Outsourcing Strategy and Performance of Kenya Tea Development Agency Managed Tea Factories in Kenya
Abstract
Organizations are constantly in search of strategies to increase their competitive edge in
our present day competitive world. Outsourcing has become one of those strategies that
are being embraced to reduce cost, improve efficiency and improve on profitability. No
study is available on the impact of outsourcing on performance of KTDA managed
factories. This study sought to fill the gap by establishing how outsourcing can improve
factory performance. The study was cross sectional longitudinal research targeting the 54
managed by KTDA factories in Kenya. Primary data was collected using structural
questionnaires which aimed at establishing the extent of outsourcing and the effect of
outsourcing on performance. The secondary data was collected from books of accounts
and annual returns at KTDA The findings of the study were that outsourcing improved
on efficiency in internal business operations, improved customer satisfaction and
improved performance. However it was found that morale of staff went down with
outsourcing. It was also noted that quality of the final product improved over the three
years. That was attributed to improved efficiency in operations and the ability to
concentrate on the core business of the factories. Over the three years costs increased
marginally and this was attributed to factors other than outsourcing majorly changes in
oil prices, increased cost of labour and deteriorating shilling against dollar. Respondents
also advocated for top factory management to be involved in formulation of outsourcing
strategy. They also gave a precaution on the extent of outsourcing where core services
should not be outsourced. The study recommended that there is need to outsource to
improve on efficiency and reduce costs. However in cases where the service provider
cannot deliver sufficiently, the respondents were of the opinion that such service be kept
in-house. It was also found that there should be further studies on the field to establish
the relationship between outsourcing and profitability with a detailed focus on all
determinants of performance.
Citation
Master Of Business Administration (MBA), University of Nairobi, 2013Publisher
Universty of Nairobi