Managers' perception of the effect of outsourcing strategies on the performance of Equity Bank Kenya Limited

Abstract

Rapid changes in the business environment require senior management to adopt strategies that focus on both current success and to invest in those activities that will promote a competitive advantage for future success. Outsourcing is growing at a rapid rate throughout the world because organizations view it as a way to achieve strategic goals, improve customer satisfaction and provide other efficiency and effectiveness improvements. The objective of the study was to establish the managers' perception of the impact of outsourcing strategies performance of Equity bank limited Kenya. The research design adopted was descriptive study. The study used primary data which were collected through self-administered structured questionnaire. The data was analyzed and presented using mean and percentages.

The findings of the study were that the outsourcing strategies that are used by the bank include strategic outsourcing and quasi outsourcing. Outsourcing of services by the bank has resulted in improved performance by making the firms operations be cost effective, increase quality of work life, enabled the bank to be more innovative and skilled in core activities, allow the bank to centre on what it can do well, thus increasing performance and allowing the bank to be more flexible, results to more importance to the training of its employees and search for possibilities to develop them and that the job becomes more meaningful for the employees.

Further, the effect that outsourcing has had on the banks performance include being able to allocate resources to activities that will lead to the bank enjoying comparative advantage, enhanced the bank's ability to reap profit from the low-cost-high-value-innovation and skills, enabled the bank to have productivity-enhancing effects at a more aggregated level and also enabled the bank increase its rate of converting fixed costs into variable costs which enhances the leverage of the organization's core resources.

The study recommended that the bank should continue outsourcing other services which they do not have competitive advantage over its competitors which will make them concentrate with activities that only they have a competitive advantage over. The study established that the there was a change in the performance of the bank as a result of outsourcing non-core functions and it is recommended that other commercial banks should outsource its non-core services so that they can concentrate on its core activities which would enable them to offer quality services to its customers.