Strategies Adopted By Glaxosmithkline In Managing Outsourcing Relationship

Abstract

Outsourcing has become a common practice among both private and public organizations and is a major element in business strategy in the 21st century. This study sought to find out the strategies adopted by GlaxoSmithKline in managing outsourcing relationship. The study was guided by the following objectives: to identify the main motives for starting an outsourcing relationship; to identify the benefits of an outsourcing relationship and to establish the factors that influences the management of the outsourcing relationship by the client organization. The study adopted a case study methodology. 28 respondents were targeted, 22 of them responded translating to a response rate of 78.5%. SPSS was used to analyze the data. The results are displayed in form of tables. Cost effectiveness of the outsourcing decision is a key factor to be considered before outsourcing. From the research findings it is evident that cost saving on overheads and concentration on core business activities was the most motivating factor. Overall, from the study the company has accrued both direct financial gains as well as non-financial gains. As a result of outsourcing, management has directed focus on core business activities. However, the organization has not attained maximum value for money given the result finding of low quality and lack of timeliness in service delivery. On strategies of managing outsourcing relationship, clear service level agreements with vendors, appoint in house managers to hold regular meeting with vendors and instituting flexible contracts were cited as the key strategies. In future outsourcing activities, the organization should carefully select vendors who have technical capability to perform expected tasks. Organizations should ensure that outsourcing aligns with the overall corporate strategy. Cost benefit analysis should always be done to evaluate the real value to be anticipated from service outsourcing. Research established that organization will benefit from setting out clear service level agreements with suppliers as well as appointing in house managers to be in charge of service providers and monitor their progress. This is practical to implement during fresh bids as well as during contract renewal. Existing department in charge of suppliers can be broadened to accommodate auxiliary service outsourcing.