Selection of Outsourcing Agency through AHP and Grey Relational Analysis: A Case Analysis

  • Debendra Kumar Mahalik
Part of the Communications in Computer and Information Science book series (CCIS, volume 141)


IT enabled services (ITeS), often outsourced by different utility industry. But the problem before the manager is to from where to outsource, wrong selection often blame for delay, partial success and failure. This selection is vital and is a multi criteria decision making process (MCDM), where the manager has to take a decision taking several factor in to consideration. Often these managers have to take on decision on some qualitative and quantitative data. This paper focuses on selection of outsourcing agency through an integrated Analytic Hierarchy Process (AHP) along with Grey Relational Analysis (GRA) approach for an organization for their e-procurement services. This paper proposes an integrated AHP and GRA method for multi criteria decision problem.


Outsourcing MCDM AHP GRA ITeS 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
  2. 2.
    Apte, U.M., Sobol, M.G., Hanaoka, S., Shimada, T., Saarinen, T., Salmela, T., Vepsalainen, A.P.J.: IS outsourcing practices in the USA. Japan and Finland: A Comparative Study. Journal of Information Technology 12, 289–304 (1997)CrossRefGoogle Scholar
  3. 3.
    Chaudhury, A., Nam, K., Rao, H.R.: Management of information systems outsourcing: a bidding perspective. Journal of Management Information Systems 12(2), 131–159 (1995)CrossRefGoogle Scholar
  4. 4.
    Cheon, M.J., Grover, V., Teng, J.T.C.: Theoretical perspectives on the outsourcing of information systems. Journal of Information Technology 10, 209–210 (1995)CrossRefGoogle Scholar
  5. 5.
    Applegate, L., Montealegre, R.: Eastman Kodak Company: managing information systems through strategic alliances. Harvard Business School Case 9-192-030. Harvard Business School, Boston (1991)Google Scholar
  6. 6.
    Arnett, K.P., Jones, M.C.: Firms that choose outsourcing: a profile. Information and Management 26(4), 179–188 (1994)CrossRefGoogle Scholar
  7. 7.
    Caldwell, B.: Farming out client-server. Information Week 510(5) (1994),
  8. 8.
    Young, S.: Outsourcing: lessons from the literature. Labour and Industry 10(3), 97–118 (2000)CrossRefGoogle Scholar
  9. 9.
    Devos, J., Van Landeghem, H., Deschoolmeester, D.: Outsourced information systems failures in SMEs: a multiple case study. The Electronic Journal Information Systems Evaluation 11(2), 73–82 (2002), Google Scholar
  10. 10.
    Ackoff, R.L.: Management misinformation systems. Management Science 14(4), 147–156 (1967)CrossRefGoogle Scholar
  11. 11.
    Lucas, H.C.: Why information systems fail. Columbia University Press, New York (1975)Google Scholar
  12. 12.
    Lyytinen, K., Hirschheim, R.: Information systems failures-a survey and classification of the empirical literature. In: Zorkoczy, P.I. (ed.) Oxford Surveys in Information Technology, vol. 4, pp. 257–309. Oxford University Press, Oxford (1987)Google Scholar
  13. 13.
    Sauer, C.: Why information systems fail: a case study approach. Alfred Wailer, Henley-on-Thames (1993)Google Scholar
  14. 14.
    Keil, M.: Pulling the plug: software project management and the problem of project escalation. MIS Quarterly 19(4), 421–431 (1995)CrossRefGoogle Scholar
  15. 15.
    Beynon, D.: Information systems ‘failure’: the case of the London ambulance service’s computer aided dispatch project. European Journal of Information Systems 4(3), 171–184 (2002)MathSciNetCrossRefGoogle Scholar
  16. 16.
    Schmidt, R., Lyytinen, K., Keil, M., Cule, P.: Identifying software project risks: an international Delphi study. Journal of Management Information Systems 17(4), 5–36 (2001)Google Scholar
  17. 17.
    Ewusi-Mensah, K.: Software development failures. MIT Press, Cambridge (2003)Google Scholar
  18. 18.
