Factors That Influence Outsourcing Strategy in Kenya Power and Lighting Company Limited

Abstract

Faced with global competition and increased customer awareness, companies have been forced to adopt cutting-edge strategies to survive in the turbulent environment. Managers need to use only those practices that ensure customer needs are addressed and met in time. Supply chain management has been a norm for many firms with outsourcing being a key element in this process. Managers have limited resources which require to be optimized for maximum output. Firms have therefore to continuously consider the advantages and disadvantages of producing goods and services in-house. Outsourcing has attracted huge attention from many firms as it offers a quick solution in cutting costs and most importantly allows the firm to only deal with those activities that are core to the organization. Business support and non-core activities are better handled by firms who are specialized in specific areas. This case study sought to determine the factors that influence outsourcing strategy in the Kenya Power and Lighting Company limited. Data was collected by use of an interview guide and from documents obtained internally within the firm. The interviewer had a face-to-face interview with the respondents who were managers and functional heads at the firm. Eighteen interviews were carried out before a consistent view could be obtained from the respondents. From the findings of the study, KPLC outsourced several activities. All departments within the firm outsourced some of their processes. Human Resources and administration, and Distribution departments practiced outsourcing more than the other departments in KPLC. The study revealed that, outsourcing was used in KPLC to cut on vi costs emanating from human labour, accelerate electricity connection to the huge Kenyan market and to allow the firm to concentrate on the core activities. KPLC usually made the decision to outsource by considering cost, time duration and the strategic implications of outsourcing. The study revealed that some partnerships with outsourced firms have lead to management consultancy services being extended to employees to participate abroad which is a form of diversification of business. It also revealed that supervising the outsourced firms in KPLC is a big challenge which requires a refined approach.