Evaluating the Best Outsourcing Service Country in the Southeast Asian Region: A Fuzzy-AHP Approach

Abstract

Abstract Over the last two decades, the popularity of outsourcing, one of the most important elements in supply chain management, has been on the rise. Outsourcing is considered to be a key vehicle for firms to narrow their business operations and focus on core competencies. More recently, outsourcing has also been seen as a key source of innovation. Because of this phenomenon, an increasing amount of research in this field has come to aid firms in figuring out the optimal outsourcing service destinations. However, most of these studies concentrate on a specific field at the company level, therefore leaving a gap in research for a complete and comprehensive framework study. This study attempts to address this research gap by constructing an outsourcing hierarchy model with four levels. The four levels introduced in this study are the following: overall goal, criteria, sub-criteria, and alternative. Criteria would include the most important attributes, such as cost competitiveness, human resources, business environment, and government policies. Each criterion itself would be supported by several sub-criteria. With respect to these criteria, seven typical countries in the Southeast Asian region were selected to serve as alternatives. This article applied the fuzzy analytic hierarchy process approach to help decision makers identify the most important dimensions and the optimal outsourcing service country. As a result, the higher the priorities’ weights, the more important the criterion or the alternative will be. In this study, cost competitiveness is the most important element, followed by human resources and business environment. The results of this study indicate that China is the best destination among seven typical outsourcing service countries. Furthermore, the rise of Vietnam, Thailand, and The Philippines is creating new choices for decision makers. This study not only enriches the existing literature but also provides readers and decision makers a comprehensive view of the given field.