Evaluation of Outsourcing and Its Performance Management in Relation to Profitability of an Organisation. A Case Study of Kampala City Council

ABSTRACT Following continuous loss of money by Kampala City Council due to shoddy work by the contractors, a study was conducted to make an evaluation of outsourcing and its performance management in relation to the profitability of an organization ofKCC The objectives of the study were to examine the outsourcing policy of Kampala City Council and to suggest ways of improving the outsourcing policy ofKCC The researcher used both primary and secondary data sources. the primary date sources comprised of 43 respondents from Kampala City Council. the secondary data comprised of text books, journals and newspapers The study was carried out using exploratory deceptive research design and with the sample population of 43 respondents was considered from KCC. Questionnaires and interview guides were used, primary and secondary data were very important for this study so as to get the findings. The findings were coded from the questionnaires and presented using frequencies, tables, graphs and percentages. The findings of the study showed that outsourcing policy in KCC was not properly done mainly because oflack of competent and skilled staff, contract management policies have also been poorly implemented because of bureaucratic procedures used in awarding tenders. The relationship between evaluation of outsourcing and its performance indicates an insignificant relationship, recommendations were made enrolling competent staff who are skilled in tendering. Effective and efficient policies on outsourcing management should be emphasized. Laws involving contract management policies in outsourcing should be implemented to avoid shoddy work done by contractors.

TABLE OF CONTENTS

DECLARATION ..................................................................................................................... i

APPROVAL ............................................................................................................................. ii

DEDICATION ........................................................................................................................ iii

ACKNOWLEDGEMENT ..................................................................................................... iv

TABLE OF CONTENTS········································································································ V

LIST OF TABLES AND GRAPHS ...................................................................................... ix

LIST OF ACRONYMS ........................................................................................................... X

ABSTRACT ............................................................................................................................ xi

CHAPTERONE .................................................................................................................... l

INTRODUCTION ................................................................................................................... I

1.0 Background to the study .................................................................................................... I

1.2 Purpose of the study .......................................................................................................... 2

1.3 Objectives of the study ...................................................................................................... 3

1.3. I Specific objective ........................................................................................................... 3

1.3 .2 General objectives .......................................................................................................... 3

I. 4 Research questions ............................................................................................................ 3

1.5 Scope of study .................................................................................................................... 3

1.6 Significance of the study ................................................................................................... 3

CHAPTER TWO ................................................................................................................... 5

LITERATURE REVIEW ........................................................................................................ 5

2.1 Introduction ........................................................................................................................ 5

2.2 Definition of outsourcing .................................................................................................. 5

2.2. I Outsourcing is possibly a wider term than make or buy ............................................... 5

2.2.2 Abaily (I 998) .................................................................................. 5

2.3 Type of outsourcing ........................................................................................................... 6

2.3 Body shop outsourcing ...................................................................................................... 6

2.3 .2 Project management outsourcing .................................................................................. 6

V

2.3 .3 Total Outsourcing ........................................................................................................... 6

2.4.1 Contracting out defined .................................................................................................. 7

2.4.2 Forms of outsourcing ..................................................................................................... 8

2.5 Methods of sourcing .......................................................................................................... 8

2.6 What to out source ............................................................................................................. 9

2. 7 The benefits of outsourcing ............................................................................................ 10

2.8 Costs of out sourcing (contracting out) .......................................................................... 10

2.9 Benefits of contracting out .............................................................................................. 11

2.10 Supplier sourcing and evaluation ................................................................................. 12

2.10.1 Aspect to consider when evaluating a supplier for outsourcing .............................. 13

2.10.2 Techniques for managing outsourcing ...................................................................... 13

CHAPTER THREE. ............................................................................................................ 14

METHODLOGY ................................................................................................................... 14

3.0 Introduction ...................................................................................................................... 14

3 .1 Research design ............................................................................................................... 14

3.2 Study population .............................................................................................................. 14

3 .3 Sampling Design .............................................................................................................. 14

3 .3 .1 Sampling procedure and size ....................................................................................... 14

Table 1: showing the sampling size structure of the respondents ....................................... 15

3.3.2 Sampling size ................................................................................................................ 15

3 .4 Sources of data ................................................................................................................. 15

3.4.1 Primary data source ...................................................................................................... 15

3 .4 Data collection instruments ............................................................................................. 16

3.4.1 Questionnaire ................................................................................................................ 16

3 .4.2 Observation ................................................................................................................... 16

3.4.3 lnterviewing .................................................................................................................. 16

3 .5 Data processing and analysis .......................................................................................... 16

3.6 Limitations of the study .................................................................................................. 16

3. 7 Solutions to the limitations ............................................................................................. 17

VI

CHAPTERFOUR ............................................................................................................... 18

PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS ............................ 18

4.0 Introduction ...................................................................................................................... 18

4.2. General background information ................................................................................... 18

4.2.1 Response rate ................................................................................................................ 18

4.2.2. Marital status ............................................................................................................... 19

4.2.4 Education levels attained ............................................................................................. 20

4.3 Findings on the outsourcing policy of Kampala City Council. .................................... 21

4.3.1 Postsheld ...................................................................................................................... 21

4.3.2 Appointment on the Tender Board .............................................................................. 22

4.3 .3 Appointing Authority ................................................................................................... 23

4.3.4 Outsourcing strategies .................................................................................................. 23

4.3.5. A Start of Kampala City Council outsourcing ........................................................... 24

4.3.5. B: service commenced with ........................................................................................ 25

4.3.6: Arrival at the outsourcing decision ............................................................................ 26

4.4. Findings on the evaluation of Kampala City Councils outsourcing policy ................ 26

4.4.1 Effectiveness of Kampala City Council outsourcing ................................................. 27

4.4.2. Showing whether Kampala City Council exercise vendor rating ............................ 27

4.4.3: variables determine where to outsource from by Kampala City Council.. .............. 28

4.4.4 Presence of a technical and commercial team ............................................................ 28

4.4.5. Respondents views on whether there is baring restriction: ....................................... 29

4.4.6 Criteria used in outsourcing ......................................................................................... 29

4.4.7. Showing who benefits from the outsourcing ............................................................. 30

4.4.8. Outsourcing benefits to Kampala City Council... ...................................................... 30

4.5. Findings on ways of improving the outsourcing policy of Kampala City Council. ... 31

4.5.1 Improving Kampala City Councils outsourcing policy ............................................. 31

4.5.2. Showing ways of improving outsourcing policy ....................................................... 32

4.5.3 Problems of outsourcing policy of Kampala City Council.. ...................................... 32

4.5.4 Expressing the degree of agreement/disagreement .................................................... 33

4.5.6 Findings on the relationship between outsourcing and its performance management

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CHAPTER FIVE ................................................................................................................. 37

SUMMARY CONCLUSIONS AND RECOMMENDATIONS ....................................... 37

5.0 Introduction ...................................................................................................................... 37

5.1 Summary of findings ....................................................................................................... 37

5.2 Summary of major findings ............................................................................................ 37

5.2.1. Findings on the evaluation of outsourcing policy in KCC ....................................... 37

5.2.2. Findings on the ways of improving outsourcing policy management ofKCC ....... 37

5.3. Conclusion ...................................................................................................................... 38

5.4 Recommendations ........................................................................................................... 38

5.5 Areas for further Research .............................................................................................. 38

BIBLIOGRAPHY .................................................................................................................. 39

Appendix 1 : Questionnaire .................................................................................................... 40