CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE … PETER OKAFOR chapt..pdf · Recruitment...

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY:

Outsourcing refers to the delegation of one or more business processes to an

external provider who then owns, manages and administers the selected processes

based on defined and measurable performance objectives. The specific processes

include human resources outsourcing like: security services, cleaning and trimming

services; printing services, furniture making services; building office blocks as

practiced in PRODA and SEDI ENUGU. These may vary from organization to

organization. While some organizations may outsource virtually all of their extra

curricula services, others may opt for selective of specific services resourcing as an

acceptable management tool for restructuring and refocusing on corporate affairs

or businesses aiming at cost reductions.

According to Okorie (2010) human services outsourcing are gaining momentum

globally as a move for enhancing revenue particularly in the developing economies

like Nigeria with net advantages in operational costs for wages and key expenses

and that outsourcing occurs anytime one enterprise makes a contract with another

to perform a process that is normally done internally by the first enterprise.

Human resource outsourcing model as an acceptable management tool for

restructuring and refocusing the corporate affairs, goals and objectives, will result

in cost saving and overhead reduction, staffing flexibility, development of in-house

staff. (Rothman,2003), It will result in the shading of non-core corporate

activities and right focusing on valuable material and human resources activities,

thereby repositioning the organization for effectiveness, efficiency and

competitiveness and that organizations of all sizes (and industries) are outsourcing

parts of their human resource business processes to effect efficiency in services at a

reduced cost.

Based on these afore-mentioned facts about human service outsourcing, the

researcher finds it worthwhile to undertake the research work for a better

understanding by the organizations under study.

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1.2 STATEMENT OF THE PROBLEM:

The goals and expectations of the service outsourcing process should be well

articulated, funded, in a detailed project plan since productivity is best achieved

using special trained manpower and in other to avoid the concept of square pegs in

round holes that adequately fits into the following : some people have questioned

the need for outsourcing services in the Nigerian public sector on the belief that the

cost may be more than government expenditure on the services before the decision

to outsource.

Costs charged for outsourced recruitment transactions may be greater than internal

recruitment and service providers and may fail to provide the right quality or

quantity of staff required by their clients. Others argue that outsourcing may not

even improve the revenue of the government and wandered why the decision to

engage service providers.

Most recruitment process outsourcing service providers perform their staffing

functions and service offsite and further disconnecting the client's growth and

recruiting strategy from the actual work force within the Client Company or

organization.

Organization may run the risk of outsourcing; as double spending may be

experienced in practice; since the service provider (vendor) wants to make his

profits at the expense of his clients and his employees; thereby charging exorbitant

fees which do not support the image of cost reduction and waste control.

Organizations are faced with several challenges when re-streaming formally

outsourced operations due to infiltrators of corporate attitudes, lack of the

necessary skills and capacities required for such ventures.

Recruitment process of outsourcing service providers do not follow due process in

their staff recruitments, thereby deviating from the client's process of recruitment

procedures.

The above problems more or less points at both negative and positive impacts of

the policy of human outsourcing services in the Nigerian public sector

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1.3 OBJECTIVES OF THE STUDY: The main objective of this study is to

investigate the impact of human service outsourcing on the Nigerian public sector

financial performance. The specific objectives are to investigate:

1. Whether there is increase in revenue due to the human services outsourcing

in the public sector

2. To determine if costs charged for outsourcing transactions are greater than

internal recruitment cost

3. To evaluate the corporate performance of the in-house staff to that of the

outsource workers in relation to quality and quantity of services rendered

4. To ascertain whether human services outsourcing has helped in controlling

overhead cost and wastage in the public sector.

1.4 RESEARCH HYPOTHESIS:

The following research hypotheses are formulated to provide solutions to the

research problems.

H1: There is significant increase in revenue in PRODA/SEDI as a result of the

human services outsourcing

H0: There is no significant increase in revenue in PRODA/SEDI as a result of the

human services outsourcing

H1: The cost charged for outsourcing services is higher than cost of internal

recruitment wage financing

H0: The cost charged for outsourcing services is not higher than cost of internal

recruitment wage financing

H1: Out-sourcing service workers are significantly performing better than the

scraped core staff in the public sector

H0: Out-sourcing services workers are not performing better than the scraped core

staff in the public sector

H1: The human services outsourcing has significantly helped in controlling over-

head cost and wastage in the public sector.

H0: The human services outsourcing has not significantly helped in controlling

over-head cost and wastage in the public sector.

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1.5 SIGNIFICANCE OF THE STUDY:

The significance of this study basically intends to review what is derivable in the

human outsource services in the public sector. That is the cost and benefits

accruable and attributable to the organization under study in one hand and to the

service providers, bordering on financial performance to the following

significances outlined below:

The study is significant in the sense that it will draw the attention of the

management of the organizations under the study and the views of the public

concerning human service outsourcing, and the need to have close supervision on

the service provider (vendor) if the objective of human services outsourcing are to

be realized.

It will as well create government’s awareness towards the need to recognize and

capture human out-source services in the annual budget

It will draw the attention of government parastatals to the cost effectiveness of out-

sourcing services and its credibility in government reformation agenda.

It will create cordial relationship between the service providers and the

organization(s) outsourcing and also to explore a better way of going about human

services outsourcing so as to attain public recognitions

It will enrich literature reviews on human services outsourcing for students and as

well as encourage future researchers on the topic.

