OUTSOURCING OF FUNCTIONS AND PUBLIC SECTOR PRODUCTIVITY AT

UGANDA BUREAU OF STATISTICS (UBOS)

BY

A PROPOSAL SUBMITTED TO THE SCHOOL OF MANAGEMENT SCIENCES IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF

A MASTER’S DEGREE IN PUBLIC ADMINISTRATION OF UGANDA

MANAGEMENT INSTITUTE

FEBRUARY, 2024
 TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................i

CHAPTER ONE............................................................................................................................1

INTRODUCTION..............................................................................................................................1

1.1 Introduction................................................................................................................................1

1.2 Background of the Study...........................................................................................................2

1.2.1 Historical Background............................................................................................................2

1.2.2 Theoretical Background..........................................................................................................4

1.2.3 Conceptual Background......................................................................................................................5

1.2.4 Contextual Background......................................................................................................................5

1.3 Statement of the problem.......................................................................................................................6

1.4 Purpose of the Study..................................................................................................................7

1.5 Objectives of the Study..........................................................................................................................7

1.6 Research Questions...............................................................................................................................8

1.7 Research Hypotheses.............................................................................................................................8

1.8 Conceptual Framework..........................................................................................................................8

1.9 Justification of the study........................................................................................................................9

1.10 Significance of the study...................................................................................................................10

1.11 Scope of the Study.............................................................................................................................10

1.11.1 Content Scope.................................................................................................................................10

1.11.2 Geographical Scope........................................................................................................................11

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1.12 Operational Definitions of Key Terms and Concepts............................................................11

REFERENCES..............................................................................................................................13

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 CHAPTER ONE

INTRODUCTION

1.1 Introduction

Precarious problems facing modern business is to determine what causes failure and success in

their endeavors’ in the global market. It has become crucial for managers to know which factors

affect their organizations productivity in order for them to take appropriate steps to initiate them

(Mohamed, Mohamed, Aiman & Ahmed, 2018). Productivity is the evaluation of the

constituents that try to assess the capability and ability of a company in achieving the

constituents’ aspiration levels using efficiency, effectiveness, or social referent criteria

(Jacqueline, 2019). Organization productivity can be termed as; Timeliness, Cost-effectiveness,

Quality of information and Efficiency.

Outsourcing of functions leads to unknown and unexpected results regarding the dynamics of

working groups, as well, it may have unintended consequences on the corporate culture that

include standards, values, expected and shared behaviors between most or all of the

organization's members, as well as the approaches by which people interacting repeatedly with

each other (Alrwashdeh, Adaileh, & Ali, 2022). This study will investigate the relationship

between outsourcing and productivity of public sector organizations using a case of Uganda

Bureau of Statistics (UBOS). Illustratively, outsourcing represents the independent variable and

organizational productivity is defined as the dependent variable. This chapter in short provides

the background of the problem, states the problem, general study purpose, illustrates the

objectives including their research questions and hypotheses. It further provides the conceptual

framework of the study, significance, justification, study scope, limitations, as well as the

operational definitions.

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1.2 Background of the Study

The background to the study is presented in four themes including historical, theoretical,

conceptual, and contextual background.

1.2.1 Historical Background

Organizational productivity dates back to the 18th Century, and the initial perception of

productivity evaluation was that the emperor hired an "empire appraiser" to judge organization

productivity (Armstrong, 2009). It was in Royal family. In the 16 th Century, Ignatius Loyola

established a system for officially evaluating Jesuit members. However, the first formal

surveillance method arose from the efforts of Frederick Taylor and his cohort before World War

I.

During 1900s, the rating of US military officials became broad, stretching out not exclusively to

the United Kingdom, yet additionally to parts of the manufacturing plant based American

framework. The Merit Rating began in the United States and the United Kingdom during the

1450s and 1460s and was periodically renamed to Productivity Rating. The Management by

Objectives (MBO) showed up during the 1460s and 1470s, and in lined up with this, assessment

techniques, for example, the Behavior Anchor Evaluation Scale were tried (Armstrong, 2009).

In Africa, organization productivity can be traced to Kahn’s (1490) article, based on

psychological conditions of productivity at work. Current research such as Wollard and Shuck

(2017) continue to highlight the advantages of developing a highly productive workforce and

thus, many organizations are turning to enhancing levels of productivity within their effect.

