Outsourcing in Ethiopia
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Date
2007-07
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Addis Ababa University
Abstract
According to Nicholas Beaumont and Amrik Sohal (2004) outsourcing is a fashionable way
of solving some business problems and there are numerous reports of its increasing use.
However, the use of outsourcing in Ethiopia is very low with the exception of outsourcing
some non-core functions like Security service and Janitorial service. Thus, this variation
attracts the researcher to undertake a research with the objective of evaluating the current
practice and future potential of outsourcing in the country. This research assessed the current
practice of outsourcing, identified those business functions that Ethiopian organizations are
willing to outsource and pointed out the reasons for outsourcing and not outsourcing.
Accordingly, the use of outsourcing in Ethiopia has been low and highly dominated by noncore
business functions such as maintenance and janitorial services, security services and
information technology services. The findings also confirm that Ethiopian organizations are
willing to outsource non-core business functions, such as maintenance and janitorial services,
security services and information technology services. Conversely, the research found out that
Accounting and Administration outsourcing service providers will face great challenges form
Ethiopian organization to deliver their services. This is mainly due the fact that Ethiopian
organizations fear the risk of loss of confidential information and loss of control in
outsourcing these business functions. In addition, the organizations assume that the external
service providers are not loyal to them in providing such business functions. The most
expressed reasons for outsourcing in ascending order are: allowing more focus on core
business, improving service level, acquiring innovative ideas and cost savings. On the other
hand, the most strongly expressed reasons for not outsourcing, in ascending order, are: loss of
control, having no loyalty to company and possible loss of confidentiality.