ABSTRACT

This study is aimed at assessing the effect of outsourcing on organizational performance. A case study of Guinness Bamenda. The specific _objective were; to assess the effect of outsourcing of back office activities on organizational performance in Guinness Bamenda, to examine the effect of outsourcing of primary activities on organizational performance of Guinness Bamenda, and to investigate the effect of outsourcing of accounting activities on organizational performance of Guinness Bamenda. The research methodology involved the adoption of a survey as a research strategy  and quantitative approach, utilized a self administered questionnaire with a sample size of 36 respondents to arrive at the major  finding of the study. The typed of research is the descriptive research design in which the collection of data from the respondents was carried out only once. Data was analyzed using the statistical package for social sciences (SPSS). The case study found that organizations can benefits from outsourcing both back office activities and accounting activities to improve the overall performance. The research also highlighted the important insight into the relationship between various outsourcing practices and organization performance. And lastly the study recommends that the organization

on should prioritize outsourcing their back office activities and accounting activities, as these have been shown to have a positive significant impacts on their overall performance. This can help organizations focus on their core competencies and improve efficiency and competitiveness, Managers should carefully evaluate the potential benefits and risk of outsourcing primary activities as the current study did not find a significant positive effect, Further research needed to understand the condition under which outsourcing primary activities may be beneficial for organizations performance. Organization should consider the age of the organization as a factor in the strategic decision making. The positive relationship between organization age and performance suggest that more established organizations may have an advantages in term of accumulated knowledge, experience and resource, Policy makers should develop supportive regulatory frame work and incentive that encourages organizations to adopt strategic outsourcing practices particularly in the areas of back office and accounting functions. This can help drive overall productivity and competiveness in the business environment.      

CHAPTE ONE

INTRODUCTION

1.1 Background to the Study

The growth of organizations ultimately results in the expansion of their activities, this growth in some instances tends to divert the organizations focus from their core activities really needed to be done and might invariably affect the overall performance. To be able to avoid or better still reduce this loss of focus that might result in reduced or epileptic performance, there is need for the organizations to come to a decision to disengage their noncore activities in order to allow them have undivided focus on the more important and core tasks without sacrificing quality. This can be achieved through outsourcing (Jae et al., 2000).

According to Nwokocha and Iheriohanma’s (2012) view on outsourcing, it grants organizations the daring opportunity to contract out non-core jobs to specialized firms and contractors at minimal or no cost and burden thus creating enough room for employees to be able to concentrate on the core activities in which they have competence and comparative advantage. In other words, outsourcing is basically the process of hiring a third party to do a job for the company, instead of having an in-house employee do the job.

Organizations consider outsourcing as a very important strategy required for sustenance in the current work environment because it plays a prominent role in improving performance by reducing costs, creating new products and services and equally enhancing quality and productivity (Jyoti, 2015). It is worthy of note that present day outsourcing is no more limited to non-core activities such as cleaning, catering and security but includes critical areas such as design, manufacturing, marketing, distribution, information system etc. (Jennings, 1997; Dominguez, 2006). A lot of notable international companies have been known to have outsourced parts of their job operations to other companies (Jyoti, 2015).

In the world context, Alibaba, one of the world’s biggest global market-place started in China as a small internet company called China Yellow Pages. The organization was not only able to shoot to limelight in the international global market but equally optimized her performance. This was achievable, according to Shiying and Avery (2009), because Jack Ma, the founder of Alibaba, opted for outsourcing their website development to a US firm at a time when US developers were notably far advanced in the knowledge and skills Alibaba needed and was looking for as against the short supply of same obtainable in China. Sev (2009) avers that Kodak Company outsourced its computing operations to International Business Machines (IBM) and the outcome is higher quality computing system and operation at Kodak for less money than it was spending.

In the Africa context, in Nigeria, according to Sev (2009), in addition to Ashaka Cement Plc, which outsourced its operations and services to Blue Circle Industries of United Kingdom, several Nigerian mega banking groups like the United Bank for Africa (UBA) Plc. and Access Bank Plc. outsourced their Automated Teller Machines (ATM) to a company called Interswitch Operations to enhance global competition in the international financial markets. Some higher institutions of learning in Nigeria, for example, presently have given out cleaning of hostels, offices, etc. and even security to contracting firms; services which were hitherto carried out effectively by some sections or arms of the institutions and which were the beauty and attraction of campus life.

According to preliminary interview with management at manufacturing firms in Nairobi region, these companies are increasingly opting for outsourcing of non-core activities relating  to human resource (HR), information technology (IT) and finance. The companies feel they will be able to focus on their core activity by outsourcing functions like promotions, payroll management, bonus, salary disbursement, provident fund, gratuity, recruitment, flexi-staffing, IT work, new product introduction, security and training to HR consultants. All these are in a bid to provide high service quality, improve on skills and experience and offer innovativeness that would consequently spur performance (Nayak et al., 2007).

In Cameroon, a growing trend in work organization is for firms to outsource many activities that had been previously performed in-house. Outsourcing these activities, it is argued, will free up human and capital resources as well as allow for increased flexibility in the way labor is employed. Although the extent of outsourcing and other approaches to flexibility have been well documented in developed countries, little attempt has been made to evaluate such practices in the Bamenda context and specifically in the suppler firm such Guinness Bamenda. The purpose of this study was to review the existing research and to evaluate the effect of outsourcing on organizational performance in Guinness Bamenda.

1.2 Statement of the Problem

The world has embraced the phenomenon of outsourcing and companies have adopted its principles to help them expand into other markets (Bender, 2009). Strategic management of outsourcing is perhaps the most powerful tool in management, and outsourcing of innovation is its frontier (Quinn, 2000). Firms and industries under the context of increasing use of outsourcing arrangements, as well as the unfamiliar complexity, are unaware of how to effectively utilize this strategy to improve their performance (Bender, 2009).

The problem addressed in this study is the conflicting arguments and mixed outcomes surrounding the practice of outsourcing as a means of achieving a sustainable competitive advantage. On one hand, proponents argue that outsourcing allows organizations to focus on core activities and improve organizational performance; while on the other hand, critics suggest that outsourcing may hinder innovation, result in knowledge transfer to external service providers, and reduce control over organizational functions. Quinn (2012) have indicated that many large organizations that have outsourced did not achieve the expected cost savings, and outsourcing may lead to job losses and the departure of talented in-house workers. This problem statement highlights the need to examine the actual effects of outsourcing on organizational performance and its potential impact on long-term competitive advantage. Therefore, this study seeks to investigate the effect of outsourcing on organizational performance in Guinness Bamenda.

1.3 Research Questions

1.3.1 Main Question

What is the effect of outsourcing on the performance of Guinness-Bamenda?

1.3.2 Specific Questions

• What is the effect of outsourcing of back office activities on organizational performance of Guinness-Bamenda?
• What is the effect of outsourcing of primary activities on organizational performance of Guinness-Bamenda?
• What is the effect of outsourcing of accounting activities on organizational performance of Guinness-Bamenda?

1.4 Research Objectives

1.4.1 Main Objective

To examine THE EFFECT OF OUTSOURCING ON ORGANIZATIONAL PERFORMANCE OF GUINNESS BAMENDA

1.4.2 Specific Objectives:

• To assess the effect of outsourcing of back office activities on organizational performance in Guinness-Bamenda.
• To examine the effect of outsourcing of primary activities on organizational performance of Guinness-Bamenda.
• To investigate the effect of outsourcing of accounting activities on organizational performance of Guinness-Bamenda.