Evaluation and selection of outsourcing counterparty by the analytic hierarchy process

Abstract

Introduction. The development of economic outsourcing relations causes relevance of selecting the most suitable contractor. For selecting a counterparty in a contractual relationship, including delivery, analytic hierarchy process by T. Saati is widely used. But outsourcing relationships are not limited to only supply contracts that is why the future contractor assessment regarding types of outsourcing is an urgent matter.

Purpose. The purpose of the research is to develop a methodological framework of outsourcing contractor evaluatiing and selecting.

Method. In the research general scientific methods of generalization and abstraction, and dialectical methods were used: a principle of transition from quantitative to qualitative changes and economic modeling.

Results. According to the research four typical outsourcing strategies can be identified which could differ by a primary purpose, a demand resource provider, a form of contractual relations, an equity or a management process. The compliance of a contractor for the chosen strategy is described by specific requirements that change their usefulness (weight) depending on the strategy. The requirements which are the same for all strategies are common.

To select the most appropriate partner according to the chosen strategy the four-level hierarchy was proposed with sets of general and specific requirements, and a set of alternatives.

For filling the matrix of pairwise comparisons two wayswere used: direct (inverse) relationship for indicators that have a continuous utility function and discrete for figures that have a discrete utility function. The usefulness of specific requirements depending on the strategy of outsourcing was determined and the eigenvector of the matrix that determines the weight of each requirement within a strategywas calculated.

The final choice of a contractor is based on the principle of maximum.

The application of the proposed framework improves the quality and validity of administrative decisions.