PERSONNEL OUTSOURCING AND ORGANIZATION’S COMPETITIVENESS

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ABSTRACT

The study sought to determine the nature of the relationship between personnel outsourcing and organizational competitiveness, ascertain the extent to which commercial banks outsource their personnel services, identify the areas in which commercial banks outsource personnel services, determine the benefits from outsourcing personnel services. The study had a population size of 613, out of which a sample size of 242 was realized using Taro Yamane’s Formula at 5% error tolerance and 95% level of confidence. Instruments used for data collection were questionnaire and interview. A total number of 242 copies of the questionnaire were distributed while 191 copies were returned. The Survey research design was adopted for the study. The four hypotheses were tested using Pearson product moment correlation coefficient and chi- square statistical tools. The findings indicated that there is a significant relationship between personnel outsourcing and organizational competitiveness. Nigerian commercial banks always outsource their personnel services. Recruitment of human resource, cleaning and security services are areas in which Nigerian commercial banks outsource personnel services. Reduced cost, improved quality and time -related advantages are benefits attributed to personnel outsourcing. The study recommended that every organization that operates in a highly competitive environment should embark on personnel outsourcing.


TABLE OF CONTENTS

Abstract

CHAPTER ONE: INTRODUCTION
1.1       Background of the Study
1.2       Statement of the Problem
1.3       Objectives of the Study
1.4       Research Questions
1.5       Research Hypotheses
1.6       Significance of the Study
1.7       Scope of the Study
1.8       Limitation of the Study
1.9       Definition of Terms
1.10     Profile of Organizations Under Studied
            References

CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1       Conceptual Framework
2.2       Forms of Outsourcing
2.3       Processes of Outsourcing
2.4       Advantages and Disadvantages of Outsourcing
2.5       Drawbacks of Outsourcing
2.6       Outsourcing Principles
2.7       Key Requirements for Effective Outsourcing
2.8       Quality of Outsourcing Relationship
2.9       Outsourcing Activity and Role of Performance
2.10     Reason to Outsource
2.11     Factors to Consider When Outsourcing
2.12     Model for Business Process Outsourcing (Bpo)
2.13     Outsourcing Option
2.14     Outsourcing Decision Making
2.15  Decision-Making Characteristics In The Outsourcing Process
2.16     Outsourcing and Employee Perspective
2.17     Prescriptive Models of Outsourcing
2.18     Outsourcing Governance: Criticality and Scope
2.19     Development of the Outsourcing Concept
2.20     Outsourcing as a Strategic Consideration
2.21     Types of Outsourcing Relationship
2.22     Theoretical Framework
2.23     Empirical Review
2.24     Summary of the Reviewed Literature
            References

CHAPTER THREE: METHODOLOGY
3.1       Introduction
3.2       Research Design
3.3       Sources of Data
3.4       Population of the Study
3.5       Sample Size Determination and Sampling Technique
3.6       Description of the Research Instruments
3.7       Data Analysis Techniques
3.8       Validity of the research Instrument
3.9       Reliability of the Research Instrument

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1       Summary of Findings
5.2       Conclusion
5.3       Recommendations
5.4       Contribution of Knowledge
5.5       Suggestions for Further Studies
Bibliography
Appendix

CHAPTER ONE

INTRODUCTION

1.1          BACKGROUND OF THE STUDY

With competition becoming stiffer, and the Nigerian business environment increasingly becoming hostile amidst several regulations and government interference nowadays, organizations especially banks are continuously being forced to find ways to improve their business performance and to obtain competitive advantage in all possible means. To this end, many of them have looked beyond the traditional boundaries of their firms to obtain performance improvement. They have turned to personnel outsourcing with an increasing attempt to enhance their competitiveness, increase their profitability and refocus on their core business (Hill, Ireland and Hoskisson, 2007).
Personnel outsourcing can potentially reduce costs, which is one crucial basis for attaining competitive advantage over competitors as well as increasing profitability. Organizations may give away their ‘Crown of Jewels’ if they are not careful when doing the outsourcing .For example, strategic reputation loss, compliance and operational risks arising from failure of a service provider in providing the services, breaches in security, or inability to comply with legal and regulatory requirements of the company, etc(Kremic, Tukel and Rom, 2006).

