The impact of outsourcing strategies on organizational effectiveness in new generation banks

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THE IMPACT OF OUTSOURCING STRATEGIES ON ORGANIZATIONAL EFFECTIVENESS IN NEW GENERATION BANKS

ABSTRACT

The aim of this study is to determine the impact of outsourcing strategies on organizational effectiveness in new generation banks. This is because mystery shopping provides important information for businesses and leads organizations to efficient performance. Outsourcing process is mainly used to increase the effectiveness of the organization through low cost, and organizations gain competitive edge over their rivals by simply shifting some of the Human resources non-core functions to outside suppliers which is core of outsourcing strategies.Survey design was adopted, and the statistical tool employed comprises of frequency, standard deviation, and correlation as well as regression analysis. The findings show that there is a significant positive relationship between the variables of outsourcing strategies and Organizational effectiveness; Recruitment Outsourcing strategy, Training & Development strategy, Mystery Shopping strategy, Payroll outsourcing strategy are positively related to Organizational Efficiency. The study therefore concludes that mystery shopping provides important information for businesses and increases organizational effectiveness, and the correlation matrix implies that the independent variables are very crucial determinants of organization Effectiveness. hence information provided by the mystery shoppers is used for improving the services and products to get more customers. The study thus recommends that Banks should outsource their training & development activities, since its potential effect is cost reduction, as outsourced training provides a means of reducing the fixed costs associated with maintaining a training staff.

CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

1.2     Statement of the Problem

Recruitment outsourcing is a strategic tool used by companies to improve their ability to concentrate on the core competencies. Outsourcing employee job is not contacting or fixing business processes. It is about creating value. It is about diligently outsourcing the management of employees to ensure “they are round pegs in round holes” hence able to provide firms a greater value faster, at a lower cost and higher quality as the firm focuses on its core competences. However this concept seems to be vague in the Nigerian context.

Although Industries are faced with fierce and intense competition due to the activities of rivals, their substitute quality work force can be outsourced. As a result of these pressures, outsourced employee interviews are embarked upon by firms to boost its competitive advantage. However the inability of most of these recruitment agencies of organizations to be objective during the interview sessions affects organizations competitive advantages.

Outsourced selection and screening of applicants have been proven to relatively providing the right caliber of individuals at short intervals aimed at effectively providing a pool of qualified personnel to firms at relative lowered cost. However the irresponsiveness of management to outsource these functions while it focuses on its myriad of processes and the ineptitude of recruiting agencies to develop a data base of pool of applicants to fill vacant positions at short interval constitutes a problem to the study.The inability of firms to engage vendors to optimize and utilize the company’s resources, reduces overhead cost and to exceed average profit margin poses a problem to the study.

Finally, outsourcing is aimed at improving profitability, efficiency and service delivery at relatively low cost, thereby increasing organizational effectiveness, but when the wrong applicant is recruited in the organization it poses a problem.

1.3     Objectives of the Study

The general objective of this research is to determine the impact of Outsourcing Strategies on Organizational Effectiveness. However, other specific objectives are to;

  1. Determine the impact of Recruitment Outsourcing Strategy on Organizational Effectiveness.
  2. Ascertain the effect of outsourced training and development Strategy on Organizational Effectiveness.
  3. Identify the impact of mystery shopping outsourcing Strategy on Organizational Effectiveness.
  4. Examine the effect of payroll outsourcing Strategy on Organizational Effectiveness.

1.4    Research Questions

This study is guided by the following research questions;

  1. What is the impact of recruitment outsourcing Strategy on Organizational Effectiveness?
  2. Do outsourced training and development Strategy have any effect on Organizational Effectiveness?
  3. What impact does outsourced mystery shopping Strategy have on Organizational Effectiveness?
  4. What is the effect of payroll outsourcing Strategy on Organizational Effectiveness?

1.5     Statement of the Hypotheses

This study is guided by the following hypotheses;

H01:     There is no significant positive relationship between recruitment outsourcing Strategy and Organizational Effectiveness.

H02:     There is no significant positive relationship between outsourced training Strategy and Organizational Effectiveness.

H03:     Mystery shopping outsourcing Strategy has no significant positive relationship with Organizational Effectiveness.

H04:     Payroll outsourcing Strategy has no significant relationship with Organizational Effectiveness.

1.6     Scope of the Study

The scope of this research work is limited to the staff of 13 selected new generation banks inAsaba metropolis located in Delta State, and also the role that Outsourcing plays in the overall Organizational Effectiveness.

The study covers the various variables or components of Outsourcing strategies such as Recruitment Outsourcing strategy, Training & Development strategy, Mystery Shopping strategy, Payroll outsourcing strategy and evaluates the impact of these strategy in on Organizational Effectiveness.

This study also outlines the relevance of outsourcing as a workable strategy that will help Banks to survive in this era of stiff competition and to remain relevant in the industry while ensuring quality service delivery.

1.7     Significance of the Study

Previous research on the impact of Human Resources Outsourcing on Organizational Effectiveness has been inconsistence in their findings. Hence it is the onus of this study to shade light on this inconsistency. The Nigerian economy particularly the banking sector is a sector that is faced with major challenge of performance in terms of efficient and effective utilization of the available resources to generate adequate output that can compete globally(Agusto, 2004). The study would help bank investors to embrace the uniqueness of outsourcing strategy to venture into the business with lesser stress. It will also help them to see the opportunities that exist in embracing innovation technique as outsourcing that could help build customers relationship, increase productivity and efficiency of employee and assist in adoption of outsourcing strategies by Nigeria Banks to increase turnover and profit.

Finally this study becomes significant because it would provide a framework for Banks and managers to be able to adopt outsourcing strategies in a unique manner to stay ahead of competition in their industry and also be able to compete globally with foreign Banks in developed countries thereby being a model for the advanced world in any substantial form they desire.

1.8     Limitations of the Study                

This research work was constrained in this way;

Secrecy: some information needed to be exposed by the study area- Bank(s) were actually withheld, with their claims as not to be involved in outsourcing as it was regarded as anti-labour concept as workers are disengaged from work when the time frame for the contractual agreement elapses. Nevertheless, despite the constraints to the work, the researcher was able to gather substantial materials to the best of her ability which made the work possible, realizable and reliable.

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