Service Outsourcing and Operational Performance of the Real Estate Firms in Nairobi City County

Abstract

In the current dynamic era which is described by market volatility, cycle times, constant change cycle times and demand to reduce costs attached with the globalization trend has driven the rising need to outsource business operations. The return on asset of the user’s firm can be improved by outsourcing. Firms are focusing more on their core processes while non-core processes are relegated to third party logistics companies. The purpose of this study was to find out the effect of outsourcing practices on the operational performance of real estate firms in Kenya. The specific objectives of the study were; to determine the extent to which different outsourcing practices have been adopted by real estate firms and to establish the relationship between outsourcing and operational performance of real estate firms. This study was guided by the transaction costs theory and the agency theory. The study was a census approach since all the elements were considered. Primary data was collected from the respondents by use of self-administered structured questionnaires containing both open and closed ended questions. The questionnaires were administered through the drop and pick method. The collected data was edited and coded and fed into the SPSS computer package to generate both descriptive and inferential statistics. On the extent to which the different outsourcing practices had been adopted, the study found that logistics outsourcing, human resource outsourcing and administrative support outsourcing had largely been adopted as shown by overall means of 4.019, 4.019 and 3.844 respectively while the financial services function had moderately been outsourced as shown by 3.695. The inferential statistics was undertaken by performing a regression analysis on the dependent variables (speed, cost and quality) against the independent variables (financial services outsourcing, administrative support outsourcing, logistics outsourcing and human resource outsourcing). The study found that outsourcing decision significantly influences the operational performance of real estate firms. This was evidenced by p values of 0.000 at 95% level of confidence for all the three regressions. This shows that the model adopted for this study was significant and that outsourcing was significant in predicting the operational performance of real estate firms. It was concluded from the study that the attainment of operational performance is not a solely independent process but entails the coordination of different factors such as administrative support, financial services outsourcing, logistics outsourcing and human resource outsourcing. The study therefore recommends that real estate firms and other organizations must adopt different outsourcing practices in order to gain operational efficiency but be on the lookout on the challenges that come with outsourcing.