Declaration                                                                                                      ii

Approval                                                                                                         iii

Dedication                                                                                                      iv

Acknowledgements                                                                                        v

Abstract                                                                                                          viii


1.1       Background of the Study                                                                   1

1.2       Statement of the Problem                                                                   3

1.3       Objectives of the Study                                                                      3

1.4       Research Questions                                                                             3

1.5       Research Hypotheses                                                                          4

1.6       Significance of the Study                                                                   4

1.7       Scope of the Study                                                                             4

1.8       Limitation of the Study                                                                      4

1.9       Definition of Terms                                                                            5

1.10     Profile of Organizations Under Studied                                             5



2.1       Conceptual Framework                                                                       13

2.2       Forms of Outsourcing                                                                         14

2.3       Processes of Outsourcing                                                                    20

2.4       Advantages and Disadvantages of Outsourcing                                22

2.5       Drawbacks of Outsourcing                                                                 30

2.6       Outsourcing Principles                                                                        32

2.7       Key Requirements for Effective Outsourcing                                    33

2.8       Quality of Outsourcing Relationship                                                  35

2.9       Outsourcing Activity and Role of Performance                                 37

2.10     Reason to Outsource                                                                           38

2.11     Factors to Consider When Outsourcing                                             42

2.12     Model for Business Process Outsourcing (Bpo)                                 42

2.13     Outsourcing Option                                                                            43

2.14     Outsourcing Decision Making                                                            44

2.15    Decision-Making Characteristics In The Outsourcing Process            45

2.16     Outsourcing and Employee Perspective                                             47

2.17     Prescriptive Models of Outsourcing                                                   48

2.18     Outsourcing Governance: Criticality and Scope                                50

2.19     Development of the Outsourcing Concept                                         55

2.20     Outsourcing as a Strategic Consideration                                           60

2.21     Types of Outsourcing Relationship                                                    61

2.22     Theoretical Framework                                                                       67

2.23     Empirical Review                                                                                70

2.24     Summary of the Reviewed Literature                                                71



3.1       Introduction                                                                                        79

3.2       Research Design                                                                                 79

3.3       Sources of Data                                                                                  79

3.4       Population of the Study                                                                      80

3.5       Sample Size Determination and Sampling Technique                        80

3.6       Description of the Research Instruments                                            82

3.7       Data Analysis Techniques                                                                   82

3.8       Validity of the research Instrument                                                    83

3.9       Reliability of the Research Instrument                                               83





5.1       Summary of Findings                                                                                     95

5.2       Conclusion                                                                                          95

5.3       Recommendations                                                                              95

5.4       Contribution of Knowledge                                                               96

5.5       Suggestions for Further Studies                                                                        97






Table 4.1:        Questionnaire Distribution                                                      86

Table 4.2:        Sex  Distribution of the Respondents                                     86

Table 4.3:        Age Distribution of the Respondents                                     87

Table 4.4:        Marital Status of the Respondents                                         87

Table 4.5:        Educational Qualification of the Respondents                       88

Table 4.6:        What nature of relationship exists between personnel outsourcing and organizational competitiveness?                                   88

Table  4.7:       Descriptive Statistics                                                              89

Table  4.8        Correlations                                                                             89

Table 4.9:        To what extent do Nigerian commercial banks outsource

personnel services?                                                                  90

Table 4.10       Chi-Square Tests from the frequency cross tabulation           90

Table 4.11:      What are the areas in which Nigerian Commercial banks

outsource their personnel services?                                         91

Table 4:12       Chi-Square Tests from the frequency cross tabulation           90

Table 4.13:      What are the benefits from Outsourcing personnel services? 92

Table 4:13       Chi-Square Tests computed from the frequency cross

tabulation                                                                                93

Table 4:14 Chi-Square Tests computed from the frequency cross tabulation              93





The study sought to determine the nature of the relationship between personnel outsourcing and organizational competitiveness, ascertain the extent to which commercial banks outsource their personnel services, identify the areas in which commercial banks outsource personnel services, determine the benefits from outsourcing personnel services. The study had a population size of   613, out of which a sample size of 242 was realized using Taro Yamane’s Formula at 5% error tolerance and 95% level of confidence. Instruments used for data collection were questionnaire and interview. A total number of 242 copies of the questionnaire were distributed while 191 copies were returned. The Survey research design was adopted for the study. The four hypotheses were tested using Pearson product moment correlation coefficient and chi- square statistical tools. The findings indicated that there is a significant relationship between personnel outsourcing and organizational competitiveness. Nigerian commercial banks always outsource their personnel services. Recruitment of human resource, cleaning and security services are areas in which Nigerian commercial banks outsource personnel services. Reduced cost, improved quality and time-related advantages are benefits attributed to personnel outsourcing. The study recommended that every organization that operates in a highly competitive environment should embark on personnel outsourcing.





