Outsourcing and Performance of Savings and Credit Societies in Nairobi, Kenya

Abstract

The purpose of the study was to explore the effects of outsourcing on performance of SACCOs in Nairobi City County. The study was guided by two objectives namely; to establish services outsourced by SACCOs in Nairobi City County, Kenya and to determine the relationship between outsourcing and performance of SACCOs in Nairobi City County, Kenya. To satisfy the research objectives, the study population was the 34 deposit taking SACCOs in Nairobi City County. All the 34 SACCO in Nairobi were considered and hence it was a census. Two respondents namely finance and operations manager were selected from each SACCO. These respondents were purposively selected because of their position and their role in running of SACCOs. The data was collected using structured questionnaire which had open and close ended questions. The data collected was analyzed using descriptive statistics and presented using frequency tables, pie charts and frequency graphs. SPSS (Statistical Package for Social Sciences) version 17 was used in analyzing data. Regression analysis was also performed in establishing the relationship between outsourcing practices and performance of SACCOs in Nairobi City County. The regression analysis revealed that new product development and information technology (IT) outsourcing practices positively affect performance of SACCOs while customer support outsourcing practices negatively affects performance of SACCOs in Nairobi City County. This confirms Gilly and Rasheed (2000) and Masten (1993), studies which found that the link between outsourcing and performance is less developed empirically. The researcher therefore recommends that SACCOs management be educated on the need to have outsourcing in SACCOs operations and the come up with clear outsourcing strategies that will ensure that the benefits of outsourced services surpasses cost. SACCOs should also use bank and other financial institutions to benchmark their outsourcing practices, identify the gaps and come up with strategies of overcoming such gaps.