Outsourcing and Operational Performance of Commercial State, Corporations in Kenya

Abstract

Due to the ever-changing nature of today's global marketplace, doing business has become more difficult. Organizations are becoming sick of the old methods of conducting business because of the increasing number of signs that point to higher uncertainty in the future. In order to remain competitive and viable in the market, most organizations have devised solutions to address these issues. One strategy is to focus on the company's core capabilities while outsourcing or contracting out the majority of the company's operations. An analytical measuring system is required for the never-ending process of improving operational performance. The general objective of the study is to examine effect of outsourcing on operational performance of Commercial state corporations in Kenya. The study was anchored by the core competency theory, agency theory and resource based view. The study used descriptive cross-sectional survey. The data was collected from operations managers, warehouse managers and supply chain managers. It was found that ICT services, logistics management services, human resource, sales and marketing and financial management were the most commonly outsourced services. Logistics and human resource services were outsourced to the greatest extents. A favorable association among outsourcing and operational performance, according to the study's findings, was shown to exist. According to the findings of the research, commercial state corporations outsource ICT to the greatest degree possible. A favorable association among outsourcing and operational performance, according to the study's conclusions, was shown to exist. The study also came to the conclusion that service outsourcing enhances the operational performance of commercial state corporations in form of greater levels of productivity, enhanced productivity of employees, reductions in operating costs, savings on hiring costs, timely delivery, and better quality. According to the findings of the research, commercial state enterprises in Kenya should strive to improve services to its customers by outsourcing critical functions. Outsourcing important services guarantees that each aspect is handled effectively, allowing for more time to be spent on the delivery of services. Second, the study suggests that commercial state businesses assess their outsourcing policies to ensure that service providers are used in the supply of some services that are not important in the functioning of the company.