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Hr Outsourcing

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Chapter one
Introduction
1. Background to the study
Although service quality in banking has been considered markedly important over the years, the topic has recently been afforded even more attention. (Crosby, 1979). Such interest may be the result of the reduced customer base and decreased market share affecting a portion of the banking industry. (Bowen and Hedges, 1993).
The trend of world markets has changed noticeably from agricultural to service markets (Asian Development Outlook, 2007). All of the service businesses are trying their best to improve their service quality in order to make customers satisfied with their services, especially the banking sector. Banks now focus more on the quality standards in order to meet the basic needs and expectations of the customers. Once customer’s requirements are clearly identified and understood, banks are more likely to anticipate and fulfill their customers& needs and want (Juwaheer & Ross, 2003). The more satisfied the customers are, the more likely they are to return or prolong their stay with the company.
Organizations are therefore increasingly being more customer-centric and are much interested not just in acquiring new customers, but more importantly, retaining existing customers. This is perhaps because it costs more to attract new customers than to retain existing ones. (Juwaheer & Ross, 2003) were of the view that the average business spends six (6) times more to attract new customers than to retain old customers. Again it is more profitable retaining an old customer who is more likely to re-purchase or re-use a company’s products/services and recommend them to others. Customer retention is, therefore, basically a product of customer loyalty and value which in turn is a function of the level of customer satisfaction or dissatisfaction (Reichheld, 1996).

Oliver (1993) stated that during the past decades, in the marketing literature and marketing practices, the importance in the concept of service quality and customer satisfaction has increased. Quality and satisfaction are indicators for corporate competitiveness and explores the benefit of marketing academics and practitioners. The relationship and nature of these customer evaluations remains unclear though satisfaction and service quality comes from two big research paradigms; expectations and perceptions which are considered as key instruments. Zeithaml (1993) mention that in empirical studies quality and satisfaction are introduced as synonyms within the service business.
Schneider and Bowen (1985) and Tornow and Wiley (1991) found a positive correlation between the attitude of employees, the attitude of customers and employee and customer perceptions of service quality. They also found that customer satisfaction is directly related to the attitude and perceptions of employees, in turn, the attitude and perceptions of employees relate to the organization and its management practices. They also said that customer satisfaction is not just relating to the values and attitudes of employees, which means that the overall effectiveness of the organization has direct impact on values and attitudes.
According to Eskildsson (1994) over the past decades, many attempts have been made in both private and public sectors in the hope of making improvements in processes and services from the perspective of the customer. Many initiatives have been aiming for targeting the satisfaction of external customers. Often research has shown that these programs have failed to satisfy the first expectations. Consequently, consultants and experts have aimed for a broader focus within organizations in order to include the perspective of employees and their interrelationships with both managers and customers (Tornow and Wiley, 1991).

According to Oliver (1980) the customer satisfaction research literature concerns how well the service delivery occurs in comparison with expectations. Today customer satisfaction is an important subject and is also often discussed in marketing literature. Satisfaction can be described as a number of post experience decisions. One reason for the big interest in this area is that researches believe that customer satisfaction is crucial for all business organization. Researches also argue that satisfaction has positive impact on intention to repurchase.
Andreassen T W (2001) mentions that customer satisfaction can be viewed as an evaluation where expectations and actual experience is compared. A service failure is when the service delivery does not manage to meet customer expectations. Often service recovery begins with a customer complaint. The aim with service delivery is to move customers from a state of dissatisfaction to a state of satisfaction.
Butcher and Heffernan (2006) discuss the relationship between customer and employees and that social regard plays an important role in service delivery, for example in a situation where a customer has to wait. A number of studies have shown the importance of friendly behaviour from the staff in order to improve service delivery and create long term relationships.
DEFINITION OF SERVICE QUALITY
Zeithaml. (2006) define service quality as “a critical element of customer perceptions and it will be the dominant element in customers‟ evaluations”. According to Lewis and Booms (1983) “service quality is a measure of the degree to which the service delivered matches customer expectations.” In other words, it is a kind of comparison between the service offered and customer expectations of those services (Hernon and Whitman, 2001).

