| Abstract: | With a view to focus on core business functions and to take advantage the benefit of specialization, organizations took outsourcing as one of the widely embraced business strategy for delivering outstanding services to customers and enhancing their business performance. The practice of outsourcing in Ethiopia is pronounced more on clerical part.This research sought to study the impact of outsourcing of security service on the performance of Bank of Abyssinia (BOA). The research objectives were to determine whether outsourcing of security services in Bank of Abyssinia affects organizational performance through its influence on Key Parameters as cost effectiveness, efficiency, service quality, trust and competitive advantage. The study employed both qualitative and quantitative (mixed) research design. The study targeted a population of 10,000 both Bank’s and outsourced staffs and sample of 100 is selected based on stratified sampling method in a way that could represent the whole population. Data was collected from primary sources through survey method by use of questionnaires. The data was quantitatively analyzed based on research objectives. The quantitative data was analyzed through descriptive statistics, and regression analysis by use of statistical package for social sciences (SPSS) software version 20. The results revealed that efficiency and competitive advantage have a significant strong positive relationship while cost, service quality and trust turned out to have an insignificant weak relationship with organizational performance due to outsourcing. Cost and trust have positive relationship while service quality has negative association with organizational performance although are all insignificant. Based on the study findings, the study result leads to the conclusion that the outsourcing of security service by BOA does not as such bring about a significant influence on its business performance as its association with majority of key parameters (except efficiency and competitive advantage) is turned out to be insignificant. However, the result came up with the finding that outsourcing has improved efficiency in the Bank and helped the Bank to gain competitive advantage. Thus, to bring about the desired result, BOA in future should not outsource an activity fully until it has confirmed beyond doubt that the service provider is capable of handling the activity and has a positive influence in driving its business performance. |
