Strategic Outsourcing: the Experiences of Companies Listed in the Nairobi Stock Exchange

Abstract

Today's global market place is becoming fiercely competitive than ever before. As Thomas Edison could say, "If there is a better way, find it." And so the possibilities in a supply-chain world are astounding, but the challenges that lie along the path to supply chain excellence are equally formidable (Fawcett, 2001). A resultant effect is that firms are increasingly performing certain functions or processes in the supply chain and outsourcing the rest of non-core processes so as to create competitive advantage within this volatile environment. The objective of this project was to determine the experiences of Kenyan companies listed at the Nairobi Stock Exchange with respect to strategic outsourcing, especially in management of the process, expected benefits, risks and the future of this strategic tool. In a sample survey carried out by use of questionnaires sent out to top corporate executives, respondents were asked a set of questions, responses of which were analyzed to reach a set of conclusions. The results show that outsourcing is driven by top management and is seen as a strategic tool that would enable the firms to compete in the future. It also shows that information technology, human resource and some production processes are the areas for increased future outsourcing. The risks foremost in executives' mind include honesty of the outsourced suppliers and that outsourcing may make the firm unable to learn to perform the activity being outsourced. Overall though fairness, team approach and trust are key to a successful strategic outsourcing relationship.