CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Human
resources outsourcing evolved from hiring payroll processing companies in the
1990s to delegating tasks previously performed by human resources assistants
and specialists, such as recruiting, coordinating benefits and handling
unemployment claims. Some small businesses outsource entire human resources
departmental functions; however, many companies outsource singular
processes.Small businesses to large corporations decide for one reason or
another that outsourcing human resources functions is a way to improve
efficiency and minimize staffing costs. Large organizations that employ
thousands of people may find it's simpler to outsource a process, such as
payroll, rather than employ two to three payroll clerks and purchase
sophisticated technology than engage the services of an organization that
focuses entirely on processing payroll (Elmuti, 2003). Small companies might
decide that outsourcing human resources processes is more cost-effective and
efficient than creating a human resources department while the business is
focused on other projects associated with starting a new business (Elmuti,
2003).
Organizationalperformance
is an important consideration when small business owners weigh the pros and
cons of Human resource outsourcing. One school of thought is that aorganizations
can focus its energy and expenditures on developing the product it sells. This
enables organization to allocate its resources to areas that include
engineering and research and development, instead of recruiting staff,
maintaining personnel files and other human resources tasks. The other school
of thought has more to do with human capital and talent believes that an
organization may find herself without the talent she needs to build an
efficient human resources department. In this case, Human resource outsourcing
resolves the dilemma organizations face during the search for an in-house human
resources expert. In the first scenario, an organization directing its focus on
product design and sales may determine the expense of Human resource
outsourcing can be easily justified by more attention given to product sales. An
organization that doesn't have the requisite talent to lead a human resources
department can justify the expense of Human resource outsourcing by the
confidence in the level of competency Human resource outsourcing companies
offer.
A
well-designed human resource outsourcing strategy can allow organizations to
focus on their core competencies in order to increase efficiency without having
to invest in people and technology (King, 2007; Lau & Zhang,
2006).Additionally, this production strategy permits organizations to become
increasingly profitable, and better able to service both local and
international customers (Maidment, 2003). An example of this is Nike Inc. which
outsources nearly 100 per cent of its shoe production, locallymanufacturing
only key components of the “Nike Air” product. As a consequence of this
outsourcing, Nike Inc. can focus solely on its corecompetencies, such as
production design, marketing, distribution and sales (Entrekin& Court,
2001).
1.2 STATEMENT OF THE PROBLEM
In recent years, organizations have outsourced an expanding
variety of activities including human resource functions in an attempt to
improve service andproduct quality, reduce production cycle times, lower costs,
increase their focus on core competencies, and, in general, enhance
organizational performance. organizations appear to be focusing on a
relatively narrow set of functions and are contracting with outside suppliers
to perform the others.
Despite the trend toward Human
resource outsourcing, evidence of its performance effects is scarce. Appealing
arguments have made the case both for and against outsourcing as a means of
achieving long-run competitive advantage. On the one hand, by outsourcing human
resource management tasks to specialist organizations, organizations may better focus on their
most value-creating activities, thereby maximizing the potential effectiveness
of those activities.In addition, as outsourcing increases, costs may decline,
and investment in facilities, equipment, andmanpower can be reduced). On the other hand, anecdotal
evidence suggests that increased reliance on outsourcing may lead to reduced
innovation (Kotabe, 1992),
eventual competition from outsourcing partners (Bettis et al., 1992), and
reductions in control of the task in question. Thus, the performance effects of outsourcing are uncertain. However, the
researcher is examining the impact of outsourcing human resource functions on
organizational performance at Stanbic IBTC Bank Plc.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
examine the impact of outsourcing human resource functions on organizational performance
at Stanbic IBTC Bank Plc.
2. To identify the benefits derived
in outsourcing
human resource functions at Stanbic IBTC Bank Plc.
3. To
ascertain the relationship between Human resource outsourcing and
organizational performance.
1.4 RESEARCH QUESTIONS
1. What
is the impact of outsourcing human resource functions on organizational performance
at Stanbic IBTC Bank Plc?
2. What are the benefits derived
in outsourcing
human resource functions at Stanbic IBTC Bank Plc?
3. What
is the relationship between Human resource outsourcing and organizational
performance?
1.5 HYPOTHESIS
HO:
There is no significant relationship between outsourcing human resource functions
and organizational performance at Stanbic IBTC Bank Plc
HA:
There is significant relationship between outsourcing human resource functions and
organizational performance at Stanbic IBTC Bank Plc
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of this study:
1. The
findings from this study will be useful to the management of Stanbic IBTC Bank Plc
and all other corporate organizations in Nigeria on how they can use Human
resource outsourcing as a tool for organizational performance and
effectiveness.
2. This
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This
study on the impact of outsourcing human resource functions on organizational performance
at Stanbic IBTC Bank Plc will cover Human resource
outsourcing approaches at Stanbic IBTC Bank Plc with a view of
identifying its effect on organizational performance and effectiveness.
LIMITATION OF STUDY
1. Financial
constraint-
Insufficient fund tends to impede the efficiency of the researcher in sourcing
for the relevant materials, literature or information and in the process of
data collection (internet, questionnaire and interview).
2. Time
constraint- The
researcher will simultaneously engage in this study with other academic work.
This consequently will cut down on the time devoted for the research work.