Effect Of Outsourcing Non-Core Business Activities On Organizational Performance In The Case Of Ethiopian Commodity Exchange (ECX)
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Date
2019-06
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Addis Ababa University
Abstract
In the current dynamic business world, organizations are always in searching different
strategy to enhance their organizational performance and outsourcing becomes one of the
widely embraced business strategies. However, in spite of the increasing trend in outsourcing
arrangements, there are inadequate literature underpinnings on how outsourcing non-core
business activities affect organization performance in different sector and the same is true in
ECX. In order to bridge that gap this research sought to study the effects of outsourcing noncore
business activities on organization performance in ECX. The researcher used
descriptive and inferential research design method in carrying out his study. The study
targeted a population of 682 staff from 11 departments. The researcher used stratified
sampling method to pick sample respondents. Data was collected from primary sources
through survey method by use of questionnaires and interview of the top level management.
The data was quantitatively analyzed based on research objectives by using of statistical
package for social sciences (SPSS) version 20 software. Both correlation and regression
analysis were done. The study findings revealed that, though all of the dimensions of
outsourcing non-core business practices have statistically significant positive relationship
with organizational performance, service quality and communication was found to have no
statistically significant predictive power on organizational performance of ECX, while the
remaining two dimension, cost reduction and employee commitment, have found to have a
statistically significant predictive power on organizational performance of ECX. Based on
the study findings, the researcher recommended that: ECX should be more strict in following
the deployment of committed outsource staff by designing competency framework which can
ensure employees commitment and that can be strictly followed and meet by the outsource
company in deploying employees which provide the outsourced noncore business activity of
the Exchange, and ECX should not outsource an activity until they have confirmed that the
service provider is capable of handling the activity with minimum reasonable cost in the way
that can meet cost reduction objective of outsourcing
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Keywords
Outsourcing, Organizational Performance, Non-core Business Practice