Historically, it should thus be noted that the genesis of outsourcing is rooted in the need for

organizations to remain competitive over others in the market while making required profits

(Michael & Michael, 2021). Therefore, outsourcing was discovered as a mechanism of

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integrating the backward and upstream activities in the organization especially when it comes to

acquiring raw materials as well as combining the forward and the downstream integration

activities which consisted of marketing.

In developing countries particularly in Africa, outsourcing first emerged in South Africa in the

early 1990s especially in the exporting industry (Zheng & Abbott, 2013). This later spread to the

North African countries where business process outsourcing was majorly adopted in form of call

and contact centers. Many companies were opened to provide business process outsourcing

services which expanded the industry, especially the security services (Agburu, Anza &

Iyortsuun, 2017). In East Africa, Kenya emerged as the first country to adopt outsourcing

through Business Process-Outsourcing (BPO). This was prioritized by the government as the

primary mechanism to be used in achieving Vision 2030. The aim of the government was to

ensure that Kenya emerges as the best hub for BPO to solve IT-related missing functions in the

region (Manning, 2013).

In Uganda, the expansion of business asymmetries has been registered in almost all fields

including government ministries, departments and agencies. These fields have broadened their

wings of functions into adopting outsourcing as one way of increasing organizational

productivity (Kataike, 2019). In 2012, the Ministry of ICT started a policy of BPO which was

drafted to attract foreign investors into Uganda. This was additionally supported by increasing

the training role of Makerere University, College of Computing and Information Technology

where much emphasis was given to ensure that more IT Outsourcing (ITO) projects are designed

(Gitiye & Omondi, 2018).

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1.2.2 Theoretical Background

The study will be anchored on agency theory. The principal-agency theory is derived from works

of Ross (1973) and Jensen and Meckling (1976) cited in Osunsanmi, Aigbavboa, Thwala and

Oke (2022). Under this framework, the focus is on the relationship between agents and

principals. This is because the interests of the principal tend to different from those of the agents

or contractors. This theory according to its proponents is majorly based on three main

assumptions. First, the agents may have different preferences from their principal, such as

willingness to work. Second, agents may have different incentives from the principal. Agents

may have a different stake in the outcome or may receive different rewards than the principal.

Third, agents may have information that is unavailable to the principal, or vice versa. These

types of divergences may give rise to problems relating to planning, methods of doing things,

monitoring, incentives, coordination, and strategy (Bjurstrøm, 2020).

In relation to this study therefore, the productivity of public organizations is assumed to rely on

their willingness to work, their stake in the outcome of the project and available information in

their hands, more than what the contracting organization or principal-that is the government may

need (Osunsanmi, et al., 2022).. Entirely, the good planning and contracting of a company on the

side of the contracting agency does not necessarily mean that the implementation will be good

due to a number of interests on the side of the contracting company. It is from this basis that this

study was conducted to assess whether the outsourcing practices i.e. information technology,

management of human resources and facility management have been adhered too by UBOS and

the extent to which this can explain its productivity.

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1.2.3 Conceptual Background

The study is based on two main concepts, outsourcing and organizational productivity. Adeniji,

(2020) defines outsourcing as a strategic decision which calls for contracting outside the

organization especially when it comes to non-strategic activities or engagement. They add that

this is an agreement or contract which ensures every party strives to achieve competitive

advantage.

Contracting out means that after evaluating and appointing a contractor, the process must

continue through monitoring and managing organizational productivity towards predetermined

service goals (Schniederjans, 2015). Tomas and Victor (2016) indicate that outsourcing is

commonly done in IT services, human resource recruitment and payment, appraisals, cleaning

services, fleet management and facility management. In this study, outsourcing was limited to

functions related to information technology, management of human resources and management

of facilities.

According to Mtsweni, et al. (2021), organizational productivity means the ability of an

organization to meet the intended output when compared to input or goals and objectives. In

addition, Beulen, et al (2022) defines organizational productivity as the capacity of an

organization, institution, or business to produce desired results with a minimum expenditure of

energy, time, money, personnel, material and many others. Christauskas and Miseviciene (2012)

operationalized organizational productivity to mean minimum expenditure on personnel, energy,

cost effectiveness and timeliness.

