The effect of outsourcing on the financial performance of supermarkets in Nairobi

Abstract

Outsourcing is receiving a lot of attention from supermarkets chains all over the world. This is attributed to perceived benefits expected to accrue to a firm from outsourcing by way of cutting costs and hence enable supermarkets to improve their performance and add firm value. In current years the competition has been extremely intense with each supermarket fighting for its survival against competitors who do not only want to remain cost effective and drive profit but also attract and retain customers. The objectives of this study were to determine the effect of outsourcing on financial performance of supermarkets in Nairobi Kenya and establish the services that are outsourced. The study adopted a descriptive research design. Primary data was collected using a questionnaire that was dropped and picked from a population of 50 supermarkets in Nairobi. The number of supermarkets that responded in time for the study was 28 which represent 56% of the total population studied. The study established that all the supermarkets that responded embrace the outsourcing strategy. The supermarkets outsourced various activities the most prevalent being information technology and security services. The findings indicated that there is a significant relationship between outsourcing and the level of financial performance for each of the respondents. Results indicated positive performance and hence outsourcing is viewed to have enhanced banks performance. However, as a suggestion to future research, a more sophisticated performance measurement system ought to be used.