The implication of Information Technology outsourcing on operational firm performance : a study on companies in Nairobi

A Research Submitted in Partial Fulfillment of the Requirements of the Award of a Masters of Commerce DegreeThe general purpose of the study was to investigate the implication of I.T. outsourcing on operational performance of companies in Nairobi. The study sought to find out whether there is a change in cost savings after I.T. outsourcing, change in efficiency of service provision and provision of up to date technology and determine the impact of outsourcing of information technology on the provision of up-to-date Technology. Two theories were applied in this research which is transactional cost theory and agency theory. The research targeted companies operating in Nairobi where questionnaires were sent out to the targeted population for collection of primary data while secondary data was collected from the financial statements. Data collected from questionnaires was coded and entered in SPSS software for analysis. The study found out from the analyzed data that there was indeed reduction of costs after I.T. outsourcing. From the questionnaires, the study found that most respondents were of the opinion that there was efficient provision of I.T. services and provision of up to date technology which was due to the economies of scale enjoyed by the vendor or service provider. The study also found that I.T. outsourcing is not as widespread in Kenya as in other parts of the world. Companies in Kenya should consider outsourcing I.T. as it reduces costs and enables them to focus on their core competences. This should however be done with caution and with inclusion of all stakeholders in I.T. as well as signing of service level agreements (S.L.A.s) with the vendors