IMPROVING CASHFLOW OF PUBLIC UNIVERSITIES IN THE COAST REGION OF KENYA THROUGH OUTSOURCING OF NON-CORE SERVICES

Abstract

The government has been facing constraints in funding public universities. Foreign partnerships have played a role in alleviating universities’ financial shortcomings. Nevertheless, financial limitation remains a challenge yet they are expected to provide quality education and improve the quality of services to a rapidly growing student population. Data from KUCCPS shows an increase in student population from 363,334 in 2014/2015 to 427,034 in 2015/2016 while data from estimates of expenditure for the national government show the estimates for year 2014/2015 and 2015/2016 was 45 billion and 50 billion respectively for the public universities, the actual budgetary allocation was 33 billion and 35 billion respectively. In an attempt to minimize expenditure, universities have considered outsourcing as an option. The main objective of the study was; to investigate how public universities in the coast region manage their cash flow through outsourcing non-core functions. The specific objectives were; to investigate the risks associated with improving cash flow through outsourcing, to establish factors influencing the decision to manage cash flow through outsourcing, to evaluate how outsourcing has aided public universities in control of cash inflows and outflows. The study offers great value to the policy makers in the education sector. Descriptive research design was adopted. A survey of newly chartered Public universities at the coast region of Kenya was conducted which constituted the population of study. Purposive sampling was conducted; respondents were identified on their ability to provide needed information. Open-and closed-ended questionnaires were used in data collection. Data analysis was done using percentages, mean, and frequency distributions. Statistical Package for Social Science (SPSS) software version 23.0 was used in analysis. Data presentation was done using frequency tables, pie charts and graphs. Decision theory framework compares the risks and benefit of a decision in this case outsourcing, he states that if the benefits outweighs the risks the management will have a positive attitude towards the decision and vice versa. The findings indicated that non-core services mainly outsourced are security, catering, accommodation, cleaning, maintenance, v transport. The study also established that 54.5% respondents agreed that the major risk associated with improving cash flow through outsourcing is disclosure of confidential information to the external environment. According to the study findings 45.5% of the respondents agreed, management decide to outsource in order to save time to focus on fewer manageable activities. Outsourcing controls cash inflows and outflows as per the study findings by enhancing reduction of overheads, 54.5% of the respondents agreed. Based on the findings it is recommended that managers should develop a decision making process, they should conduct an analysis of risk and benefits of outsourcing decision and managers should operate from a budget. Limitations encountered were; information sought was confidential in nature, the respondents deliberately refused to divulge but after careful explanation, they gave the information. Areas of further research are thus suggested; assessment of risks and benefits associated with outsourcing, analysis of costs versus savings derived from outsourcing decisions frameworks and outsourcing decision as a strategic managerial tool for decision making.