Effects Of Outsourcing On Organizational Performance Of Oil Marketing Companies In Kenya

Abstract

Outsourcing is using an external provider for services to a company that is not able to provide them for itself, or cannot provide them in a better and efficient way. Almost all business functions have become complex with globalization, technology, and competition progressing at a speedy pace. By strictly analyzing the motivations, prospects, and justifications for outsourcing basic supply chain functionality, enables companies to make better and sound decisions hence generating progressive yields and shareholder value (Hockey Min, 2012). The core objective of carrying out this study was to analyze the effects of outsourcing services in the oil marketing firms in Kenya. Descriptive research design was employed in this study .The population of the study consisted of 30 oil companies in Kenya targeting managers in the legal departments, Finance/IT departments, Head of operations and heads of marketing thus giving a target population of 120 managers. A census sampling method was conducted owing to the small number of the study population. The study used primary sources to collect data by use of questionnaires. Data analysis was done using Microsoft excel and statistical packages for social sciences (SPSS).The study findings were that outsourcing influences organization performance even though to a small extent. This might be due to our variables that proved to be weak in predicting the rate of increase. Professional outsourcing, manufacturing outsourcing, Process specific outsourcing and operational outsourcing explain 4% of the organizational performance. Only process specific outsourcing had a notable influence on the organization performance. Professional services outsourcing affect organizational performance and thus an organization needs to minimize professional outsourcing as it kills the credibility of the organization. Manufacturing outsourcing affects an organization negatively and thus if possible a company should thrive to manufacture its products or services to ensure they conform to market standards and also control the quality of the products. Process specific outsourcing is positively related to organization performance thus companies can take advantage of that to increase profitability, productivity and time by ensuring they outsource the best to get the best results so as to improve organization performance. A further study is needed to find the really predictors of organization performance in oil companies like manufacturing, production.