DIMENSIONS TO QUALITY
There are many dimensions to service quality and over the years authors have expounded on this topic. Johnston‟s (1995) study identifies the following 18 dimensions of service quality: access, contents, attentiveness, availability, care, cleanliness/tidiness, comfort, commitment, communication, competence, courtesy, flexibility, friendliness, functionality, integrity, reliability, responsiveness, and security. A study by Parasuraman et al. (1985) indicates that tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding the customer, and access create the ten dimensions of service quality. Later, Parasuraman et al. (1988) reduce this list to five dimensions, which are used by customers to evaluate service quality. These dimensions can be summarized in the following way: • Reliability
It is the ability to perform the promised services that can also be called delivery of promise and it is the significant element in the service quality. It can be called delivery of promises. • Responsiveness
This dimension identifies how quickly an organization is able to provide assistance, answer questions, or pay attention to the problems that customers present. In brief, it is the willingness of an organization to help and provide quick service to customers. • Assurance
Assurance depends on employee knowledge and courtesy, including their ability to gain trust and confidence. This dimension is essential in environments where customers need to share personal information, for example in fields of banking, insurance, and mobile telecommunication

• Empathy
This dimension identifies how employees pay attention and care for individual customers. In other words, it refers to how the service provider shows sympathy and understanding to a customer‟s problems. • Tangible
The tangible dimension can be used as an important element affecting customer behavior and attitude (White and Schneider, 2000). Zeithaml and Bitner (2000) argue that the environment in which services are delivered can affect customer feelings regarding that service. Moreover, this dimension includes all the physical components such as equipment, communication material, facilities and appearance that will create conducive ambiance for the customers
Defining Outsourcing
The definition of outsourcing found on Wikipedia on December 17, 2012, read “Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.” There are dozens of definitions of the term in the academic literature. Brown and Wilson (2005, p. 24) define outsourcing as “the act of obtaining services from an external source.” Describing information technology (IT) outsourcing Kern, Willcocks and Heck (2002) state that “outsourcing is the practice of contracting out or selling the organization's IT assets, people and/or activities to a third party supplier for monetary payments over an agreed time period.” This framework fits the experience of HRO in that the definition includes the practice of “badge flipping” which is the term used when an HRO provider assumes the employment responsibility for a share of the new client’s former human resource professionals.
According to McIvor (2005, p. 7), “Outsourcing involves the sourcing of goods and services previously produced internally within the sourcing organization from external suppliers.” The key point worth noting is that this definition excludes processes never performed internally. Linder (2004, p. 27) writes that outsourcing is “purchasing ongoing services from an outside company that a company currently provides, or most organizations normally provide, for themselves.” This view limits McIvor’s definition by adding the qualification that most organizations normally provide some services for themselves. Lee and Hitt (1995, p. 836) provide a much broader definition for outsourcing, as “the reliance on external sources for the manufacturing of components and other value-adding activities.” This definition could include nearly any activity so long as it is value-adding.
Outsourcing can be defined as the transfer of a function previously performed internally to an external provider (Domberger, 1998; Finlay and King, 1999). Many organizations realise the importance of outsourcing and are beginning to expand this practice to many of their business operations. In fact, outsourcing has encompassed a wide spectrum of activities, from manufacturing operations (Dekkers, 2000) to research and development (Quinn, 2000), logistics (Boyson,Corsi, Dresner, and Rabinovich, 1999), information technology (Lacity and Willcocks, 1998), human resource management (Lever, 1997) and accounting (Switzer, 1997). This preponderance indicates that outsourcing is becoming a common practice among organizations and that it is used widely in a variety of business activities (Lever, 1997).
This project adopts the broader definition, though it excludes activities such as advertising and independent auditing as these are nearly universally outsourced by companies that are not directly selling these services to other companies. Kotabe and Mol’s (2006) notion that outsourcing may be viewed as both a process and a state is helpful. They define the state of outsourcing as “the procurement of goods and services from external suppliers.” The opposite is vertical integration or the production of goods or services within the firm. Kotabe and Mol (2006, p. 5) define the outsourcing process as “a range of actions within a clearly identifiable time-frame that lead to the transfer to outside suppliers of activities, possibly involving the transfer of assets including people, as well, that were previously performed in-house or procured from other units within the corporate system.” The Kotabe and Mol definition encompasses purchasing and subcontracting, which recalls Thompson’s (1967, pp. 54-55) categorization of interdependence mechanisms.
Organizations outsource because they want to concentrate of areas of expertise while at the same want to ensure that they provide quality care. However areas that are outsourced the organization do not have much control over how services are delivered and this can affect customers’ satisfaction and retention.
Price and profit margin is one aspect of service firms. Ha and Jang (2009) argues that service failure occurs when customer perceptions do not meet customer expectations. The problem with service failure is that it may lead to a destroyed relationship between the customer and the organization. Grönroos (1983) argues that when the service producer and the service consumer are in direct contact there are many factors that affect the level of satisfaction. In service production there is an extensive involvement of people which creates some level of non-standardization that do not exist in production of service. There are also a number of communication gaps that can occur between a service company and its customers.
To avoid communication gaps and other service failures Gonzalez & Garzia (2008) argues that it is important for the organization to know what the customers are thinking about their service so that failures can be avoided and improvements can be made. They need to know which attributes to measure and which factors that can be taken from different tools to identify customer satisfaction. Time and costs also effects customer satisfaction, a quick response can be crucial for satisfying the customer. Cottle (1990) argues that in service encounters there are differences in tangibility and human interactions which make them complicated and it also makes them difficult to control. There are several reasons for difficulties connected to service control, service is about performance so there is no production process where you can put in quality. Thus, the research seeks to find out how outsourcing of some activities within Ecobank can impact service quality delivery. 1. Background of Ecobank
Ecobank Transnational Incorporation, a public limited liability company, was established as a bank holding company in 1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. In the early 1980’s the banking industry in West Africa was dominated by foreign and state-owned banks. There were hardly any commercial banks in West Africa owned and managed by the African private sector. ETI was founded with the objective of filling this vacuum. The Federation of West African Chambers of Commerce promoted and initiated a project for the creation of a private regional banking institution in West Africa. In 1984, Ecopromotions S.A. was incorporated. Its founding shareholders raised the seed capital for the feasibility studies and the promotional activities leading to the creation of ETI. In October 1985, ETI was incorporated with an authorised capital of US$100 million. A Headquarters’ Agreement was signed with the government of Togo in 1985 which granted ETI the status of an international organisation with the rights and privileges necessary for it to operate as a regional institution, including the status of a non-resident financial institution. ETI commenced operations with its first subsidiary in Togo in March 1988. Today, the Ecobank Group is a full-service regional banking institution employing over 11,000 staff in over 746 branches and offices in thirty (30) west, central and east and southern African countries namely Benin, Burkina Faso, Burundi, Cape Verde, Cameroon, Central African Republic, Chad, Congo Brazzaville, Democratic Republic of Congo, Côte d'Ivoire, Gabon, The Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone, Tanzania, Togo, Uganda, Zambia and Zimbabwe. The Group's expansion plan includes the opening of new subsidiaries and branches in other Middle African countries as well as representative offices and international banking facilities in the major financial centres that have substantial trading and transaction links with Africa such as London, Paris, Dubai and Beijing.