Personnel outsourcing can only be a panacea for organizational competitiveness if organizations possess the resources and capabilities required to achieve competitive superiority in all primary and support activities (Gillett, 2004).

Linder, Jarvenpaa, and Davenport (2003) state that, few companies can afford to develop internally all the technologies and the competences that might lead to or enhance competitive advantage. And by nurturing a smaller number of capabilities, a firm can increase the probability of developing a competitive advantage because it would not become overextended-which is protective against the great risk of loss in outsourcing. Meanwhile, by outsourcing the personnel, it makes the firm concentrate on those areas in which it can create value (Click and Duening, 2005).


Paraskevas (2001) stresses that personnel outsourcing as an alternative approach:“Outsourcing might be a better alternative when it is believed that certain support functions can be completed faster, cheaper, or better by an outside organization” Nowadays along with traditional outsourcing of internal functions in category of support, advice, audit, and evaluation such as IT, training, accounting and internal auditing, organisation outsource other service encounters by eliminating internal suppliers like the purchasing department that replace with e-procurement, food production and housekeeping (Paraskevas, 2001).

One of the effective ways to handle this issue is outsourcing the training or at least outsourcing the appraisal of training. Outsourcing has been viewed as a form of predetermined external provision with another enterprise for the delivery of goods and/or services that would previously have been offered in-house (Elfing and Baven, 1994program and satisfaction survey (Paraskevas, 2001).

Personal outsourcing is able to save money for organisations and is able to perform a business function better than organisations’ employees by economic of scale, process expertise, access to capital, and access to expensive technology (Zhu et al., 2001).

Lackow (1999) opines that the main reasons of outsourcing as cost saving, improvement of service, the ability on focus on core business and the ability to access outside expertise. “Given that outsourcing will be a natural outgrowth of globalization and fast-changing technology for many companies in the world, those who anticipate and manage these changes strategically, the gains can be enormous”.

The effectiveness of outsourcing application can be reached when the need of outsourcing is correctly determined, core competencies are identified, cost benefit analysis on advantages and disadvantages of outsourcing is conducted, information regarding outsourcing function is disseminated, bank basic outsourcing needs in long and short terms are identified, data collection process is implemented, proposals from available vendors (those companies that are able to contract out to and carried out the function) are collected and evaluated, a most suitable vendor is identified, a contract is made, and a control process is implemented (Bolatet al., 2009).

Similarly Domberger (1998) states that organizations should assess the range of its internal activities by considering its objectives additional to the intention to apply cost saving. Outsourcing should be employed to satisfy organisational strategic objectives such as strategic improvement in area of cost saving and enhancement of efficiency, or strategic business impact in area of improving contribution to companies’ performance, or strategic commercial exploitation in area of leveraging technology related assets .
Thus in addition to cost reduction drives of outsourcing; organisation strategic repositioning, core competency improvement, superior service integration and upper value creation are among major drivers of outsourcing (Quinn, 1999).

1.2          STATEMENT OF THE PROBLEM

The increasing competition in the today banking industry has prompted management of Nigerian banks to adopt different kinds of strategies just to make their customers and other stakeholders enjoy improved operational performance. Incidence of distresses resulting from increasing operating costs and consequently shrinking profits have been the order of the day among the banks. Despite these, inability to keep pace with technological advancement made some Nigerian banks competitively battered. Meanwhile, tight labor conditions have equally made it a challenge to attract, retain and invest in the necessary technology-based human capital and expertise. However, the study focuses on personnel outsourcing and organizational effectiveness.

1.3          OBJECTIVES OF THE STUDY

The specific objectives of the study are:

i.            To determine the nature of the relationship between personnel outsourcing and organizational competitiveness.
ii.             To ascertain the extent to which commercial banks outsource their personnel services.

iii.             To identify the areas in which commercial banks outsource personnel services.

iv.            To determine the benefits from outsourcing personnel services.


1.4          RESEARCH QUESTIONS

These research questions were formulated for the study

i.            What is the nature of the relationship between personnel outsourcing and organizational competitiveness?

ii.             To what extent do Nigerian commercial banks outsource personnel services?

iii.             What are the areas in which Nigerian commercial banks outsource their personnel services?

What are the benefits from outsourcing personnel services?

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