Implementation of Outsourcing Strategy at Selected Sugar Companies in Kenya.

Abstract

When different companies within an industry make a choice to outsource an activity and settles on a particular implementation process that suits their uniqueness, they are bound to encounter different challenges during the implementation process. These challenges will consequently mirror the outsourcing implementation process used, company management, and ownership structure. The sugar industry is currently faced by a number of challenges and outsourcing of noncore activities has emerged as one of the many strategies being implemented to mitigate these challenges. The objectives of this study were: to establish the outsourcing strategy implementation practices, to determine the challenges of implementing outsourcing strategy, and to establish the measures put in place by the selected Sugar companies to deal with the challenges. To achieve these objectives, a multiple-case study design was conducted. Primary and secondary data was collected from interviews with senior managers and analyzed using content analysis. The findings from the study were; the companies have outsourced noncore activities to external firms motivated by focus on core competencies, access to specialized skills, and cost reduction. Ineffective management of the implementation process, resistance to change from the workforce, and conflict of interest from employees were common implementation challenges faced by the companies. To mitigate these challenges, top management is involved in the outsourcing steps, staff members are provided and availed sufficient information about change, there are open communication channels within the organizations, as well as adequate policies and operating procedures that guide members of staff while undertaking various activities. The study concludes that outsourcing is beneficial to the companies, the companies have documented the process, service providers have duly signed contracts, and there are differences in the activities outsourced attributed to the number of years in operation, ownership structure, and oversight system. The study complements Agency theory and Transaction cost economics theory in the study of implementation of outsourcing. The study recommends that companies should step up enforcement of the current rules, regulations and policies; dispute resolution mechanisms should be strengthened; the companies should renew their focus on staff training at all levels, and regular benchmarking should be undertaken with the best in class to learn as well as share experiences. Overall, the study partially concurs with related empirical studies and but also contradicts some. Finally, based on the limitations of the study, further research can be done employing a qualitative methodology of data collection in all the companies in the industry and the findings compared with the current data