    Iacovou, C.L., Dexter, A.S.: Surviving IT project cancellations. Communications of the ACM 48(4), 83–86 (2005)CrossRefGoogle Scholar
  19. 19.
    Avison, D., Gregor, S., Wilson, M.: Managerial IT unconsciousness. Communications of the ACM 49(7), 89–93 (2006)CrossRefGoogle Scholar
  20. 20.
    Dibbern, J.: The sourcing of application software services: empirical evidence of cultural. In: Industry and Functional Differences. Physika-Verlag, Reihe, Information Age Economy, Berlin (2004)Google Scholar
  21. 21.
    Dibbern, J., Goles, T., Hirschheim, R.: Information systems outsourcing: a survey and analysis of the literature. Database for Advances in Information Systems 35(4), 6–102 (2004)CrossRefGoogle Scholar
  22. 22.
    Natovich, J.: Vendor related risks in IT development: a chronology of an outsourced project failure. Technology Analysis & Strategic Management 15(4), 409–419 (2003)CrossRefGoogle Scholar
  23. 23.
    Aubert, B.A., Patry, M., Rivard, S.: A tale of two outsourcing contracts - an agency-theoretical perspective. Wirtschaftsinformatik 45(2), 181–190 (2003)CrossRefGoogle Scholar
  24. 24.
    Savas, E.S.: Privatization: the key to better government. Chatham House, Chatham (1987)Google Scholar
  25. 25.
    Young, S.: Outsourcing: uncovering the complexity of the decision. International Public Management Journal 10(3), 307–325 (2007)CrossRefGoogle Scholar
  26. 26.
    Farneti, F., Young, D.: A contingency approach to managing outsourcing risk in municipalities. Public Management Review 10(1), 89–99 (2008)CrossRefGoogle Scholar
  27. 27.
    National Research Council Committee on Outsourcing Design and Construction-related Management Services for Federal Facilities and National Research Council Board on Infrastructure and the Constructed Environment and the National Research Council Commission on Engineering and Technical Systems (2000)Google Scholar
  28. 28.
    Preker, A.S., Harding, A., Travis, P.: Make or buy decisions in the production of health care goods and services: new insights from institutional economics and organizational theory. Bulletin of the World Health Organization 78, 779–790 (2000)Google Scholar
  29. 29.
    Lane, J.E.: New public management. Routledge, London (2000)Google Scholar
  30. 30.
    Savas, E.S.: Privatization: the key to better government. Chatham House, Chatham (1987)Google Scholar
  31. 31.
    Dickson, G.: An analysis of vendor selection systems and decisions. Journal of Purchasing 2(1), 5–17 (1996)Google Scholar
  32. 32.
    Sreekumar, M.S.S.: A fuzzy multi-criteria decision making approach for supplier selection in supply chain management. African Journal of Business Management 3(4), 168–177 (2009)Google Scholar
  33. 33.
    Pearson, J.N., Ellram, L.M.: Supplier selection and evaluation in small versus large electronics firms. Journal of Small Business Management 33(4), 53–65 (1995)Google Scholar
  34. 34.
    Kagnicioglu, C.H.: A Fuzzy multiobjective programming approach for supplier selection in a supply chain. The Business Review 6(1), 107–115 (2006)Google Scholar
  35. 35.
    Sasikumar, G., Selladurai, V., Manimaran, P.: Application of analytical hierarchy process in supplier selection: an automobile industry case study. South Asian Journal of Management 13(4), 89–100 (2006)Google Scholar
  36. 36.
    Muralidharan, C., Anantharaman, N., Deshmukh, S.G.: Multi-criteria group decision making model for supplier rating. Journal of Sup. Chain Management 38(4), 22–33 (2002)CrossRefGoogle Scholar
  37. 37.
    Ibrahim, D., Ugur, S.: Supplier selection using activity based costing and fuzzy present-worth techniques. Logistics Information Management 16(6), 420–426 (2003)CrossRefGoogle Scholar
  38. 38.
