EFFECTS OF OUTSOURCING ON AN ORGANIZATION’S PERFORMANCE: A CASE STUDY OF KENYA REVENUE AUTHORITY NAIROBI CUSTOMS STATION

Wekesa Anthony

Jomo Kenyatta University of Agriculture and Technology, Kenya

Susan Were (Ph.D.)

Jomo Kenyatta University of Agriculture and Technology, Kenya

ABSTRACT

Outsourcing has been adopted widely in the world as a strategy to gain competitive advantage. Companies are increasingly seeking outside firms to perform activities previously conducted in – house in order to achieve time, process and cost advantages. The main objective of this study was to determine the effects of outsourcing on an organization’s performance: a case study of Kenya Revenue Authority Nairobi Customs Station. The specific objectives were to establish the influence of cost of operation, time saving in outsourcing, quality of service operation, business agility operation in outsourcing on an organization’s performance. The study adopted a descriptive research design. The study targeted 15 procurement officers, 17 financial officers, 386 custom department staff and 50 support staff working in Kenya Revenue Authority, Nairobi Customs station. The study used census sampling to collect data from all 15 procurement officer, 17 financial officers and 50 support staff. The study randomly sampled 10% of the 386 custom department staff to involve 38 staffs. Stratified sampling was used to obtain a sample of 120 respondents from four sections of the Kenya Revenue Authority customs station. Reliability analysis was done through piloting the instrument at the KRA headquarters. Cronbach alpha coefficient was used to test reliability. Validity was ensured through discussion with the experts including supervisors and colleagues. Primary data was collected and analyzed using quantitative and qualitative techniques and then presented using narratives, tables and graphs. Secondary data was also obtained from journals and the Kenya Revenue Authority data base. Data collected was analyzed using SPSS (Statistical Package for Social Sciences). Descriptive statistics and inferential statistics such as Pearson’s correlation were used. This assisted in determining the level of influence the independent variables have on the dependent variable. The findings indicated that outsourcing positively increases on the performance of organizations, it reduces costs of operation, time saving, quality of service and finally the affects positively business agility operation. Therefore, the rate of organizational performance as a result of outsourcing is high in both short and long- term and many business executives are committed to attach their success to the outsourcing process. At the end of the study, the study provides variable insight to firms on how effective the outsourcing can be, as performance management tool. Policy makers and the government may be able to understand the challenges faced in outsourcing services and therefore may be able to formulate policies that may improve service delivery. The study may also form a basis for further research by scholars interested to explore how outsourcing affect performance at Kenya Revenue Authority.

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