Impact of Outsourcing on Productivity in Bakery Industry, Abakaliki Metropolis

Abstract

Management of bakery industry is under pressure of stakeholders to increase equity value. Consumers of bread in Abakaliki Metropolis regret the soaring unit price of the product which managers attribute to increasing cost of outsourcing which result from inflationary economic system. The major objective of this study is to determine the general impact of labour outsourcing on productivity of bakery industries in the area. Three hypotheses were formulated to measure the relationship between outsourcing and operational labour cost, reject bread manufacture and operational time of production. This study was based on Transaction Cost Economics theory propounded by Oliver Williamson (1975). The theory stresses the need for decisions to be made such that it generates economically efficient outcomes. Research instrument adopted was questionnaire. Spearman’s correlation was used in data analysis. Results indicate that outsourcing increases the level of efficient production by reducing the operational labour cost and labour time while minimizing the quantity of bread rejects. It is therefore recommended that management of bread industry in the city should intensify outsourcing as a means of reducing unit price of bread and promote Transaction Cost Economics decision for greater productivity.