Mudambi, S. M. (2005). The outsourcing of IT-enabled business processes: A conceptual model of the location decision. Journal of International management, 11(2), 253-268.
Guo, S., & Zhao, H. (2017). Fuzzy best-worst multi-criteria decision-making method and its applications. Knowledge-Based Systems, 121, 23-31.
Guo, Y., & Liang, C. (2016). Blockchain application and outlook in the banking industry. Financ Innov 2: 24. In.
Hailu, T., & Chebo, A. K. (2023). Mapping business process outsourcing and innovation towards a future research. Business Process Management Journal, ahead-of-print(ahead-of-print). doi:10.1108/BPMJ-03-2023-0182
Hanafizadeh, P., & Zareravasan, A. (2020). A systematic literature review on IT outsourcing decision and future research directions. Journal of Global Information Management (JGIM), 28(2), 160-201.
Hayashi, T. (2023). IT Business Process Outsourcing (BPO) Strategy as a New Development Strategy in Emerging Countries: Focusing on the Philippine IT-BPO Industry and Lewis Turning Point Theory. In Base of the Pyramid and Business Process Outsourcing Strategies: In the Age of SDGs (pp. 141-160): Springer.
Heeks, R., & Arun, S. (2010). Social outsourcing as a development tool: The impact of outsourcing IT services to women's social enterprises in Kerala. Journal of International Development: The Journal of the Development Studies Association, 22(4), 441-454.
Hernandez, D. F., & Haddud, A. (2018). Value creation via supply chain risk management in global fashion organizations outsourcing production to China. Journal of Global Operations and Strategic Sourcing.
Ikediashi Dubem, I., Ogunlana Stephen, O., Boateng, P., & Okwuashi, O. (2012). Analysis of risks associated with facilities management outsourcing: A multivariate approach. Journal of Facilities Management, 10(4), 301-316. doi:10.1108/14725961211265756
Ishizaka, A., Bhattacharya, A., Gunasekaran, A., Dekkers, R., & Pereira, V. (2019). Outsourcing and offshoring decision making. In: Taylor & Francis.
Jaukovic Jocic, K., Jocic, G., Karabasevic, D., Popovic, G., Stanujkic, D., Zavadskas, E. K., & Thanh Nguyen, P. (2020). A novel integrated piprecia–interval-valued triangular fuzzy aras model: E-learning course selection. Symmetry, 12(6), 928.
Kant, C., Higashino, T., & von Bochmann, G. (1996). Deriving protocol specifications from service specifications written in LOTOS. Distributed Computing, 10(1), 29-47.
Karagöz, S., Deveci, M., Simic, V., & Aydin, N. (2021). Interval type-2 Fuzzy ARAS method for recycling facility location problems. Applied Soft Computing, 102, 107107.
Khan, G. M., Khan, S. U., Khan, H. U., & Ilyas, M. (2022). Challenges and practices identification in complex outsourcing relationships: A systematic literature review. PloS one, 17(1), e0262710.
Khosravizadeh, O., Maleki, A., Ahadinezhad, B., Shahsavari, S., Amerzadeh, M., & Tazekand, N. M. (2022). Developing decision model for the outsourcing of medical service delivery in the public hospitals. BMC Health Services Research, 22(1), 1-9.
KiA, R., Javadian, N., & Tavakkoli-Moghaddam, R. (2014). A simulated annealing algorithm to determine a group layout and production plan in a dynamic cellular manufacturing system. Journal of optimization in industrial engineering, 7(14), 37-52.
Kim, T. J., Lee, J. H., & Hong, J. S. (2017). Supply Network Analysis of Second and Third Outsourcing Firms with E-Invoice at Automobile Parts Industry: Focused to Brake Manufacturing Firms. Journal of Society for e-Business Studies, 21(3).
Kivijärvi, H., & Toikkanen, J. (2015). Measuring the business value of IT outsourcing: A systems approach. Strategic Outsourcing: An International Journal.
