Challenges of the implementation of business process outsourcing strategy at the East African Portland cement company ltd in Kenya

Abstract

In the current rapidly changing competitive business environment, organizations endeavors to outperform one another. Thus the company must deliver greater value to customers or create a comparable value at lower cost or both in order to outperform competitors. Cost is generated by performing particular activities, and cost advantages arise from performing particular activity more efficiently than the competitor. Similarly, differentiation arises from the choice of activities and how they are performed. To enhance business processes performance with an objective of cost reduction and satisfaction of customers, many organizations are turning to Business Process Outsourcing (BPO) strategy. East African Portland Cement Company (EAPCC) is one of the organizations that have adopted BPO strategy as a move to gaining competitive advantage. EAPCC is the oldest cement manufacturing company in Kenya with its operations dating back to 1933. Over the years the market dominated by EAPCC has been invaded by competition resulting to reduction of market share to 18% and adoption of BPO strategy was to enable the organization regain its competitive advantage. The implementation of BPO strategy at EAPCC has not been smooth and therefore the study was to determine the challenges in the implementation of Business Process Outsourcing strategy at East African Portland Cement Company Limited. The case study method was adopted since it provides very detailed information about a particular subject that it would not be possible to acquire through another method. The study used primary data which was collected from the top management staff of EAPCC through face to face interview. The data collected was then analyzed through content analysis method due to its suitability to analyze data collected from Open-ended questions which are more difficult to code. The study established that business operations that are outsourced by East African Portland Cement Company are mining operation, security services, various consultancy services, transportation of raw materials and cement, sales of cement in Uganda, marketing, recruitments for senior position, printing services, garbage collection, fumigation and cloud based PABX. The study also established that outsourcing at EAPCC is driven by cost reduction, lack of internal expertise, quality of services, lack of adequate infrastructure and the need to focus on core business. The study concludes that the challenges facing the organization in implementation of business process outsourcing strategy are selection of the right vendor, loss of control, resistance from staff and leakage of information to other competitors. The implication of study is that East African Portland Cement Company Ltd and other organizations practicing business process outsourcing strategy or intending to adopt BPO strategy will use the study to benefit the organization by formulating strategies to counter the challenges of BPO strategy and enhance successful implementation of BPO. The policy makers will use the recommendations from the study to formulate policies that will enhance business process outsourcing strategy implementation in organization. The academicians would use that the study as a basis upon which further studies on Business Process Outsourcing could be researched. The study also serves as a source of reference for future scholars besides providing areas of further research on BPO.