Abstract
This study examined rationale and benefits for outsourcing in Nigerian banking industry. The study utilized primary data which were collected through questionnaire and key informant interviews. The data collected were analysed using descriptive and inferential statistical techniques. The paper found that security, cleaning, recruitment, training, human resources and ATM are the most outsourced services in the Nigerian Banking Industry. The study however revealed that, technical convenience and efficiency, increased productivity/performance, the need to focus on core activities, Improvement of service delivery and quality, as well as to meet changing customers’ needs are the major rationale for outsourcing in Nigerian banking industry. In addition, the study concluded that increased flexibility, growth of banks and increased services are the major benefits of outsourcing in the Nigerian Banking Industry. The study however concluded that, poor suppliers’ problem, reputation damage and poor expertise delivery are the major risk which the banking industry are confronted with whenever they outsource their activities . Keywords: Outsourcing benefits, strategic management, Nigerian banks, DOI: 10.7176/EJBM/12-23-04 Publication date: August 31 st 2020
Highlights
The word outsourcing has attracted a lot of attention in the last decade, to the extent that managers and organizations consider whether in their best interest to carry out some activities within the organisation or have them performed by a third party
From the foregoing, it can be established that outsourcing decision in the Nigerian banking industry is significantly influenced by factors as; Technical convenience and efficiency, Increased productivity/performance, the need to focus on core activities, Improvement of service delivery and quality, as well as to meet changing customers’ needs, in the respective order
5.0 Conclusion and Policy Implication This study examined the services outsourced in the Nigerian banking industry and analyzed the perceived benefits and risks of outsourcing activities of banks in Nigeria
Summary
The word outsourcing has attracted a lot of attention in the last decade, to the extent that managers and organizations consider whether in their best interest to carry out some activities within the organisation or have them performed by a third party. The results identified the need to focus on core activities, cost reduction, technical considerations, increase productivity and performance as the rationale behind outsourcing by banks in Lagos state. The study highlights the benefits of outsourcing, suggesting; cost reduction; access to better technology and infrastructure and strategy of focusing on core activities; free scarce resources; quality services; and flexibility. Employing chi square and descriptive analysis, the study revealed that information technology equipment acquisition, software development and web-hosting are the most common outsourced services He further provides evidence that the need to reduce cost and improved quality as the rationale behind outsourcing in Nigeria. The unit must be those units that have something to do with outsourcing decision while simple random sampling will be used to select the staff to interview or administer questionnaires
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