The Effect of Outsourcing Non-core Business Functions on Company’s Performance: (The Case of Commercial Bank of Ethiopia
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Date
2017-06-18
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Addis Ababa University
Abstract
Outsourcing is a powerful strategic tool to cut cost, improve performance, and refocus on the core business functions. However, the outsourcing practice of CBE is confronted with weaknesses such as; lack of support from internal stakeholders and top management, lack of well defined service level agreement and unable to get committed outsourced staffs . This thesis was designed to identify effect of outsourcing noncore business functions on the
company’s performance the case of Commercial Bank of Ethiopia. Data were collected through questionnaires, interview and internal documents of the Bank. Descriptive statistic and frequency, correlation and regression were utilized to analyze the data. Interpretation is made on the mean, frequency, and percentage of data. The study’s result has implied that the outsourcing practice of non-core business functions of the Bank has unsolved problems. Theft of properties, both the security staffs and drivers lack commitment and loyalty, have ethical
problems and lack of support from stakeholders and top management as expected. On the other hand some benefits are obtained by outsourcing the non-core business functions of the Bank. Among these outsourcing helps the Bank to focus on its core function, helps to minimize operating cost, avoid major investment in HR and reduce administrative burden of HRM of the Bank. Finally, the researcher suggests that the Bank should work hard to reverse the adverse impact of outsourcing by conducting due diligence on the delivering quality
services, increasing customers’ satisfaction and improving competitiveness & efficiency. The bank also ensures service provider’s related work experience, ethical considerations, technical capabilities, the resource possessed are in a position to fit the requirements.
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Keywords
Outsourcing, performance, business function, customers’ satisfaction