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

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