A Survey of Business Outsourcing Practices Amongst Private Manufacturing Companies in Nairobi

Abstract

Few management practices have attracted as much attention as outsoucing is enjoying at the present time. Over the last few years, outsourcing has become an important issue for many organizations. Many companies have finite resources and cannot always afford to have all manufacturing technologies in-house. This has resulted in an increasing awareness of the importance of outsourcing. The potential of outsourcing has moved from peripheral activities such as cleaning and catering to critical activities such as design and manufacturing. Organizations are thus focussing on outsourcing as a management strategy to delegate major non-core functions to specialized service providers. Outsourcing therefore represents a significant shift in the way organizations manage and staff their business support activities. This study was an exploratory study that sought to determine the outsourcing practices used to gain competitive advantage in the private manufacturing industries operating in Nairobi. The objectives of the study were twofold. The first was to establish the extent of outsourcing within private manufacturing firms based in Nairobi. The second was to determine factors that influence outsourcing in the industry. The data was collected by use of a structured and non-disguised questionnaire. The questionnaires were administered on by a "drop-and-pick-Iater" basis. One hundred manufacturing firms were surveyed of which fifty-two responded. According to the findings of the study, all the manufacturing industries that were surveyed outsourced various activities. This was most prevalent in departments like Human Resources, Finance and Information technology. There is greater drive towards the use of outsourcing as a strategy to cut costs, to pursue the core business activities akd outsource the non-core or non-strategic activities. The survey was able to find out the factors that are important in maklng the decision to use outsourcing as a strategy for competitive advantage. Firms need to evaluate their decisions based on the strategic implications of outsourcing. Also of importance is evaluation of vendors likely to create valuable partnerships intended to culminate in organizational success. The study clearly revealed that the sourcing debate has moved from whether to outsource, to what and how to outsource.