Effect of outsourcing on performance: a case of spectre International, Kisumu Kenya

Abstract

Abstract

Globalization and increasing consumer demand for value have pushed firms to efficiently use limited resources efficiently; outsourcing is one of the ways through which firms attempt to address the new requirements of the market place. It has been adopted by many organizations with much success as it can offer many incentives that can contribute to a firm's competitiveness. However this success has not been realized in most firms. Such contradictory outcomes raise concerns among companies evaluating outsourcing as a crucial strategic initiative. Global empirical evidence adduced show study's done on outsourcing lacking consensus as to the effect of outsourcing on performance. Locally no study has been done to establish the strength and the relationship between these variable. In spite of the wide use of the outsourcing policy at Spectre International, its performance has been wanting and no study has been done to reveal the reasons for the low performance and it is in this regard that the study was thought of The study was anchored by Resource based theory. Both case and correlational research designs were used to provide empirical data to help address the existing research gaps. The objectives of the study were to establish the extent to which Spectre International adopted outsourcing and to determine the effect of Outsourcing on Performance of Spectre International. The target population for the study was 56 out of which a sample of 50 were selected purposively. The primary data was collected using structured questionnaires and analysed using descriptive, correlation and regression analysis. The supervisor and supply chain experts preexamined the instrument to ascertain its validity. To assess instruments reliability correlation of the scores from both testing periods was done and coefficient of 0.821 found illustrating that the scale was reliable. The findings showed the firm had adopted outsourcing to appreciable levels as given by a weighted mean grade of 3.92. The regression results revealed an R2 = 0.795 implying that transport services, security services, human resource services and cleaning services explains performance up to 79.5 %. All the P coefficients were found to be positive (PI =0.971, P2= 0.676, P3=0.547, and P4= 0.603) meaning that any unit increase in the independent variable would lead to a positive increase in performance. It is therefore recommended that the management of Spectre International consider putting in place targeted measures intended to spur adoption of outsourcing on a few areas of outsourcing such as transport service and cleaning services as they contribute more to the organizational performance.