BUSINESS PROCESS OUTSOURCING AND OPERATIONAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Joan Nyariara Njoro, Ernest Akello

Abstract


The general purpose of the research was to establish the impact of business process outsourcing on the operational performance of commercial banks in Kenya. The specific objectives were to determine the level of business process outsourcing adoption in commercial banks in Kenya and to investigate the relationship between business process outsourcing and the operational performance of commercial banks in Kenya. The study was underpinned by the resource-based view. The research used a descriptive cross-sectional study. The target population for the research was all the commercial banks in Kenya. The research was a census survey, and thus all 42 commercial banks were included. A questionnaire was the designated instrument or tool for data collection. Quantitative data collected from the closed-ended questions were analyzed using descriptive statistics, which involved averages, standard deviations, percentages, and frequencies. The data were presented using tables and in prose form. Multiple linear regression analysis was used to assess the association between business process outsourcing and operational performance. The study concludes that information technology services outsourcing, Human resource management services outsourcing, security services outsourcing and marketing services outsourcing positively and significantly increases operational performance of commercial banks in Kenya. The research suggests that banks take steps to ensure that outsourced services are well-documented and that expertise is transferred to internal IT workers to prevent over-reliance on service providers and a loss of control. The study recommends that commercial banks outsource more human resources management services to facilitate concentration on their core activities. There should be an effective mechanism to determine the security services that can be outsourced, those that require internal control, and those that can be done in collaboration with external providers. The banks should continue to outsource their marketing services for better operational performances.

Keywords: Business Process Outsourcing, Operational Performance, Commercial Banks


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References


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