USING A MULTIPLE CRITERIA APPROACH FOR RANKING OUTSOURCING RISKS

摘要

In recent years, many organizations have adapted outsourcing as one of their key business drivers. However, just like any other business venture, an effective assessment of the associated risks often forms an integral part of the success or failure of outsourcing of any capital projects. A possible approach to solve this problem is to use effective decision-making techniques to evaluate and mitigate the outsourcing risks. A commonly used multiple criteria decision-making tool is Analytical Hierarchy Processing (AHP). The intent of this paper is to explore the application of AHP as a structured methodology towards ranking identified outsourcing risks. A brief overview of AHP is given, followed by a model that enlists and prioritizes the major risks associated with outsourcing. The purpose of this paper is twofold. Firstly, it discusses the risks associated with outsourcing and secondly it shows how AHP can be used to assess the risks as a part of the framework that governs the final outsourcing decision. The article concludes with its relevance of AHP to the Engineering Managers. Direction of future research is provided.