Koval, V., Olczak, P., Hakova, M., Bilyi, M., Kretov, D., & Laktionova, O. (2023). Analysis of financial outsourcing management in regional environmental systems. Sustainability, 15(15), 11966.
Lacity, M. C., Khan, S. A., & Yan, A. (2017). Review of the empirical business services sourcing literature: an update and future directions. Outsourcing and offshoring business services, 499-651.
Lamminmaki, D. (2011). An examination of factors motivating hotel outsourcing. International Journal of Hospitality Management, 30(4), 963-973. doi:https://doi.org/10.1016/j.ijhm.2010.10.010
Lian, J.-W., Yen, D. C., & Wang, Y.-T. (2014). An exploratory study to understand the critical factors affecting the decision to adopt cloud computing in Taiwan hospital. International Journal of Information Management, 34(1), 28-36.
Low, C., & Hsueh Chen, Y. (2012). Criteria for the Evaluation of a Cloud-Based Hospital Information System Outsourcing Provider. Journal of Medical Systems, 36(6), 3543-3553. doi:10.1007/s10916-012-9829-z
Lu, F., Yan, T., Bi, H., Feng, M., Wang, S., & Huang, M. (2022). A bilevel whale optimization algorithm for risk management scheduling of information technology projects considering outsourcing. Knowledge-Based Systems, 235, 107600.
Luo, J., Yang, Z., Zhang, Q., & Pan, R. (2021). Service outsourcing strategy decision for value creation in manufacturing firms. Journal of Management Science and Engineering.
Matytsin, D. E., Dzedik, V. A., Markeeva, G. A., & Boldyreva, S. B. (2023). “Smart” outsourcing in support of the humanization of entrepreneurship in the artificial intelligence economy. Humanities and Social Sciences Communications, 10(1), 1-8.
Mehdizadeh, E., & Jalili, S. (2019). An algorithm based on theory of constraints and branch and bound for solving integrated product-mix-outsourcing problem. Journal of optimization in industrial engineering, 12(1), 167-172.
merriam webster site-outsourcing definition.
Messerschmidt, C. M., & Hinz, O. (2013). Explaining the adoption of grid computing: An integrated institutional theory and organizational capability approach. The Journal of Strategic Information Systems, 22(2), 137-156.
Mishra, V., Moreira, S., & Markus, A. (2023). R&D Outsourcing in the Biopharmaceutical Industry and its Effect on Firm Innovation. Paper presented at the Academy of Management Proceedings.
Misra, R. B., & Ravinder, H. Effectiveness of R&D Outsourcing. Technovation, 29(3), 155-169.
Modak, M., Ghosh, K. K., & Pathak, K. (2019). A BSC-ANP approach to organizational outsourcing decision support-A case study. Journal of Business Research, 103, 432-447.
Muchai, E., & Acosta, F. (2012). Assessment of factors influencing decision to outsource information and communication technology by commercial banks in Kenya. DLSU Business and Economics Review, 22, 63-96.
Navarro-Paule, A. J., Romerosa-Martínez, M. M., & Lloréns-Montes, F. J. (2023). IT vendor integration as catalyst of IT outsourcing success. Journal of Business & Industrial Marketing.
Ngoc, P. T. B., Tien, P. T. H., Long, P. D., & Vu, H. Q. (2023). Total factor productivity and outsourcing: the case of Vietnamese small and medium sized enterprises. Fulbright Review of Economics and Policy, 3(2), 138-150. doi:10.1108/FREP-04-2023-0015
Oduk, P. M. (2013). Factors Influencing Outsourcing at Kenya Union of Savings and Credit Cooperatives.
Osagie, O. E., Emeka, O. F., & Beatrice, E. (2023). Outsourcing benefits and complications. BW Academic Journal, 9-9.
