The Effect of Human Resource Outsourcing on Performance of Logistics Companies in Mombasa County, Kenya

Abstract

Increased business competition, accelerated changes in technology and globalization effects have led logistics firms in Mombasa County to seek methods of reducing cost as well as creating new business opportunities. Human resource outsourcing has become very critical function for organizations due to its direct effect on the organizations’ operational activities. The increasing use of outsourcing arrangement and its complexity which is unfamiliar, has suggest that firms need to understand its intricacies in order to benefits from its cost advantages. This calls for scientific research. This research sought to examine the effect of human resource outsourcing on performance of Logistics Company in Mombasa County. Particularly, the study aimed at establishing whether outsourcing activities such as recruitment and staffing, training and development, payroll management, performance management, and contract and casual employment management have effect on the performance of logistics companies in Mombasa County. The researcher applied descriptive cross-sectional survey research design in carrying out the study. The respondents were 128 heads of HR department in the 128 randomly selected logistics companies from a population of 425. Semi-structured questionnaires were distributed to the respondents via email and feedback also received via email. The quantitative data was analyzed by use of descriptive and inferential statistics by use of statistical package for social sciences (SPSS). Both the correlation and regression analyses were used in the analysis. The results indicated that recruitment and staffing, training and development and payroll management had a positive but insignificant relationship with the performance of logistics companies in Mombasa County. Performance management had a negative and insignificant relationship. Only contract and casual employment management had a positive and significant relationship with performance of the logistics companies in Mombasa County. Only contract and casual employment management had significant relationship with performance of logistics companies in Mombasa County, while all the other HR functions outsourced had a negative relationship with performance. The top management should be in the forefront to support the business by increasing the extent of human resource outsourcing through outsourcing several human resource functions. The study has shown the outsourcing several human resource functions would spur the performance of the organization.