2. Statement of the problem
Banks have over the years played a very crucial role in the development of the country. In recent times many organizations have been practicing outsourcing in order to concentrate areas of expertise. However, this comes with complaints about poor service and thus reducing the ability of banks to attract customers to patronize banking services. The Ghanaian consumer has developed a heighten perception of quality and has become more demanding and less tolerant of assumed shortfalls in service and product quality. In Ghana, it is common to hear of such strong protestations and complaints against service providers of all kinds.
The general perception is that banks in their quest to maximize profits outsource some activities which result in poor quality service delivery. Thus, the research seeks to find out whether outsourcing of some activities of the bank has an impact on quality service delivery.

3. Objectives of the study
The objectives of this study are to: a. Analyze the functions that are outsourced by Ecobank b. Assess the quality levels of outsourced functions at Ecobank c. Examine the factors that affect the delivery of outsourced service d. Recommend areas Ecobank have to take into consideration when outsourcing in order not to compromise quality service delivery 1.4. Research Questions
To achieve the set objectives of this research further questions are being asked to guide the literature review. The following questions will be asked;
(a). What are the functions that the bank usually outsource?
(b). What are the service quality levels of an outsourced function at Ecobank Ghana?
(c). What are the factors that affect the delivery of an outsourced service?
(d). How can such service be improved? 1.5. Significance of the study
The study will primarily serve as a springboard for other studies into the subject area of outsourcing and its impact on service quality levels into the financial sector. It is hoped that, the information gathered from this research would be of benefit to corporate bodies, academia and researchers in general.
This study aims at measuring the service quality levels in an outsourced function with SERVQUAL model and how to improve upon these services. The study will therefore help practitioners determine those functions they can outsource and how service quality levels in those services can also be improved. 1.6. Limitations of the study
Possible limitations to the successful completion of this research will include the following:
(a). Access to accurate information- The biggest obstacle to the successful completion of this project is access to accurate information. This is a private bank and divulging financial and other business operations is not a culture in Ghana.
(b). Time could be a hindrance if not managed properly. Due to the methodology adapted there is much dependency on respondents giving accurate information.
(c). Non-response is another problem area in administering questionnaire. To minimize this problem, questionnaire will be delivered personally to respondents and follow up telephone contacts to improve on response rate.
(d). Another likely limitation of a dissertation is that information acquired for the purpose of conducting a dissertation may not always be correct. Many a times while conducting dissertation researchers acquire information from people associated to the research problem but these people may not deliver right information for any reason. At the same time when researchers depend on secondary data then also there are chances that the secondary data available might be a biased version of that problem.
1.7. Definitions of terms
a. Service quality- a critical element of customer perceptions and it will be the dominant element in customers‟ evaluations
b. Outsourcing- subcontracting a process, such as product design or manufacturing, to a third-party company
c. HRO- Human Resource Outsourcing
d. SERVQUAL-is a method for measuring service quality. The method was created during the 1980’s as part of research projects within the field of marketing. The model is based on the premise that the best way to measure service quality is to base it on the customer’s experience of quality. In SERVQUAL, quality is defined by the gap between what a customer expects and what the customer perceives. SERVQUAL breaks service quality down to five basic dimensions; reliability, assurance, tangibles, empathy and responsiveness, often referred to as
1.7. Organisation of the study

