Outsourcing Best Practice - The Case of Large Construction Firms in Iran

Abstract

Aim/Purpose: During an evolutionary time for Iran the purpose of this research study was to establish the outsourcing best practices in the area of supply chain by investigating in the construction firms in Iran, which is identified as the most successful industry in outsourcing. Background: Clarifying outsourcing decisions have been a difficult and challenging task because the outsourcing itself is complex. Meanwhile, the construction industry is recognized as one of the most complex and vibrant industries, although no concentration was set to outsourcing practices and its approach in construction firms in Iran. This paper aims to address this gap. Methodology: Based on a combination of academic literature, screening interviews, and survey, data was collected from Iranian construction firms involved in outsourcing. Participants were senior managers and CEOs from twenty one large construction firms in Tehran. The analysis methods in this study were centered on comparative analysis, factor analysis, Pearson correlation, and relative important indices. Contribution: The paper offers insight into outsourcing decisions, focusing on Iranian construction firms. Findings: The findings identified that construction firms regularly choose to outsource their operation functions/processes to find operational expertise, a wider pool of knowledge and experience, and cost restructuring. The study revealed that selective outsourcing was the popular practiced outsourcing type in construction firms. On the other hand, the study has acknowledged that construction firms mainly practiced strategic outsourcing as a level of outsourcing. The study established that conducting a need analysis prior to making the outsourcing decision is the outsourcing success element for Iranian construction firms. Lastly, the result shows that nearly two thirds of the large construction firms were identified as successful at outsourcing process. Recommendations for Practitioners and Researchers: The outcomes of this research offer practical value for construction managers and researchers to choose the best outsourcing practices method. Impact on Society As the sanctions are removed, it is predicted the economic settings in Iran will become more firm and the findings of the study will assist the successful implementation of outsourcing in economic growth of Iran. Future Research: To further development of this study, an in-depth investigation into risks involved in outsourcing, reasons to insource, economical and environmental effects on outsourcing process, cultural and social effects, as well as the result of sanctions on the process of outsourcing can provide more insight to the outsourcing practitioners.