With competition becoming stiffer, and the Nigerian business environment increasingly becoming hostile amidst several regulations and government interference nowadays, organizations especially banks are continuously being forced to find ways to improve their business performance and to obtain competitive advantage in all possible means. To this end, many of them have looked beyond the traditional boundaries of their firms to obtain performance improvement. They have turned to personnel outsourcing with an increasing attempt to enhance their competitiveness, increase their profitability and refocus on their core business (Hill, Ireland and Hoskisson, 2007).

Personnel outsourcing can potentially reduce costs, which is one crucial basis for attaining competitive advantage over competitors as well as increasing profitability. Organizations may give away their ‘Crown of Jewels’ if they are not careful when doing the outsourcing .For example, strategic reputation loss, compliance and operational risks arising from failure of a service provider in providing the services, breaches in security, or inability to comply with legal and regulatory requirements of the company, etc(Kremic, Tukel and Rom, 2006).

Personnel outsourcing can only be a panacea for organizational competitiveness if organizations possess the resources and capabilities required to achieve competitive superiority in all primary and support activities (Gillett, 2004).

Linder, Jarvenpaa, and Davenport (2003) state that, few companies can afford to develop internally all the technologies and the competences that might lead to or enhance competitive advantage. And by nurturing a smaller number of capabilities, a firm can increase the probability of developing a competitive advantage because it would not become overextended-which is protective against the great risk of loss in outsourcing. Meanwhile, by outsourcing the personnel, it makes the firm concentrate on those areas in which it can create value (Click and Duening, 2005).

Paraskevas (2001) stresses that personnel outsourcing as an alternative approach:“Outsourcing might be a better alternative when it is believed that certain support functions can be completed faster, cheaper, or better by an outside organization” Nowadays along with traditional outsourcing of internal functions in category of support, advice, audit, and evaluation such as IT, training, accounting and internal auditing, organisation  outsource other service encounters by eliminating internal suppliers like the purchasing department that replace with e-procurement, food production and housekeeping (Paraskevas, 2001).


One of the effective ways to handle this issue is outsourcing the training or at least outsourcing the appraisal of training. Outsourcing has been viewed as a form of predetermined external provision with another enterprise for the delivery of goods and/or services that would previously have been offered in-house (Elfing and Baven, 1994program and satisfaction survey (Paraskevas, 2001).

Personal outsourcing  is able to save money for organisations and is able to perform a business function better than organisations’ employees by economic of scale, process expertise, access to capital, and access to expensive technology (Zhu et al., 2001).

Lackow (1999) opines that the main reasons of outsourcing as cost saving, improvement of service, the ability on focus on core business and the ability to access outside expertise. “Given that outsourcing will be a natural outgrowth of globalization and fast-changing technology for many companies in the world, those who anticipate and manage these changes strategically, the gains can be enormous”.

The effectiveness of outsourcing application can be reached when the need of outsourcing is correctly determined, core competencies are identified, cost benefit analysis on advantages and disadvantages of outsourcing is conducted, information regarding outsourcing function is disseminated, bank basic outsourcing needs in long and short terms are identified, data collection process is implemented, proposals from available vendors (those companies that are able to contract out to and carried out the function) are collected and evaluated, a most suitable vendor is identified, a contract is made, and a control process is implemented (Bolatet al., 2009).


Similarly Domberger (1998) states that organizations should assess the range of its internal activities by considering its objectives additional to the intention to apply cost saving. Outsourcing should be employed to satisfy organisational strategic objectives such as strategic improvement in area of cost saving and enhancement of efficiency, or strategic business impact in area of improving contribution to companies’ performance, or strategic commercial exploitation in area of leveraging technology related assets .

Thus in addition to cost reduction drives of outsourcing; organisation strategic repositioning, core competency improvement, superior service integration and upper value creation are among major drivers of outsourcing (Quinn, 1999).



The increasing competition in the today banking industry has prompted management of Nigerian banks to adopt different kinds of strategies just to make their customers and other stakeholders enjoy improved operational performance.