Implementation of outsourcing strategy at Kenya Post Office savings bank

Abstract

Implementation of outsourcing strategy is currently viewed as a globally accepted best practice which has brought dramatic change of fortunes in many organizations. Smart organizations focus on core competences that provide high value, maximize return on internal resources, treat many services as strategic enablers and also have an internal customer/supplier orientation. Through outsourcing organizations can improve on customer service, cut down costs, minimize risks, increase competitive advantage and improve shareholders returns. As a result both outsourcing organizations as well as service providers require relevant information on existing and emerging practices and trends so as to make optimal operational and management decisions. The implementation of outsourcing strategy has challenges and risks involved and in order to get the in sight of these challenges and risks, a study was carried out at the Kenya Post Office Savings Bank who have implemented the outsourcing strategy in most of their non-core services. The purpose of study was to investigate how Postbank has implemented the outsourcing strategy which was found to be almost complete and the challenges they have faced which include switching costs, degree of control, human and technology interface, threat to security and confidentiality, resistance to change from employees, lack of support from top management lack of resources and legal issues of outsourcing. The study adopted a case study design and utilized both primary and secondary data. The same was guided by a pre-planned interview guide. From the study, it was clear that the implementation of outsourcing strategy in Postbank has gone on well despite challenges faced but at the end, it will benefit the organization. All the employees of the bank understand the outsourcing strategy and are aware that is started three years ago. They are aware that services line security, messenger services, cleaning, tea provision, transport and medical services have been outsourced. In conclusion the challenges can be solved by continuous training, provision of recourses and support from top management will help is solving the problems encountered thus succeeding in the outsourcing strategy implementation. It is recommended that the bank involves all stakeholders to conclude the implementation of the outsourcing strategy which is almost complete. There is need for further study in implementation of outsourcing in banks and also in other industries since they all operate in the same competitive environment.