Outsourcing and operational performance of major petroleum marketing firms in Kenya

Abstract

An organizational competitiveness based on capabilities and production strategies, results in a better quality, efficiency and flexibility in the firms operation. With the increasingly competitive environments along with changing customers' demands, companies are required to continuously evaluate, improve and reengineer their operations with the aim of identifying those strategies that enhance the firms’ performance. Outsourcing is one such strategy that can be pursued. The research objective was to establish the effect of outsourcing on operational performance of major petroleum firms in Kenya. The research adopted a descriptive research design. Data was collected using a self-administered questionnaire that was distributed to 20 senior and middle level managers at the firm that were selected randomly. It was found that outsourcing increased the firm’s competitiveness through access to modern technology and expertise, cost savings and enable the firm to focus on core competence. Firms can maximize returns on internal resources by concentrating investments and energies on core competencies which can be achieved through firms’ transfer of resources from non-value added staff functions to value-added core functions. The expected performance from the outsourcing was not achieved due to a lack of trust which resulted in none sharing of information for fear of sharing with competitors and lack of synergy. Success of outsourcing depends on a userprovider relationship based on mutual trust and faith. Consequently, it is recommended that the firms should adopt those practices that would guarantee them competitive advantage in their business environment and at the same time they outsource the processes to the organizations that will provide high quality services which will enable the firms achieve the desired objectives. The limitation of the study was that the data in this research was collected from top managers of the organizations on the basis of their subjective evaluations, objective performance indicators should also be employed in the analysis