An investigation of the business process outsourcing strategy and performance in manufacturing and technology driven companies in Kenya

Abstract

As the world goes through the current economic recession that has impacted both developed and developing countries, focus will shift to those strategies that can help companies remain lean and quick to overcome the effects of the economic decline and the subsequent decline in markets. Business process outsourcing is one of the strategies that would help firms remain focussed in their core activities and consequently remain competitive in the face of the global financial squeeze. Outsourcing is becoming a significant strategic issue. According to Casale (2000), outsourcing has become a standard practice across all industries. Further, it has evolved from being a 'controversial practice to a mandatory business strategy for companies to compete successfully in today's fast-paced, e-commerce-enabled market environment' (Casale, 2000). Casale asserts that outsourcing is no longer a tool only for cost-control, but rather has become a strategic tool for innovation, global expansion, and a source of competitive advantage. This study evaluated the effect of Business Process Outsourcing (BPO) as a strategy on company performance. The study used the descriptive research method. Structured questionnaires were employed to measure researcher- set variables related to business process outsourcing and performance in Kenya's manufacturing and technology driven firms. The questionnaire also had sections for the respondents to record what the researcher could not have identified as a measurable variable. Several statistical analyses were performed on the data collected form the field. Descriptive statistics..were used to analyze the distribution of any category and numerical responses to generate frequencies, percentages, graphs and tables. Data from open ended questions were transcribed, reconstructed and analysed using narratives. The study findings revealed that companies that have outsourced their non -core activities have realised improved performance, better quality management and competitive advantage among other benefits. Some of the respondent companies have not outsourced non core activities as they believe they have adequate in-house capacity.