The final report of the study will be organized into five chapters. The first chapter will center on the introduction of the research project while the second chapter reviews the various literature on outsourcing and service quality. The third chapter will discuss the methodology to be used in this project. The fourth chapter will give attention to the data analysis and interpretation and the last chapter will concentrate on summary, conclusions and recommendations.…...

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...HR OUTSOURCING HR outsourcing is the process of sub-contracting human resources functions to an external supplier. Different HR functions that can be outsourced: One can outsource various HR functions depending upon the expertise required. Recruitment is unarguably the most common functions outsourced. However, it is functions like payroll, leave tracking, record keeping, etc. Recruitment: Outsourcing recruiting makes a lot of sense. The organization will always have the final say in the selection of the candidate, but the screening of resumes, and initial selections can be completely outsourced. Then there are also entrepreneurs who believe that recruitment should never be outsourced to an external party as they cannot fully understand the culture of your organization and will fully understand your requirements. Administration: This includes maintenance of employee master payrolls, tracking of leaves, any kind of employee redressal and grievances, entry and exit process, paying provident fund and life insurance, and so on. These are people- and effort-intensive activities that can be mastered over a period of time. This is the reason why it makes sense to outsource it to a service provider. Strategy: This includes setting up a performance management system, building an employee handbook, and undertaking activities that offer value addition for employees. A number of strategic drivers for outsourcing HR services are: 1. Reduced cost 2. Increased......

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Premium Essay

Hr Outsourcing

...Phida HR OUTSOURCING The Human Resources department or support systems are responsible for personnel sourcing and hiring, applicant tracking, skills development and tracking, benefits administration and compliance with associated government regulations. A human resources department is a critical component of employee well-being in any business, no matter how small. HR responsibilities include payroll, benefits, hiring, firing, and keeping up to date with state and federal tax laws. Any mix-up concerning these issues can cause major legal problems for your business, as well as major employee dissatisfaction. But small businesses often don't have the staff or the budget to properly handle the nitty-gritty details of HR. Because of this, more and more small businesses are beginning to outsource their HR needs. HR outsourcing services generally fall into four categories: PEOs, BPOs, ASPs or e-services. The terms are used loosely, so a big tip is to know exactly what the outsourcing firm you're investigating offers, especially when it comes to employee liability. A Professional Employer Organization (PEO) assumes full responsibility for your company's HR administration. Business Process Outsourcing (BPO) is a broad term referring to outsourcing in all fields, not just HR. Application service providers (ASPs) host software on the Web and rent it to users--some ASPs host HR software. E-services are those HR services that are web-based. Both BPOs and ASPs are often......

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Outsourcing

...INDEX 1 Outsourcing industry Objective Introduction Importance of outsourcing Classification of outsourcing industry Advantages of outsourcing Disadvantages of outsourcing 2 WIPRO BPO Comparative sheet of wipro Ratio analysis of wipro 3 INFOSYS BPO Ratio analysis of infosys Comparative sheets of infosys 4 GAPS OUTSOURCING INDUSTRY OBJECTIVE The objective of this report is to focus on the outsourcing sector of India and to provide an insight of the various major players in this sector . To analyse the outsourcing industry and find the future growth opportunities To carry out the company analysis of the major players in the outsourcing sector INTRODUCTION Industry is the manufacturing or technically productive enterprises in a particular field, country, region, or economy viewed collectively, or one of these individually. A single industry is often named after its principal product; for example, the auto industry. Outsourcing is contracting with another company or person to do a particular function. Almost every organization outsources in some way. Typically, the function being outsourced is considered non-core to the business. The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers. Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to......

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