FACTORS INFLUENCING INFORMATION TECHNOLOGY OUTSOURCING IN THE INSURANCE SECTOR IN KENYA.

Abstract

The rationale of this study was to examine the factors that influence the adoption of Information Technology outsourcing by insurance companies in Kenya, with specific interest in four key factors; Establish how Financial drivers, Focus on core competencies, Technological advancements and Government policy influence adoption of Information Technology outsourcing by the insurance companies in Kenya. The study was guided by a theory propagated by Glassman which supported these factors as key to outsourcing decisions by companies. The study was quantitative and a survey on the factors influencing the adoption of IT outsourcing was conducted. This type of design was used because one or more variables, apart from the independent variable in question, would be the causal factor of the expected variations on the dependent variable, where all the 49 registered insurance companies were targeted by the study and ICT managers were identified as the key respondents. A questionnaire tool was developed to collect the data. The study achieved questionnaire return rate of 82 percent. Data was analyzed using statistical package for social scientists (SPSS) version 17.0 and Microsoft's excel. The study found out that the key factors that influence adoption of IT outsourcing among the insurance companies in Kenya are two namely financial drivers(P-value=0.001) and focus on core competencies(P-Value=0.028) whilst government policy has least if no influence at all. Out of the companies that successfully responded, it was established that 75% of them were engaging in Information Technology outsourcing where 50% of them were involved in outsourcing of cloud services. The study recommended that ICT managers encourage the' application of outsourcing practices in their organizations because of the benefits that accrue to organizations. The study recommended that similar studies be conducted within the same industry as there are other factors apart from the four that influence the adoption of Information Technology outsourcing.