    Bhutta, K.S., Faizul, H.: Supplier selection problem: a comparison of the total cost of ownership and analytical hierarchy process approaches. Supply Chain Management - An International Journal 7(3), 126–135 (2002)CrossRefGoogle Scholar
  39. 39.
    Al-Faraj, T.N.: Vendor selection by means of data envelopment analysis. Bus. Rev. Cambridge 6(1), 70–77 (2006)Google Scholar
  40. 40.
    Singpurwalla, N.D.: A probabilistic hierarchical classification model for rating suppliers. Journal of Quality Technology 31(4), 444–454 (1999)MathSciNetGoogle Scholar
  41. 41.
    Fuh-Hwa, L., Hai, F., Lin, H.: The voting analytic hierarchy process method for selecting supplier. Int. J. Prod. Eco. 97, 308–317 (2005)CrossRefGoogle Scholar
  42. 42.
    Kumar, K., Vart, P., Shankar, R.: A fuzzy goal programming approach for vendor selection problem in supply chain management (2004)Google Scholar
  43. 43.
    Kumar, M., Vrat, P., Shankar, R.: A fuzzy programming approach for vendor selection in a supply chain. Int. J. Prod. Eco. 101(2), 273–285 (2006)CrossRefGoogle Scholar
  44. 44.
    Saaty, T.L.: Theory and applications of the analytic network process, p. ix. RWS Publications, Pittsburgh (2005) ISBN1-888603-06-2Google Scholar
  45. 45.
    Saaty, T.L.: The Analytic Hierarchy Process. McGraw-Hill, New York (1980)zbMATHGoogle Scholar
  46. 46.
    Deng, J.L.: Control problems of grey system. Systems and Control letters 1, 288–294 (1982)CrossRefzbMATHGoogle Scholar
  47. 47.
    Hsu, T.H.: The study on the application of grey theory to the evaluation of service quality. In: The Proceeding of Conference of Grey System and Application, pp. 1–15 (1997)Google Scholar
  48. 48.
    Chang, Y.C.: The application of grey theory to purchasing-decision. Knowledge of Military Supplies 94 (1996)Google Scholar
  49. 49.
    Wen, K.L.: The quantitative research on the grey relational grade. Journal of Grey System 2(2), 117–135 (1999)Google Scholar
  50. 50.
    Luo, M., Kuhnell, B.T.: Fault detection using grey relational grade analysis. The Journal of Grey System 5(4), 319–328 (1993)zbMATHGoogle Scholar
  51. 51.
    Chiang, K.S.: The introduction of grey theory. Gauli Publishing Co., Taipei (1997)Google Scholar
  52. 52.
    Wu, H.H.: The method and application of grey decisions. Chien-Kuo Institute of Technology, Chang-Hwa (1998)Google Scholar
  53. 53.
    Meade, L.M., Sarkis, J.: Analyzing organizational project alternatives for agile manufacturing processes-an analytical network approach. International Journal of Production Research 37, 241–261 (1999)CrossRefzbMATHGoogle Scholar
  54. 54.
    Saaty, T.L.: Rank from comparisons and from ratings in the analytic hierarchy/network processes. European Journal of Operational Research 168, 557–570 (2006)MathSciNetCrossRefzbMATHGoogle Scholar
  55. 55.
    Ashby, W.R.: Effect of control on stability. Nature (London) 155(3933), 242–243 (1945)CrossRefGoogle Scholar
  56. 56.
    Wu, H.H.: The introduction of grey analysis. Gauli Publishing Co., Taipei (1996)Google Scholar
  57. 57.
    Deng, J.L.: Properties of relational space for grey system. In: Deng, J.L. (ed.) Essential Topics on Grey System—Theory and Applications, pp. 1–13. China Ocean, Beijing (1988)Google Scholar
  58. 58.
    Hsia, K.H., Wu, H.: A study on the data preprocessing in Gery relation analysis. J. Chin. Gery Syst. Assoc., 147–153 (1998)Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Debendra Kumar Mahalik
    • 1
  1. 1.Department of Business AdministrationSambalpur UniversityIndia

Personalised recommendations