Challenges and prospects of outsourcing practices in the commercial bank of Ethiopia -A case study Ambo District

Abstract

Outsourcing may be a powerful strategic tool to chop price, improve performance, and refocus on the core business functions. However, the outsourcing practice of CBE is confronted with challenges such as; lack of support from internal stakeholders and top management, lack of well-defined service level agreement, difficult to measure the service like that of tangible products and unable to get committed outsourced staffs. This Study aims to assess the challenges and prospects of outsourcing practices the activities in commercial bank of Ethiopia. The study areas CBE branches under Ambo district by focusing outsourcing administrative office. The population of the study was the management members in the outsourcing management office, district, branch managers and customer service managers in each branch’s. Data were collected through questionnaires, interview and internal documents of the Bank. The research is a descriptive study applying both quantitative and qualitative approach to analyze the data. Interpretation is made on the mean, frequency, and percentage of data. The study used primary and secondary data. The finding of the study shows that outsourced service assist commercial bank of Ethiopia to focus more on core functions and strategic areas, to save management time, to reduced cost and expand its branch assertively. On the other side, difficult to measure service quality, low employee belongingness, conflict of interest among outsourced and low quality of employee were the major challenges of the bank due to outsourcing. Finally supported the finding, the researcher suggested that observance and analysis system have to be compelled to be place in situ for timely corrective action before time elapses and rectification becomes thus tough. When it is used in a calculated and well-designed method; outsourcing may bring legion edges to the client organization. If applied while not correct assessment of the capacities of service suppliers, it should involve irreparable damages within the short-range and will draw innumerable risks that will disturb time-honored structure culture. Hence, any type of outsourcing is probably going needed maximizing edges and minimizing risks.