Relationship between Business Process Outsourcing and Performance of Oil and Gas Distribution Firms in Kenya
Keywords:
Business process outsourcing, Performance, oil and gas distributionAbstract
resulting in a more globalized, integrated, interdependent and competitive world economy. It is driven mainly by global competitiveness and the need for firms to reduce costs and increase operational efficiency by focusing firm resources on growing core business. Outsourcing service providers in the oil and gas distribution firms in Kenya are categorized into specialist service providers, direct service providers and indirect service providers. However, the liberalization of the petroleum sector in Kenya in 1994 forced several multinational firms such as Esso Limited, Mobil Limited, Caltex Limited, Beyond Petroleum (BP) and Agip Limited to prematurely exit the market. Reduced profit margins, negative returns and a distribution infrastructure system that was inadequate, unreliable and unable to meet local and regional supply chain and market demands were cited as the main reasons for their exit from the market. The study determined the relationship between BPO and performance of oil and gas distribution firms in Kenya. Cross sectional descriptive survey research design was used in the study. Population consisted of all the oil and gas distribution firms in Kenya registered with the Energy Regulatory Commission (ERC), who formed the sample size for the study. Primary and secondary data were collected through a semi-structured questionnaire and documented annual reports, audited financial statements and revenue statistics. Simple & multiple regression and correlation analyses were used to test the hypothesis. Findings indicated that BPO contributed significantly to performance (Beta = 0.868, (R2) = 0.804 p< 0.05). It was concluded that BPO indicators; logistics and distribution, finance and accounting, human resources, ICT services, and procurement and supply chain management contribute to the performance of the oil and gas distribution firms. The recommendation was that managers must therefore, recognize this interaction and formulate their promotion strategies accordingly. Managers must continuously lay outsourcing strategies on logistics and distribution finance and accounting, human resources, ICT services, procurement and supply chain.
Keywords: Business process outsourcing, Performance, oil and gas distribution
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