A Survey of the Outsourcing of Human Resource Services by Banks in Nairobi

Abstract

The primary objective of this study was to investigate the extent of outsourcing of Human Resource Management services by commercial banks in Nairobi. To facilitate this study a qualitative approach was adopted. A questionnaire was administered as the main tool for data collection and respondents gave information on benefits, risks, and reasons for outsourcing the Human Resource activities. Although a relatively new concept, outsourcing is taking root in the commercial banking industry in Nairobi given that all the respondents outsourced at least one Human Resource activity. The results indicate that 61.22% of commercial banks of all sizes, outsource Human Resource Services and it was considered to be a strategic approach in modern management practice. It is worth noting that while interpreting results of the study, majority of the respondents came from m"edium bank-s..All the respondents cited several reasons/benefits as factors that influenced their decision to outsource; the most prevalent being the reduction in both administrative costs and operational risks and it enables the banks to focus on core business. There is however noted risks particularly in regard to staff loyalty and loss of control in decision making hence there is need for the firms to develop a comprehensive analysis of their organizations and make strategic moves in adopting the practice to ensure that they reap benefits associated with it and avoid the obvious pitfalls. Being a relatively new concept in the banking industry outsourcing is currently a very fertile area for further research.