1.2.4 Contextual Background

The Uganda Bureau of Statistics is an agency of the Ugandan government. Formed by the

Uganda Bureau of Statistics Act, 1998, the agency is mandated to "coordinate, monitor and

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supervise Uganda's National Statistical System.” The agency is supervised by the Uganda

Ministry of Finance, Planning and Economic Development. UBOS is governed by a seven-

person board of directors. Its scope of work includes conducting a national population census at

least once every 10 years or so. In undertaking its duties, UBOS is entitled to adhere to the

Public Procurement and Disposal of Public Assets (Disposal of Public Assets) Regulations,

2014. According to Nakanjako (2016) as the services sector is becoming more competitive and

globalized, organizations are looking to outsource their non-core functions in order to gain

agility, efficiency, access to newer talent and markets and save costs. The UBPOA was

established to promote, nurture and support the BPO service in Uganda and, to give the industry

a single unified and strong voice, to grow the BPO service and the companies in it, to strengthen

and enhance the link between public and private sector as well as to influence constructive

industry-friendly policy. However, despite the presence of the above, over the years UBOS has

struggled with the challenges of low productivity (Annual Organizational Productivity

Evaluation Report, 2020). This study was undertaken to ascertain the relationship between

outsourcing and the productivity of UBOS.

1.3 Statement of the problem

Outsourcing contributes to productivity of organizations as it reduces on the pressure for hiring

to enable the organization focus on core competences (Dominic, 2017). To derive productivity,

UBOS in particular adopted outsourcing in form of human resource, information and

communication technology and facility management (UBOS Strategic Plan, 2020/21-2024/25).

However, despite these efforts, productivity has remained questionable. For instance, according

to UBOS Internal Audit Report (2018), the UBOS Strategic Plan, 2020/21-2024/25 targets

improving organizational productivity and efficiency by 45% overall in the five-year period.

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However, in the five-years to date, UBOS has instead, seen a decline in overall productivity. For

instance, in the UBOS Annual Report (2019), the cost of production has gone up by almost 20%,

and overall adherence to set schedules and deadlines has declined from 58% three years ago to

43% in 2019. Further, regardless of the above mentioned strategies to improve productivity and

efficiency, the organization reported a 23% overall decline (UBOS Internal Audit Report, 2022).

If this problem was not investigated, this may further affect productivity of UBOS and

consequently affect national planning since UBOS feeds information to all sectors of the

economy. The researcher thus developed an interest to undertake this study to ascertain the

relationship between outsourcing and organizational productivity in public sector in Uganda

while using a case of UBOS.

1.4 Purpose of the Study

The purpose of this study is to determine the relationship between outsourcing and

organizational productivity in public sector organization in Uganda using a case of UBOS.

1.5 Objectives of the Study

The objectives of this study were:

i. To examine the relationship between information technology outsourcing and

productivity at UBOS.

ii. To assess the relationship between human resource outsourcing and productivity at

UBOS.

iii. To determine the relationship between facility management outsourcing and productivity

at UBOS.

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1.6 Research Questions

i. What is the relationship between information technology outsourcing and productivity at

UBOS?

ii. What is the relationship between human resource outsourcing and productivity at UBOS?

iii. What is the relationship between facility management outsourcing and productivity at

UBOS?

1.7 Research Hypotheses

i. There is a significant relationship between information technology outsourcing and

productivity.

ii. There is a significant relationship between human resource outsourcing and productivity.

iii. There is a significant relationship between facility management outsourcing and

productivity.

1.8 Conceptual Framework

Outsourcing Functions (IV)

Information Technology
 Processing
 Engineering
 Programming
Organizational Productivity (DV)

Human Resource Functions

 Timeliness
 Recruitment
 Cost-effectiveness
 Training  Quality of information
 Compensation  Efficiency

Facility Management functions

 Fleet management
 Immovable facility
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Source: Adapted from Chouayb, Barakat & Elhachemi (2020 and Mastan, Balakrishna, Raju &

Kumar (2021) and modified by the Author

Figure 1.1: A Conceptual Framework for the understanding the relationship between

outsourcing and organizational productivity

From the conceptual framework in Figure 1, it was hypothesized that outsourcing has a

relationship with organizational productivity. If the organization practices or exercises

information technology outsourcing, human resource outsources and facility management

outsourcing, this can have a significant relationship with organizational productivity in terms of

timeliness, cost-effectiveness, quality of information, and efficiency.

