Assessment of outsourcing practices in commercial bank of Ethiopia and development bank of Ethiopia in Addis Ababa
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Date
2019-06
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Addis Ababa University
Abstract
This study assessed the status of outsourcing services in government owned banks in Addis Ababa. The population for the study was the staff of senior and above senior level officers and managers of both banks: West district of CBE and head office of DBE were selected for the study. A simple random sampling was used to select the respondents for the questionnaires and a purposive sampling technique was used as well to select managers of the banks for the interview. The study used both primary and secondary data. The study brings out that the banks had outsourced the non-core activities of security, messenger, cleaning and lobby person services. These services have been given on a contract basis on a long term partnership. These banks have different motives to outsource these services. As the data gathered shows that some of the reasons are cost reduction, to save time, to enable flexible utilization of resources, take advantage of expertise and others. According to the responses, it was understood that the majority of the respondents agreed on the terms of outsourcing the major four services (security, messenger, cleaning and lobby person) had helped the banks in improving the performance of the banks and employees, enable them to have higher market share, reduce cost, focus on core functions and saves time of the managements. The major challenges associated with it was employee’s lack of belongingness to the banks, lack of commitment, less service quality, threat to security and confidentiality, some hidden cost associated with it and less managerial control. So it was recommended that the bank’s management must strongly take in to account how the assigned employees are treated at their respective branches so that they can improve their belongingness and commitment to the banks. Also the banks must aware managers at different levels about outsourcing. It was also recommended that as the service provider company (CN) is owned by CBE itself, the bank must strengthen the company at training and development and quality service aspects. The government also must strengthen outsourcing non-core functions as a good business strategy.
Description
A Thesis Submitted to the Graduate Program of the Department of Management and the College of Business and Economics of Addis Ababa University
In Partial Fulfillment of the Requirements for the Degree of
Masters of Science
in Management
(Entrepreneurship and Innovation Management)
Keywords
Non-Core Activities, Outsourcing Services, Performance of the Banks, Service Provider