Challenges and Benefits of Outsourcing Practices: The case of Dashen Bank s.c, Ethiopia

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Banks play a vital role in the socio-economic development of our country. They offer several facilities to improve the standard of living of our citizens. Outsourcing is a management strategy by which an organization gives major or non-core business functions to specialized and efficient service providers. The use of outsourcing at Dashen bank is very low with the exception of outsourcing some non-core functions like Security service, courier service and Janitorial service. The purpose of this research was to assess the benefits and challenges of outsourcing the business function in Dashen bank. The study areas were Dashen bank branches under Addis Ababa city and the outsourcing administrative office. The research employed a descriptive design and both quantitative and qualitative approach was used. Data for the study was collected using a self-administered questionnaire procedure, where the questionnaires were administered to the respondents through drop and pick later technique. A sample size of 235 respondents was drawn from the sample frame using stratified random sampling and purposive sampling technique to promote the needs for efficiency and representativeness from various levels. . Data was analyzed by aid of Statistical Package for Social Sciences (SPSS) version 20. Interestingly, certain findings were discovered which include challenges faced by the bank in outsourcing some of their non-core activities. Some of these challenges were conflict of interest among outsourced and permanent employees; low morale employee and loss of control were the major challenges of the bank due to outsourcing those activities. The major motivations for outsourcing are management convenience and focus on core business. And the benefits are save time for management and to focus more on core functions. Contrasting to the regular staffs of the bank the outsourced employees had brought many benefits to the Bank in reducing administrative burden increasing flexibility, minimizing costs. Finally, the research was concluded with the statement that nevertheless the challenges, outsourcing plays an important role at the Bank, since it enables the organization to enjoy a lot of benefits and also concentrate on their core activities



challenges of Outsourcing, benefits of outsourcing, Dashen Bank.


Addis Ababa University