Effect Of Outsourcing Strategies On Organizational Performance Of Smes: Study Of Selected Fst Foods Business In Abuja

Abstract

Outsourcing is a management strategy by which an organization delegates major or non-core business functions to specialized and efficient service provider. This paper examines outsourcing service as a strategic tool for organizational performance of small and medium enterprises using data from ten (15) fast food businesses operating in Abuja, Nigeria. Statistical methods developed to test the formulated hypotheses and analyse data collected is the Pearson moment correlation on SPSS version 20. However, the results show that the more an organization outsourced, the higher its organizational performance, and organizational productivity are positively correlated to the amelioration of competitive advantage of labour productivity and average production cost. The paper also revealed that outsourcing is beneficial to organizational performance, and enhances firm’s financial economies and competitive advantage in the market place. Therefore, Organization should develop a comprehensive plan to clarify strategic outsourcing objectives, expectations, and requirements towards their outsourcing function.

Keywords: Small and Medium Enterprises (SMEs), Competitive Advantage, Organizational Performance, Outsourcing Strategy.