The Effect of Service Outsourcing on Service Quality: (The Case of Ethiopian Cargo & Logistics Services)
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Date
2022-07
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Addis Ababa University
Abstract
The research examined the effects of service outsourcing on service quality in Ethiopian Cargo and Logistics Services with the aims to provide companies with sufficient information on the current practice & the areas to be focused on whenever subcontracting services to third parties, provide data-based justification on perceived benefits and downside in service quality. The objective of the study is to measure the effects of service outsourcing on service quality and determine the key benefits gained and challenges faced from service outsourcing. For this study, the entire 120 population under Cargo Traffic handling department of Ethiopian Airlines was targeted and 99 valid responses were collected. The data collection was facilitated through structured questionnaire and the data analysis largely performed by quantitative analysis namely descriptive statistics using SPSS 23.0. The study found out that outsourcing of cargo handling services to external provider has effect on the quality of services provided by the airline and an average of 63 percent of the respondents indicated that considering the time, effort and money Ethiopian Airlines spent on the outsourcing of the cargo handling services, the company didn’t be able to improve the improve the quality of the services provided. Even though outsourcing helped Ethiopian Airlines to focus on core business functions that are the bases for the organization to achieve & excel its performance, avoid major investment in HR, and reduce operational costs, the outsourcing practice of the airline encountered several challenges like problem in bringing customer’s satisfaction, improving service quality, increasing efficiency and effectiveness of the airline.
Keywords: outsourcing, service quality, descriptive statistics, service providers, external providers