A study of the relationship between company size and business process outsourcing (BPO) in manufacturing companies in Ghana

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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.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2013
Ghana, Business Process Outsourcing, manufacturing companies