Outsourcing practices and profitability levels of manufacturing firms in Uganda

Noah Mwelu, Musa Moya, Moses Muhwezi, Donatus Mugisha Rulangaranga, Susan Watundu


Outsourcing has been growing as an important component of business operations in Uganda today.  Manufacturing firms in Uganda have not been exempted in this development, hence the need to establish whether the outsourcing practice has any impact on the profitability level of manufacturing firms of Uganda. A survey covering 80 manufacturing firms was carried out using self administered questionnaires. Specifically, two respondents at management position were contacted purposively for representation of the company views. A total of 160 respondents turned up but only 153 respondents fully responded to the questionnaires. This represented 95.6% response rate. Findings indicated that outsourcing has a positive significant association with the level of profitability of manufacturing firms in Uganda (0.514**). The findings further indicate that whereas there is a strong and significant association between outsourcing and profitability, outsourcing is not yet pronounced enough to cause significant influence onto the profitability levels of manufacturing firms in Uganda. Thus the need for outsourcing companies to look into the actual aspects that manufacturing companies would like to be assisted into so that they can be able to cause significant influence onto the profitability levels of these companies. This is likely to be able to mark another phase in the development of manufacturing industries in Uganda since the management in these industries will be enabled to focus on the more core activities leading to their growth and expansion. This however, also creates an avenue for further research to be carried out in this direction.

Key words: Outsourcing, Outsourcing practices, Manufacturing firms, Profitability levels

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