The Effects of Human Resource Practices Outsourcing on Human Resource Performance: On Selected Private Commercial Banks in Ethiopia

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Addis Ababa University


This research was conducted to examine the effect of Human Resource Practices Outsourcing on Human Resource Performance in the case of Five Selected Private Commercial Banks in Ethiopia. Purposive sampling technique was applied to draw respondents. Data was gathered from 51 human resource professionals through questionnaire and from five human resource mangers through interview. Both groups are working at Head Offices of the banks, all found in Addis Ababa. Explanatory research design and quantitative approach are applied in this research. Data were analyzed using statistical frequency table to determine the Human Resource Practices Outsourced. Pearson correlation Coefficient (r) was used to determine the relationship between each independent variable with the dependent variable Human Resource Performance. The finding indicates that there is significant and positive relationship between Human Resource Practices Outsourcing and Human Resource Performance. The result also indicates that an increase in Outsourcing Human Resource Practices will bring positive change on Human Resource Performance. The research has established that Private Commercial Banks which adapted Human Resource outsourcing have achieved an improved HR performance related to flexibility in running Training programs, cost reduction from Security Service and efficiency improvement from health Care Service. Therefore, to exploit advantages of Human Resource Outsourcing identified in this research and further improve Human Resource Performance in the Private Commercial Banks, the researcher then suggests expansion in Outsourcing Human Resource Practices. The interview result show that cost reduction related to Security Services Outsourcing is more than 41% which is so significant. These banks are also advise to give due care to investigate more on the reason of this large difference and expand to other practices. On the other hand its fairness must also be checked to ensure that the gain remains sustainable.



Selected Private Commercial Banks, Outsourcing, Human Resource Outsourcing