Outsourcing Services in Parastatals: a Case Study of Kenya Plant Health Inspectorate Service

Abstract

The main aim of outsourcing is to restructure the corporation around its core competencies and maintain outside relationships at the same time. When an outsourcing strategy is successfully implemented it leads to; cost reduction, improvement in capacity, increase in capacity, increase in productivity, improvement of quality, lower innovation costs and risks, improvement of organizational competitiveness and improvement of financial performance. Outsourcing however has some limitations such as reducing the control of a company on the delivery of certain services which makes the company more prone to liabilities. This study sought to determine the impact of outsourcing on performance of Kenya Plant Health Inspectorate Service (KEPHIS).The study used both primary and secondary data. The data was collected from KEPHIS operational departments which were procurement, finance, human resource and administration, Information and Communication Technology (ICT), quality assurance and phytosanitary department. The data collected was analysed using descriptive statistical techniques such as means, standard deviations, frequencies and percentages. The findings of the study were then presented using figures and tables. In order to determine the impact of outsourcing on performance of KEPHIS, the researcher carried out regression analysis.The study concludes that KEPHIS outsources services to a moderate extent. The most outsourced services are cleaning services and guarding services where they are outsourced to a very great extent. Training services, facilities maintenance and ICT services are outsourced to a great extent. This outsourcing has improved the performance of KEPHIS. The study also concludes that there was strong relationship between service outsourcing and firm performance with service outsourcing accounting for 35.1 percent of total variance in the performance of KEPHIS. Further, the study concludes outsourcing of ICT services, cleaning services, guarding services, catering services, training services, transport and logistics services and facilities maintenance services has a positive and significant effect on firm performance. The study found out that outsourcing of ICT services, cleaning services, guarding services, catering services, training services, transport and logistics services and facilities maintenance services leads to improved service delivery. In regard to the challenges faced in adoption outsourcing activities, the study found out that challenges affected implementation to moderate extent. The most faced challenges was lack of suppliers’ flexibility and conflict of interest with outsourcing partners. The study recommends other firms to address the challenges and focus on their core competencies and outsource other services as a way of cutting operational cost and improving service delivery.