Outsourcing Strategy and Financial Performance of Quoted Commercial Banks in Nigeria

Abstract

This study investigates the impact of outsourcing on the financial performance of commercial banks in Nigeria over the period 2013 – 2018, while adopting a panel research design. The sample of the study covers the commercial banks with international authorization in Nigeria. These eight commercial banks represent the tier one banks. This set of commercial banks continue to grow in customer deposits, branch spread and loan issuance. They are considered to be the strongest banks. Financial performance was captured by using profit before tax, profit after tax and earnings per share as proxies, while the independent variable- outsourcing was denominated by the annual expenditure on outsourcing. All data was collected from the companies’ annual reports. The models were estimated using the Pooled Ordinary Least Squares method. The stata software was used in model estimation. Results from this study generally indicate that outsourcing has a positive impact on all the  measures of financial performance. Based on the findings, the researchers recommend that outsourcing can contribute more to performance, if companies manage the outsourcing process better and involve the employees in the decision.

Keywords: Business Processing Outsourcing, total outsourcing, partial outsourcing, core activities, non-core activities

DOI: 10.7176/EJBM/12-3-08

Publication date: January 31^st 2020