Maintenance outsourcing in electric power industry in China

Abstract

Maintenance outsourcing has been on a roll for more than a decade and the trend will continue. In China, the volume of maintenance outsourcing in electric power industry has significant increased in recent years. This paper analyses the opportunity and challenge of maintenance outsourcing service in power plants in China. Feasible suggestion is proposed. Interviews to the managers and experts in power plants show that the theory of core competence and the theory of labor division can interpret the rapid expansion of maintenance outsourcing. The main reason for rapid increase in maintenance outsourcing in electric power industry including the influence of international outsourcing bandwagon, the virtual effect of reducing cost and improving core competence brought about by outsourcing, and the objective demand by the electric power structural reform. The main existing obstacles to further development of maintenance outsourcing service in electric power industry in China include the imperfect maintenance of the outsourcing service market mechanism, the insufficient of appropriate vendors, and the misunderstanding of risk of maintenance outsourcing. Selecting appropriate vendors, designing tight contracts, developing partnerships with vendors may help promote the foundation of maintenance outsourcing service market for power plants in China. However, more exploratory research is necessary to understand the maintenance outsourcing conceptually and empirically, especially in quantitative analysis of management approach.