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Organizations seeking to gain and sustain competitive advantage choose, among other strategies, outsourcing strategy. However, companies are bound to encounter different challenges during the implementation process. Kenya’s sugar processing companies confront a number of challenges and outsourcing of noncore activities has emerged as one of the many strategies they adopt to mitigate these challenges. The study intended to establish the outsourcing strategy implementation practices, the challenges of implementing outsourcing strategy, and the measures to deal with the challenges. Through a multiple-case study design, both primary and secondary data were collected from senior managers and relevant documents respectively; and analyzed using content analysis. The findings indicate that the companies outsourced non-core activities to external firms motivated by focus on core competencies, access to specialized skills, and cost reduction. Ineffective management of the implementation process, resistance to change from the workforce, and conflict of interest from employees were common implementation challenges faced by the companies. To mitigate these challenges, top management were found to be involved in the outsourcing steps, staff members are provided and availed sufficient information about change, there were open communication channels within the organizations as well as adequate policies and operating procedures that guide members of staff while undertaking various activities. The study concludes that outsourcing is beneficial to the companies, the companies have documented the process, service providers have duly signed contracts, and the differences in the activities outsourced are attributed to the number of years the companies have been in operation, ownership structure, and oversight system. The study provides support for Agency and Transaction Cost Economics theories with regard to the implementation of outsourcing and partially concurs with extant empirical literature. The study recommends that companies should step up enforcement of the current applicable rules, regulations and policies; dispute resolution mechanisms should be strengthened; the companies should renew their focus on staff training at all levels; and regular benchmarking should be undertaken with the best in class to learn as well as share experiences. Based on the limitations of the study areas for further research have been suggested.

Implementation of Outsourcing Strategy: An Empirical Investigation of Selected Sugar Processing Companies in Kenya