Outsourcing and Organizational Efficiency. A Case Study of Phoenix Petroleum Uganda Limited

Abstract

Outsourcing is the strategic use of outside resources to perfonn activities that are usually handled by intemal staff and resources. This study was designed to explore the relationships between outsourcing and organizational efficiency at Phoenix Petroleum Uganda Limited. The major objectives of this study therefore were to find out; Reasons for outsourcing in the organization, the impact of outsourcing on organizational effectiveness and the challenges to outsourcing at Phoenix Petroleum Uganda Limited. Twenty employees of all levels of the company were interviewed and the findings were analyzed. The results show that the organization generally considered successful at outsourcing. The major reasons for outsourcing at the organization were; cost reduction, quality control, reducing risks; focus on core competencies, failure to have the required resources intemally and the reduction of head counter employees in the organization. The major impact of outsourcing in the organization were; improved quality, cost reduction, improved reliability and delivery, productivity and shorted production cycle. Finally, the respondents identified the fear of change, including fear of job loss, long te1m contractual inflexibility, poor choice of outsourcing pminers, poorly managed contracts and hidden costs and risks as the most the major challenges to outsourcing eff01is. However, while the organization achieved significant improvement in organizational performance, it had not reached the magnitude of improvements ascribed to outsourcing.