The relationship between outsourcing management of automated teller machines and organizational performance at the Cooperative Bank of Kenya
Njoroge, Emily Wairimu
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Outsourcing is a business process term for what has literally become known as hiring a consultant, independent contractor, or free lancer to do a specific task or tasks for an organization in which the organization does not have either the time or the expertise to do on their own. Banks in Kenya dedicate considerable financial and management resources to the ongoing operation and support of their ATM channel. In recent years, most banks have been taking a closer look at alternative ways of managing their ATM networks. As banks work to minimize costs in the current global economic environment, one key way of achieving long term and sustainable success is through the outsourcing and maintenance of a bank's ATM services. The purpose of this study was to examine the relationship between outsourcing of management of ATM services and the organizational performance. The study shall adopt a descriptive survey design. The population studied was all the Co-op bank branches in Nairobi area. The branches were clustered based on their geographical location in Nairobi. Sampling was done using Stratified Random Sampling method. The instrument used for data collection was a questionnaire. Data collected was by use of descriptive and inferential statistics. Frequency tables, averages and percentages were used for data analysis and then the data was presented using tables, graphs and charts. The key findings of this study IS that by outsourcing ATM management to specialist organizations, Cooperative bank may better focus on their most value-creating activities, thereby maximizing the potential effectiveness of those activities. In addition, as outsourcing increases, costs may decline, and investment in facilities, equipment, and manpower can be reduced. The conclusion of the study is that contracting out is now broadly becoming an attractive option, its specific impact on the bank's performance, i.e. outsourcing result, has been well confirmed by research. The recommendations from this study is that the bank should consider outsourcing the remaining ATMs managed by the branches countrywide in order to further reduce their ATM maintenance expenses, to improve their ATM operations and to achieve a competitive advantage over other banking institutions thereby improving overall organization performance.