The Adoption of Outsourcing Strategy by Commercial Banks. a Case Study of Commercial Banks in Nairobi - Kenya
THE ADOPTION OF OUTSOURCING STRATEGY BY COMMERCIAL BANKS. A CASE STUDY OF COMMERCIAL BANKS IN NAIROBI - KENYA
CHAPTER ONE: INTRODUCTION
1.1 Background to the study.
For many years, strategic management literature and practice have demonstrated the need for organizations to operate outside their boundaries and to establish strategic relationships with external stakeholders such as suppliers and distributors. Attention has been given to the growth of strategic alliances and joint ventures. The trend has been the downsizing of organizations and outsourcing of a range of functions, which were previously considered to be an integral part of in-house operations (Walton, 1998).
There has been a move towards subcontracting and franchising arrangement of some in-house operations. Not only are organizations operating outside their boundaries, but also individuals who are not in a conventional employer-employee relationship are increasingly conducting more and more organization’s functions. Emerging economic trends such as globalization, rapid proliferation of economic technology, declining growth rates, competition from external enterprises and the need to lower costs of operation have forced many enterprises to adapt their activities to the changing environment in order to survive (Jarillo, 1998). To cope with these pressures, enterprises are repositioning themselves in the market place so as to gain competitive advantage (Sweezy, 1997)
Outsourcing of jobs and functions has become a global business necessity in the majority of companies (Pearce & Robinson, 2007). It has moved from simply seeking low cost manufacturing options to having product development, product design and indeed core innovations sought by some of the world’s best known companies. Different authors have defined outsourcing thus;
Outsourcing refers to obtaining work previously done by employees inside the company from sources outside the company (Pearce and Robinson, 2007). It can also be
CHAPTER ONE: INTRODUCTION
1.1 Background to the study.
For many years, strategic management literature and practice have demonstrated the need for organizations to operate outside their boundaries and to establish strategic relationships with external stakeholders such as suppliers and distributors. Attention has been given to the growth of strategic alliances and joint ventures. The trend has been the downsizing of organizations and outsourcing of a range of functions, which were previously considered to be an integral part of in-house operations (Walton, 1998).
There has been a move towards subcontracting and franchising arrangement of some in-house operations. Not only are organizations operating outside their boundaries, but also individuals who are not in a conventional employer-employee relationship are increasingly conducting more and more organization’s functions. Emerging economic trends such as globalization, rapid proliferation of economic technology, declining growth rates, competition from external enterprises and the need to lower costs of operation have forced many enterprises to adapt their activities to the changing environment in order to survive (Jarillo, 1998). To cope with these pressures, enterprises are repositioning themselves in the market place so as to gain competitive advantage (Sweezy, 1997)
Outsourcing of jobs and functions has become a global business necessity in the majority of companies (Pearce & Robinson, 2007). It has moved from simply seeking low cost manufacturing options to having product development, product design and indeed core innovations sought by some of the world’s best known companies. Different authors have defined outsourcing thus;
Outsourcing refers to obtaining work previously done by employees inside the company from sources outside the company (Pearce and Robinson, 2007). It can also be
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