Outsourcing decision factors in publicly owned electric utilities

Purpose. The outsourcing of services in publicly owned electric utilities has generated some controversy. The purpose of this study was to explore this controversy by investigating the relationships between eight key independent variables and a dependent variable, "manager perceptions of overall value of outsourced services." The intent was to provide data so that utilities could make better decisions regarding outsourcing efforts.; Theoretical framework. Decision theory was used as the framework for analyzing variables and alternatives used to support the outsourcing decision-making process. By reviewing these eight variables and the projected outputs and outcomes, a more predictive and potentially successful outsourcing effort can be realized.; Methodology. A survey was distributed to a sample of 323 publicly owned electric utilities randomly selected from a population of 2,020 in the United States. Analysis of the data was made using statistical techniques including the Chi-Square, Lambda, Spearman's coefficient of rank correlation, as well as the Hypothesis Test, Rank Correlation, to test for relationships among the variables.; Findings. Relationships among the eight key variables and perceptions of the overall value of outsourced services were generally weak. The notable exception was with the driving force (reason) for outsourcing decisions where the relationship was strongly positive.; Conclusions and recommendations. The data in support of the research questions suggest that seven of the eight key variables may be weakly predictive of perceptions of the overall value of outsourced services. However, the primary driving force for outsourcing was strongly predictive. The data also suggest that many of the sampled utilities did not formally address these variables and alternatives, and therefore may not be achieving maximal results. Further studies utilizing customer perceptions rather than those of outsourcing service managers are recommended. In addition, it is recommended that a smaller sample population be analyzed after identifying one or more champions to ensure cooperation and legitimacy of data. Finally, this study supports the position that a manager's ability to identify and understand the relationships between these eight key variables and desired outcomes and outputs may contribute to more successful outsourcing operations.