Outsourcing And Organizational Performance. A Case Study Of Apa Insurance Uganda Limited

Abstract

Outsourcing is the strategic use of outside resources to perfonn activities that are usually

handled by internal staff and resources. This study was designed to explore the

relationships between outsourcing and organizational perfonnances at AP A Insurance

Uganda Limited. The major objectives of this study therefore were to find out; the

relationship between outsourcing and organizational perfonnances, Reasons for

outsourcing in the organization, the impact of outsourcing on organizational effectiveness

and the challenges to outsourcing at AP A insurance 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

internally 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 sh01ied production cycle. Finally, the

respondents identified the fear of change, including fear of job loss, long te1m contractual

inflexibility, poor choice of outsourcing pa1iners, poorly managed contracts and hidden

costs and risks as the most the major challenges to outsourcing effo1is. However, while

the organization achieved significant improvement in organizational performance, it had

not reached the magnitude of improvements ascribed to outsourcing.

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