1.9 Justification of the study

UBOS has been adopting outsourcing in form of human resource, information and

communication technology and facility management with an aim of achieving productivity

(UBOS Strategic Plan, 2020/21-2025/26). However, despite these efforts, productivity has

remained questionable. For instance, according to UBOS Internal Audit Report (2018), the

UBOS Strategic Plan, 2020/21-2025/26 targets improving organizational productivity and

efficiency by 45% overall in the five-year period. In addition, UBOS has instead, seen a decline

in overall productivity. However, none of these studies will focus on the Uganda Bureau of

Statistics. In addition, even though earlier studies have been conducted on outsourcing and

productivity of organizations, none of these studies (Li, Okoroafo, & Gammoh, 2014; Dominic,

2017 and Jyoti, et al., 2017) endeavored to measure outsourcing and productivity of

organizations similar to the current proposed study. This means that there was a contextual and

knowledge gaps to be filled by this study.

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1.10 Significance of the study

This study will be useful to various players particularly scholars or researchers, policy makers,

development partners and the government in different aspects as highlighted below.

To UBOS, the study results will be used to design better strategies on improving organizational

productivity and efficiency. Leaders may use the study results to avoid making mistakes of the

past while planning for the future. The study findings will demonstrate the role of outsourcing

towards improving productivity of public sector organizations.

To policy makers, this study anticipate to generate findings which can be used in formulating

and reviewing existing outsourcing functions in government ministries, departments and

agencies including UBOS so as to ensure that the mandates and functions of such public sector

organizations can be achieved efficiently and effectively.

To researchers and scholars, the results from the study may add to the pool of available

literature for reference while researching about on outsourcing and organizational productivity

and efficiency in Uganda and beyond.

1.11 Scope of the Study

This section handles the scope under which the study was limited. It includes the content,

geographical and time scope as explained below.

1.11.1 Content Scope

The study will focus on examining the relationship between outsourcing and organizational

productivity at UBOS. IT information technology outsourcing, human resource outsourcing and

facility management outsourcing will be used to measure outsourcing as the independent

variable, while organizational productivity was measured using timeliness, cost-effectiveness,

quality of information, and efficiency as dependent variable.

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1.11.2 Geographical Scope

The study is restricted to UBOS head office in Kampala, which is located on Statistics House on

Plot 9 Colville Street on Nakasero hill, in Kampala central division, business district at the

corner of Nile avenue with kawempe division in the north western, Nakawa in the Eastern,

Lubaga in western and Makindye in the south eastern, and the neighbouring districts of Wakiso

district, Mukono district, Mpigi Districts, Buikwe and Luwero district. This was able to provide a

balanced overview in relation to understanding the productivity of UBOS.

1.11.3 Time Scope

The study will cover and observe data covering about five years from 2021-2023 because this

was the period when productivity in UBOS has been highly challenging (Uganda Bureau of

Statistics Annual Report, 2020).

1.12 Operational Definitions of Key Terms and Concepts

IT functions: This meant the IT-related activities in an organization outsourced in UBOS.

Human resource functions: this referred to the functions related to human resource outsourced

by UBOS including recruitment, selection, training and compensation.

Facility management: this was defined to mean those functions which are most commonly

outsourced like cleaning, catering, security, transportation and building maintenance at UBOS.

Outsourcing: this is defined to mean purchasing from an external supplier of a function

previously carried out within UBOS.

Organizational productivity: This referred to the policies and strategies by the Uganda Bureau

of Statistics to ensure that the goals of the organization, especially IT related/supported goals are

achieved in terms of timeliness, cost-effectiveness, quality of information, innovativeness and

efficiency.

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Quality of work: This referred to the extent to which the work performed by employees in

Uganda Bureau of Statistics meets the standards set.

Cost effectiveness: this referred to ability of UBOS to deliver its targets within minimal cost.

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