A study of the relationship between company size and business process outsourcing (BPO) in manufacturing companies in Ghana
Date
2013-04
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Abstract
This paper focuses on studying the relationship between company size and Business Process
Outsourcing (BPO) in manufacturing companies in Ghana. The study sought to establish the
relationship between company size and the decision to outsource in manufacturing companies in
Ghana and also to assess the extent to which manufacturing companies are outsourcing and which
main functions are outsourced. By definition, Business Process Outsourcing (BPO) is a managerial
practice which essentially involves the decision of choosing between performing certain business
processes internally, or employing the services of an external firm to perform them on behalf of the
company.
The study was carried out primarily through questionnaires, which were administered to 25
manufacturing companies located in Accra and Tema that practice BPO. Secondary data was
obtained from journal articles, books and the Internet. 22 companies responded while 3
companies declined from participating.
Number of employees was selected as a proxy for company size in this study. The findings
indicated that there is no direct relationship between company size and decision to outsource.
This essentially means company size -measured by number of employees - has very little to do
with the reason why companies outsource but more to do with cost management reasons thus
emphasizing the transaction cost economic theory defined by (Heinzl, 2009). Also, the three main
functions that are usually outsourced by manufacturing companies are HR, legal and supply chain
services. This showed that manufacturing companies are inclined to outsource non-critical and
more technical business functions. However, though outsourcing is practiced, the findings showed
81% of the manufacturing companies (large to small-sized companies) perform about 60 to 95%
of their business functions in-house, leaving very little to be outsourced.
Description
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2013
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Keywords
Ghana, Business Process Outsourcing, manufacturing companies