Outsourcing decision-making in mining industry

The objective of this research is to describe the nature of an outsourcing in mining industry and the main focus of outsourcing will be in the characteristics of outsourcing decision-making and its implications on outsourcing decision-making process. Mining industry sector is offering interesting facets for outsourcing as a practice due to the remote locations, mine lifecycle, limited and specified supply market and challenging production. The theoretical contribution of this research creates knowledge from the typical elements of the outsourcing decision in mining industry and shows where the motivators and factors are typically encountered in such decisions, and how they affect to the outsourcing process. In this research qualitative research methods are used. The theoretical framework is created by combining pre-existing outsourcing literature of outsourcing process and outsourcing decision-making. The theoretical framework is used to support the empirical data collection, analysis and formation of the theoretical conclusions. The empirical part consist a multiple case-study with two research cases from a mining industry. Interviews were the main empirical data used. As a result of this study, outsourcing in mining industry is guided by two contextual factors: the production factors and the capacity-based factors. Production related decisions occur more often in the strategic level of outsourcing decision and capacity-based outsourcing decisions in the tactical level. Therefore the outsourcing decision is the groundwork of firm’s capability base and a risk perspective. The strategic risk assessment is to identify how critical outsourced processes are to the organization. For the capability evaluation, several actors have been recognized to have an impact on outsourcing decision. This research also reveals that in some situations, for example in limited market with high uncertainty, the supplier capability can have an overall impact on outsourcing decision of the company. This research provides useful insights for outsourcing managers to evaluate their outsourcing decisions. The study reveals that it is important to understand both internal and external environment of the outsourcing decision and the strategic and structural aspects associated with an organization’s decision to reconfigure