Performance evaluation of outsourcing decision using a BSC and Fuzzy AHP approach: A case of the Indian coal mining organization

Mineral and mining sectors are always of a great concern to any nation due to its major contribution to the economy. In India, the demand for coal is continuously on rise due to its ever increasing need from the growing power sectors and steel industries. In spite of the large coal reserves, India has to import coal from overseas sources to address the perpetual demand-supply gap. In order to reduce the dependence on imported coal, to ensure an affordable price to the domestic customers as well as to achieve operational efficiency, the state-owned coal mining organization of India have now started taking initiatives to outsource some of the operational activities involving private agencies. To realize the success of outsourcing, it is indispensable to consider it as part of the corporate decision. Such decision essentially considers all possible attributes of strategy planning for performance improvement. The study focuses on the development of an effective performance evaluation framework based on Balanced Scorecard (BSC) and Fuzzy Analytic Hierarchy Process (FAHP) to analyze the suitability of organization's strategic decision of outsourcing in alignment with the organizational performance for the Indian coal mining organization. BSC administers strategic elements of decision making in assessing the performance of the firm whereas FAHP, on the other hand, is applied to determine the relative importance weight of criteria in regard to organizational objectives taking into consideration the vagueness and ambiguity of information as characteristics of decision-making problems. The findings of the present study establish the proposed framework as an analytical tool in strategy formulation and provide rationale guidance to management with regard to performance improvement.