To find out factors influencing outsourcing of services in selected state corporations in Kenya
Mukiri, Jane Charity
Mukiri, J. C.
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The purpose of the study was to find out factors that influence outsourcing of services in some selected State Corporations in Kenya, a system that many State Corporations have recently adopted as a strategy in their operations. The Corporations hire other firms to provide some of the non- core services. The study was guided by the following specific objectives:- (i) to identify the factors that influence outsourcing of services; (ii) to establish the benefits derived from outsourcing of service; (iii) to determine the challenges to effective implementation of outsourcing of services; and (iv) to establish possible interventions that could be employed to enhance effectiveness of outsourcing of services. The study followed a descriptive study design, using convenience sampling design of thirty (30) State Corporations based in Nairobi. From each of the selected corporation, two (2) respondents were purposely selected (Head of finance and the Head of procurement) to obtain sixty (60) respondents. Primary data was collected by use of a structured questionnaire with mainly closed-ended questions while secondary data was obtained from organizational reports and data to supplement the primary data. Microsoft Excel and the Statistical Package for Social Science (SPSS) software were used to obtain additional analysis. Data presentation was done using frequency tables. The study findings show that the types of services outsourced by state corporations in Kenya include: - Information technology; human resources; facilities and real estate management; accounting and auditing; cleaning services; customer care; security services; and maintenance of the Information technology system and equipment. Some of the critical factors that influence outsourcing of services in state corporations include competition for professional services; operational costs; nature of business; changing working environment; management policies; Government rules and regulations; and procurement processes and policies. The major benefits derived from outsourcing of services include introduction of workforce flexibility by outsourcing the peripheral workforce; the problem of managing industrial relations is minimized; reduced costs and increased efficiency; and focus on core competencies. However, there were major challenges faced by state corporations in the implementation of outsourcing process. These include lack of clear policy framework and guidelines; weak enforcement mechanisms; centralized and lack of transparency in outsourcing; opposition from staff and resistance to change; the external systems may not be compatible with internal ones; and lack of user involvement in design - over engineered applications. The possible interventions that organizations could employ to enhance effectiveness in outsourcing include the outsourcing of project management responsibility; the definition of outsourcing project scope, definition of project expectations and a clear definition of key performance indicators. In conclusion an effective outsourcing process will allow suppliers to provide satisfactory quality service and price within a timely delivery schedule. The basic tenet of outsourcing is straightforward: acquire the right item at the right time, and at the right price, to support organizational actions while concentrating on core organizational activities. A serious and sustained review of such decisions is needed to properly manage the outsourcing system. Based on the findings of the study, it is recommended that the practitioners in outsourcing and supply chain management improve ways to manage buyer and seller relationships so that value can be appropriated more effectively by buyers from, or in conjunction with, their suppliers. There is also need for practitioners to understand the attributes of power that provide opportunities for buyers or sellers to have effective leverage over others in business relationships. Whenever practitioners operate within any buyer/supplier relationship, an objective situation of power must exist between the two parties to the exchange. Finally, the practitioners also need to understand the range of relationship choices that are available to them and the ability to choose wisely from the relationship-management choices available.