The Impact of Outsourcing on the Performance of Parastatals in Kenya

Abstract

Outsourcing is growing at a rapid rate throughout the world because organizations view it as a way to achieve strategic goals, improve customer satisfaction and provide other efficiency and effectiveness improvements. Outsourcing assists management focus all their intellectual resources, expertise and time on the distinctive competencies that give the firm an edge in the market. With the increasing globalization, outsourcing has become an important business approach, and a competitive advantage may be gained as products or services are produced more effectively and efficiently by outside suppliers. The objective of the study was to determine the impact of outsourcing on the performance of parastatals in Kenya. The research design for the company was descriptive research design. Data was collected using a questionnaire which consisted of both open and closed ended questions. The data collected was analyzed using descriptive statistics and classified, tabulated and summarized using descriptive measures, percentages and frequency distribution tables and graphs. The findings of the study was that the company considers outsourcing ICT and also focussed on competence, cost, flexibility, right time, qualification, professionalism, experience, reputation, right quality of service and type of relationship before deciding the company to outsource the service to. The performance of supply chain was being influenced by quality of service, supplier management, supplier relationship, supplier selection, time service delivered and the internal assessment of criticality of business activities. The risks facing the company as a result of outsourcing training services was found to be loss of command of outsourced service, over reliance of external parties, loss of confidentiality, loss of control in decision making, limited flexibility, low quality work and limited time. The benefits the company derived from outsourcing the service was found to be reduced costs and improvement of its competitive position, increased productivity, focusing on the core competence and strategic flexibility through changes in external flexibility, functional flexibility, change in product range, workplace flexibility and internal flexibility.