Abstract
The study aimed to determine how outsourcing core functions influence performance in relation to cost reduction, risk reduction, quality improvement and organizational efficiency of selected companies in the Nigeria telecommunications sector. Descriptive research design was adopted for the study, and census survey was used in determining the population made up 88 management and technical staff that are involved in outsourcing decisions and implementation. Structured questionnaires was used for data collection, and SPSS tool was used to quantitatively analyze the data using regression analysis to establish the relationship between outsourcing core functions, and performance of the organizations looking at cost reduction, risk reduction, quality improvement and organizational efficiency. The outcome indicated a strong positive relationship between Cost reduction and performance, weak positive relationship between Quality improvement, Organizational efficiency and performance, and a moderate positive relationship between Risk Reduction and performance The study therefore recommends that companies should concentrate on their core functions for competitive advantage and sustainability, and outsource non-core functions to free resources for value optimization, Firms should monitor outsourcing contracts for better performance, and conduct situational analysis before taking outsourcing decisions irrespective of whether they are core or non-core functions for efficiency and value optimization. Keywords: Core functions, Cost Reduction Non- core functions, Outsourcing, Performance . DOI : 10.7176/EJBM/12-2-11 Publication date: January 31 st 2020
Highlights
The study has outsourcing as independent variable and organizational performance as the dependent variables with cost reduction, risk reduction, quality improvement and operational efficiency as the proxy variables for the dependent variables, while core is the proxy variable for the independent variable
The analysis indicated that Cost Reduction has a strong positive relationship with Organizational Performance when outsourcing decisions of core functions are made, and it is statistically significant with a (R-0.031 and P-value of .0.051)
The implication of this result is that increase in cost reduction by the organization by 0.0331 units would lead to an increase in organizational performance by same units, it can be interpreted to mean that if organization reduce their cost by 0.031 or any percentage, through outsourcing decisions of core functions, the organization is expected to improve performance by 0.031 or the same percentage
Summary
Introduction Outsourcing as a business model has gained relevance among companies as a strategy of addressing the challenges posed by the competitive and demanding business environment. The era of industrial revolution made companies more concerned on the best way to exploit their competitive advantage to be able to increase their markets and profit (Handfiel, 2006). Recessions suffered in history made companies seek for new ways of doing business for profitability and sustainability, and an underlying factor on profitability is cutting down on costs. The recognition is even greater as many leading firms have considered cost control and supply management as important factors in maintaining competitiveness (Fantazy et al, 2009).
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