Outsourcing Impact on Operational Performance of PSU Steel Industry

Abstract

Public Sector Undertakings (PSUs) within the Indian steel sector have witnessed significant change through outsourcing practices meant to facilitate efficiency, curtail costs, and increase competitiveness. The operational performance effect of the same, however, is a matter of contention. This research examines the association between outsourcing functions like logistics, maintenance, IT, and ancillary services, and measures of operational performance such as productivity, turnaround time, cost-effectiveness, and quality standards in PSU steel plants. A mixed-method research approach was employed involving primary data from managerial staff and secondary data from corporate performance reports of major PSUs like SAIL and RINL. Statistical inference confirms that outsourcing has caused moderate productivity and cost savings improvements but is challenging in quality control and dependence on third-party suppliers. This study contributes to the knowledge of strategic outsourcing consequences and provides actionable insights for PSU leadership and policy makers interested in sustainable improvement of operational performance.