The current ever changing business environment has compelled organizations in various sectors especially the banking sector to constantly search for ways to remain competitive. This has become the driver leading many efforts aimed at improving organizational performance (Ketter, 2006). This has also led to the making of decisions which are aimed at ensuring that organizations are efficient in their performance by ensuring that they are effective and operate at a competitive advantage. In view of this, outsourcing of some of the tasks has garnered much attention from the service sectors (the banking sectors included) among other sectors in the economy.
In order to ensure that economic and effective performance is sustained, it is significant to maximise the use of outsourcing firms which offer specialised services. According to Gottfredson, Pruyear, & Phillips (2006), current business practices no longer are vertically integrated and as such the need to explore competitive positions through activities such as outsourcing arises. Gottfredson et al., (2006) use the terminology, “capability sourcing” due to its ability to allow organizations maximize value added business process.
This research paper intends to find out the relationship between outsourcing in the banking sector and its effects on the effectiveness and the competence of banking. This is done in relation to the U.S. banking sector. The research will show different views on the issue of outsourcing of some tasks which will bring an understanding on whether outsourcing helps in enhancing the effectiveness of the banking sector and make individual bank outsourcing to be at competitive advantage.
This paper examines the works already carried out by others in the field. As such the paper will make use of both the literary materials obtained from academic libraries and on line sources to determine the following:
- The reason for the popularity of outsourcing by banks in U.S
- The perception of the of third parties towards the practice of outsourcing among the U.S. banks
- Identify the relationship between the outsourcing and the effectiveness in the banking sector
This research is quite significant due to the need to closely examine the effect of outsourcing in the performance and effectiveness of banks in U.S. The study will shed some light on why outsourcing is popular among U.S. banks.
The scope of the paper will be limited to examination of the text materials on outsourcing of tasks in the banking sector. The research paper will make use of professional journals and literature materials as reference points. The paper will also make extensive use of academic journals.
The research question for this research paper is, “is outsourcing beneficial towards improved effectiveness and competitive advantage?"
Jankowicz (2005) argues that a research design is, “a structured approach to data-collection that neatly and economically addresses the research question, answering the hypothesis or resolving the argument involved” (p. 198). He further uses the works of Selltiz et al., (1981) to define design as, “deliberately planned arrangement of conditions for analysis and collection of data in a manner that aims to combine relevance to the research purpose with economy of procedure” (Jankowicz, 2005, p. 196). Thus from the above definitions, it can be argued that a research design aims at making use of related methods and techniques which are satisfactory in the gathering of information for the generation of qualitative findings. This research paper basically reviews different case studies and surveys carried out and published peer reviewed journals which are relevant so as to draw a clear picture for making a conclusion on the research question.