Effect of Outsourcing

The workplace today is in a state of metamorphosis with contemporary issues such as customer satisfaction, competitive advantage, revenue and expenditures, organisationalculture, technological advancement, global markets, diverse customer demands and need for effective workforce with a global mindset penetrating every aspect of the organisation. All these issues need urgent attention and most businesses do not have the technical strength to tackle them on their own. The recent downturn in the economy has had negative effects on business activities and this is something every business should be concerned with. This study is centered on examining the impact of Outsourcing on Firm performance. The objectives of the study are to: determine the impact of Outsourcing on Firm Profitability; and to investigate the relationship that exists between Outsourcing and Productivity in three selected firms all based in Ilorin, Kwara State. Two hypotheses were drawn from the objectives. The simple random sampling technique was employed for the research work given the population of 450. A total of 200 questionnaires out of 212 administered were returned by the staff of the companies used as the case study. The techniques employed for the data analysis were Linear Regression Analysis and Pearson Correlation Analysis. The result of the analysis shows that Outsourcing has a positive effect on Profitability and Productivity of firms. The study concluded that Outsourcing has a significant effect on firm performance. The study therefore recommended that organizations should give more attention to outsourcing if they are looking for ways to enhance performance.