The Effect of Outsourcing Non-Core Business Functions on A Company's Performance: The Case of Cooperative Bank of Oromia S.C
No Thumbnail Available
Date
2023-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
Outsourcing is a potent strategic tool that may be used to lower costs, boost performance, and concentrate on key business operations. However, CBO's outsourcing practice faces challenges such a lack of support from internal stakeholders and senior management, a lack of a clear service level agreement, a lack of consistency between the outsourcing strategy and corporate strategy, and the inability to recruit dedicated outsourced workers. The goal of this thesis was to analyze the effect that outsourcing non-core business function on Cooperative Bank of Oromia S.C.'s performance. Data was gathered using questionnaires, interviews, and bank internal papers. Mixed research approaches were used while descriptive and explanatory inferential statistics research design were implemented. Stratified sampling technique’s was conducted. The data were analyzed using descriptive statistics, correlation, and regression. The study's findings imply that the bank's non-core business function outsourcing approach has unresolved issues. Both the drivers and the messenger crew exhibit poor organizational citizenship and commitment, and they struggle to maintain driver control while at work. When it comes to messenger services, there have been issues with confidentiality, whereas with cleaning staff, there have been issues with staff control during working hours, misalignment between bank service requirements and service providers' capabilities, improper handling of materials, and subpar janitorial service. But there are some advantages to outsourcing the bank's non-core business operations. These include avoiding significant investments in human resources, lowering operational costs, and lessening the administrative burden of the bank's human resource management. Outsourcing also enables the bank concentrate on core business function. Regression result show that outsourcing driving, cleaning and security services were significant (p<0.05) in organizational performance whereas messenger service was insignificant.
The report concluded by advising the bank to put out significant effort to mitigate the negative effects of outsourcing by focusing on providing high-quality services, increase customer satisfaction, and enhancing competitiveness and efficiency. The bank also makes sure that the service provider has the necessary work experience, ethical standards, technical know-how, and resources to meet the requirements
Key words: Outsourcing, performance, business function, customer satisfaction
Description
Keywords
Outsourcing