The impact of outsourcing in the tobacco industry in Malawi (A case of Alliance One Tobacco Malawi Limited)

Outsourcing concept is not very old concept in the Malawi Tobacco Industry, however outsourcing practice was adopted in the late 2000 hence it‟s not fully develop in the Tobacco Industry in Malawi although most of the organizations already embarked on the strategy but not fully fragged. Outsourcing implemented by AOTM as one of their strategic choices in order to concentrate on its core activities which include growing, processing and shipping of tobacco among other activities and this applies to other tobacco companies in the industry who are striving to serve their customers beyond their expectations. AOTM through outsourcing they expected a number of benefits which include cost savings and better quality products and services when it contracted out. Data collected by the researcher was in form of qualitative and quantitative means which was collected through the use of triangulation that‟s questionnaires, interviews, structure and unstructured, observation, AOTM employees and internal reports such as memo and newsletters. Therefore data sources were both from primary and secondary sources. AOTM was the main case study under investigation where most of the data was collected from and also from other four tobacco companies, suppliers and contractors of AOTM. The data collected was qualitative in nature and analyzed through qualitative which was descriptive and in quantitative manner. Thereafter the research had drawn the findings and conclusions whereby it used charts, graphs and tables in order to present the findings in the meaningful manner. The main purpose of conducting this research study was to find out what impact the outsourcing practice had brought to the Malawi Tobacco Industry in Malawi and in particular AOTM since its implementation. The major reasons that caused the organizations to advocate for outsourcing include focusing much on the core competences, saving costs, lack of capacity and to attain expertise services. However the concept had brought some positive implications on the cost savings, effectiveness and efficiency, capacity levels and quality whereby contributes to the profit margins of the organization. The main objectives of this research was to establish whether outsourcing practice has improved effectiveness and efficiency at AOTM and its overall performance as whole. The research objectives also include benefits of outsourcing from the time of its implementation, drivers, challenges and critical success factors, procurement methods used and outsourcing methods adopted when contracting out their activities to the service providers. However, to some extend it has failed to fully achieve these objectives. The significance of this study was that some critical areas have been analyzed concerning outsourcing in relation to the problem investigated which was why there was escalation of costs and poor delivery performance of the outsourced activities