FACTORS INFLUENCING SUSTAINABLE OUTSOURCING RELATIONSHIP: AN EMPIRICAL INVESTIGATION INTO THE INDIAN COAL MINING INDUSTRY

Outsourcing is one of the strategic decisions adopted by organisations around the globe to stay competitive. Service providers have now become outsourcing partners in terms of increasing the value proposition of products and services of the client firm helping them achieve a stronger competitive position. Under the given scenario, one of the primary challenges for  the client firms is to maintain such outsourcing arrangements with the service providers so that the current competitive position and sustained business performance are maintained over an extended period of time. Although it apparently seems an effortless decision to engage external providers for creating and adding value as and when the firm is under competitive pressure, maintaining the significance and complexity of such outsourcing arrangements is difficult for both the partners. Hence, developing a sustainable client-provider relationship in an outsourcing arrangement is of absolute necessity, as it not only contributes to outsourcing success but also acts as a critical factor in risk mitigation and aids in deriving mutual benefits. The focus of this research is to identify the critical success factors for developing and maintaining a sustainable outsourcing relationship between the service provider and the client firm, considering the risks and also the likely negative consequences, in the context of a coal mining organisation. The study attempts to identify the effects of unexplored antecedents on opportunism in an outsourcing engagement and, subsequently, the significance of opportunism in relation to a sustainable relationship. A structural equation modelling (SEM) approach has been deployed for the empirical evaluation of the hypothesised relationships between the constructs using the responses obtained from the executives of the Indian coal mining organisation. The results portray the significance of each antecedent, i.e., measurement problem, qualification of service provider, and service provider lock-in in view of undesirable outcomes in an outsourcing relationship. Further, the role of the service provider’s organisation culture, moderating the strength of the linkage between opportunism and the sustainable relationship has also been explored.