OPPORTUNITES AND CHALLENGES OF LABOUR OUTSOURCING: A CASE OF HEINEKEN ETHIOPIA

Abstract

The study's overarching goal is to identify the opportunities and challenges of labor outsourcing in the context of Heineken Breweries Share Company. The research problem is that, while the company has reaped numerous benefits from outsourcing, there are also issues and challenges that come with labor outsourcing for agencies. The study is a descriptive study that used a quantitative research approach to collect data from respondents via questionnaire and interview. The information was gathered from 150 employees of Heineken Breweries Share Company. Furthermore, interviews were conducted with the human resource manager as well as the other two unit managers who supervise the outsourced labors. To determine the sample size of the study, the student researcher used a non-probability sampling approach for the customer population under study, as well as a convenient or accidental sampling technique. The questionnaire was distributed to employees via convenient or accidental sampling, and the data collected was analyzed using mean, frequency, table, grand mean, and standard deviation and descriptive statistical methods. According to the study's findings, the company has benefited from labor outsourcing in terms of lowering overhead and operational costs, improving quality, focusing on other core functions, and assisting them in focusing on strategic issues. Despite all of these opportunities, the company has faced some challenges as a result of outsourcing labor to agencies. The main challenges or problems are a loss of full control over outsourced employees and an office divide that causes discrimination against outsourced employees, resulting in a negative workplace. The findings revealed that labor outsourcing positively contributed to cost efficiency and positively contributed to improved productivity, but that there is inconsistency with employees and an unpleasant work environment through outsourced employees, as well as a feeling of lack of motivation and belongingness and a communication gap between outsourcing employees and the agency are the major problem figured out. Finally, the researcher has forwarded some recommendations to address the organization's current labor outsourcing issues. The most important thing is that both the agency and the company have to communicate at all times in order to solve the problem with overall output. If the organization is able to implement the recommendations, it is expected to benefit in reducing the challenges of labor outsourcing in the organization. The research has limitations because it was conducted in a Heineken Addis Ababa, Ethiopia. The research findings highlight conclusions about why organizations prefer outsourcing, as well as the challenges and risks associated with outsourcing services. These are the reasons for outsourcing, for the opportunities, to focus on core competencies, for flexibility, to knowledge transfer, and to value for money.