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.
1.1 BACKGROUND OF THE STUDY
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).