An investigation on relationship between business process outsourcing and cost cutting at Standard Chartered Bank in Nairobi province Kenya

Abstract

This was a study ofthe relationship between Business Processing Outsourcing and cost cutting at Standard Chartered Bank inNairobi Province, Kenya. Over time, it has become hard to do business due to ever rising operating costs. The cost of labor, electricity, water and other amenities keep rising year after year. Owing to this, companies have had to look for ways of minimizing those costs yet trying to retain quality of goods, products and services. Standard Chartered Bank in particular adopted Business process Outsourcing which is a process of contracting a third party to perform some functions on behalf of the client this being the bank. The adoption was in a bid to cut costs and fmally increase the revenue growth. This study was carried out to establish whether the bank actually saves costs by outsourcing or not. The research used descriptive studies design because the study was largely qualitative. A sample of thirty respondents from three departments was used to represent a total of two hundred employees. Their views of whether BPO leads to cost cutting in cleaning services, IT services, direct sales and recruitment services were used to make inferences and deductions. Data collection was through survey method whereby a questionnaire was administered to both the managers and the staff in the lower levels. Data analysis was through frequency tables and results were presented inpercentages. The research found out that outsourcing VarIOUSservices especially the core functions did not lead to cost cutting at all. The opposite was found to be true. It was concluded that outsourcing core functions like IT was not the way to save costs in an already existing company. Outsourcing non core services like cleaning was found to save costs. The study recommended outsourcing non-core services in already existing businesses and outsourcing some core functions in upcoming ventures.