Patil, S. K., & Kant, R. (2014). A fuzzy AHP-TOPSIS framework for ranking the solutions of Knowledge Management adoption in Supply Chain to overcome its barriers. Expert Systems with Applications, 41(2), 679-693.
Potryvaieva, N., & Palieiev, A. (2023). Accounting outsourcing as a modern effective tool of enterprise management.
Ratten, V. (2014). A US-China comparative study of cloud computing adoption behavior: The role of consumer innovativeness, performance expectations and social influence. Journal of Entrepreneurship in Emerging Economies.
Reyna, V. F. (2008). A theory of medical decision making and health: fuzzy trace theory. Medical decision making, 28(6), 850-865.
Rezaei, J. (2015). Best-worst multi-criteria decision-making method. Omega, 53, 49-57.
Rhodes, J., Lok, P., Loh, W., & Cheng, T. P. (2014). Critical success factors in relationship management for services outsourcing. Service Business, 10. doi:10.1007/s11628-014-0256-8
Sakib, M. N., Tabassum, F., & Uddin, M. M. (2023). What we know about the trends, prospects, and challenges of human resource outsourcing: A systematic literature review. Heliyon.
Santa, R., Rodríguez Victoria, O. E., & Tegethoff, T. (2023). The role of quality in the hotel sector: the interplay between strategy, innovation and outsourcing to achieve performance. The TQM Journal.
Skipworth, H., Delbufalo, E., & Mena, C. (2020). Logistics and procurement outsourcing in the healthcare sector: a comparative analysis. European Management Journal.
Sternberg, H., Mathauer, M., & Hofmann, E. (2023). Technology management in multi‐tier chains: A case study of agency in logistics service outsourcing. Journal of Operations Management, 69(4), 536-557.
Tannor, O., Dordaa, F., & Akparep, J. Y. (2023). Agency problems in facility management (FM) outsourcing in the Ghanaian retail sector. Journal of Corporate Real Estate, ahead-of-print(ahead-of-print). doi:10.1108/JCRE-12-2022-0041
TOUFIGH, A., RAJABI, M. H., & QAZIZADEH, F. S. (2015). A FRAMEWORK FOR DECISION ABOUT OUTSOURCING DEFENSE R & D PROJECTS.
Turskis, Z., Zavadskas, E. K., Antucheviciene, J., & Kosareva, N. (2015). A hybrid model based on fuzzy AHP and fuzzy WASPAS for construction site selection. International Journal of Computers communications & control, 10(6), 113-128.
Walterbusch, M., Martens, B., & Teuteberg, F. (2013). Evaluating cloud computing services from a total cost of ownership perspective. Management Research Review.
Wang, X., Lee, H., Park, K., & Lee, G. (2024). The strategic role of R&D outsourcing practices and partners in the relationship between product modularization and new product development efficiency. Journal of Manufacturing Technology Management, 35(1), 185-202. doi:10.1108/JMTM-03-2023-0098
Westphal, P., & Sohal, A. S. (2013). Taxonomy of outsourcing decision models. Production Planning & Control, 24(4-5), 347-358.
Williams, C., & Durst, S. (2019). Exploring the transition phase in offshore outsourcing: Decision making amidst knowledge at risk. Journal of Business Research, 103, 460-471.
Wu, Y., Cegielski, C. G., Hazen, B. T., & Hall, D. J. (2013). Cloud computing in support of supply chain information system infrastructure: understanding when to go to the cloud. Journal of Supply Chain Management, 49(3), 25-41.
Zarbakhshnia, N., Wu, Y., Govindan, K., & Soleimani, H. (2020). A novel hybrid multiple attribute decision-making approach for outsourcing sustainable reverse logistics. Journal of Cleaner Production, 242, 118461.
Zhang, Y., Deng, R. H., Liu, X., & Zheng, D. (2018). Blockchain based efficient and robust fair payment for outsourcing services in cloud computing. Information Sciences, 462, 262-277.