1.6 SCOPE OF STUDY:

The study is intended to gather information on the impact of human services

outsourcing on the Nigeria public sectors of the economy. The impact of the

human service outsourcing on financial performance of the cost effectiveness of

the outsourcing services to organizations will be investigated; its prospects and the

drawbacks in the public sector with particular reference to PRODA and SEDI,

ENUGU. The focus is on the six listed outsource service outfits that are in contract

with PRODA and SEDI respectively:

DAN vigilance security services ltd

Santana security services ltd

Darby and Joan environmental trimming and cleaning services

Darby and Joan office cleaning services

Klenev ventures cleaning services for SEDI

Contracted security services for SEDI

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1.7 LIMITATIONS OF THE STUDY:

Due to time, distance, and financial constraints, the researcher was unable to cover

all the human services outsources in the Nigerian public sector as this was meant to

cover all the public sectors that are engaged in the human services outsourcing

with their respective human outsource business outfits.

As a result of these constraints, the scope was limited to two government

parastatals: projects development institute (PRODA) and science equipment

development institute (SEDI) all in Enugu state, Nigeria.

However, out of 150 and 117 staff of the two organizations administered, 100 staff

each responded to the questionnaires administered and that marked the limitation

to 200 (100 + 100) staff that served as the finite population. In spite of the

assurance of the researcher to confidently use all information supplied to him,

purely for academic purposes, some of the respondents refused to oblige to the

questions.

The researcher also made several fruitless visits and sometimes some respondents

were not found on seat. The persistence of the researcher finally gave him the

success.

Finally, the use of statistical method to determine the 200(100+100) public

servants used in this study to determine sample size, the Bourley Formula:

n=N/1+Ne^ 2 was used (see table 4.1.5)

1.8 BRIEF HISTORY OF PRODA ENUGU:

For over three decades now Projects Development Institute (PRODA) Enugu being

one of the two sampled institutions of this research project, has distinguished itself

as a leading research institute east of the Niger and a major contributor to Research

and Development in the Economic Advancements and Development of Nigeria. It

was founded in 1970 immediately after the Nigeria Biafra war. This corporate

entity PRODA commenced operations as a small agency with the name Projects

development agency dealing on science, engineering and technology. Its motto is

‘Industrialization through Self Reliance’. In her efforts toward achieving their

motto, they invented and constructed many low cost machines for both industrial

and domestic uses. These low cost machines are capable of helping one to establish

small or medium scale business. Also this corporate organization is also into small

scale pottery and ceramic productions. Their efforts into science and engineering

technology and research captivated the interest of the Federal Government into

taken over the agency in 1976, thereby changing the name from projects

development agency to Projects Development Institute and as a research institute

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which was then under (NSTDA) NATIONAL SCIENCE AND TECHNOLOGY

DEVELOPMENT AGENCY UNDER THE MINISTRY OF SCIENCE AND

TECHNOLOGY( 1980). Worthy to note here is that this organization is not a profit

making organization (research institution) but for pure research and development

for science, technology and engineering in the country.

Presently it has three branches within Enugu urban (Ekulu pottery, Independent

layout, and Emene industrial layout). In other to satisfy the needs and goals of the

research institutes in the country has diversified into a wide range of research

break-through. The activities and services which included building of low cost

vehicle, digging of bore holes with their geological tools, human out source

services to accommodate low income earners. They are also into science laboratory

activities/analysis for various sciences and engineering students; corporate body’s

research projects and a school pencil projects which is presently at the formation

stage plus a lot more.

Lastly, with the increase in engineering/ technological advancements and the

increase of sophistication in research innovations and creativities throughout the

federation, the scope of her operations becomes more challenging daily and which

calls for more sophisticated system of internal control that is on ground currently

with various calibers of engineers, scientist and managers whose hands are on the

deck for up- dates to the communication and information technology (CIT) and the

internet which is generally, a welcomed development globally. This has made her

research activities, innovations and creativities more credible and faster too.

Conclusively, the introduction of government policies on down-sizing and right-

sizing in government institutions gave rise to PRODA going outsourcing of some

services to external providers (Vendors) as contract services.

1.9 BRIEF HISTORY OF SEDI ENUGU:

Federal science equipment Manufacturing centre Enugu as it was formally called

could better be described as a brain child and an offshoot of PRODA ENUGU. It

existed in PRODA and with PRODA from the onset to virtually two decades of

PRODA existence when it was separated in collaboration with the Hungarian

government between 1981 and 1987. She was commissioned on the 11th may, 1992

by the Federal Government of Nigeria to operate as an entity, a parastatal under the

Federal Ministry of Science and Technology and later to National Agency for

Science and Engineering Infrastructure (NASENI) in conjunction with Federal

ministry of education science and engineering. In other to specialize on general

science equipments, fabrications, productions, constructions and development, the

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institute name was renamed Science Equipment Development Institute (SEDI) the

name she currently bears. Its head quarter is at Akwuke in Enugu south senatorial

district, Enugu state, Nigeria. In line with the operational mandates that aimed at

developing products and technologies relating to science/engineering equipment

and other technical items including machines and equipments for public and

private consumptions, the institute was mandated among other things to

commercialize those equipments to small and medium scale industries both locally

and to general consumptions.

Currently, the federal government of Nigeria has mandated the Institute to

maintain the following objectives:

� To demonstrate the possibility of local manufacture of a variety of

needed science equipment at affordable prices for the benefit of

educational industrial and research establishment.

� To design, develop and manufacture other items of scientific equipment

related to the needs of medical, aviation and navigation industries as well

as surveying sectors of the economy.

� To help address the problems of equipment maintenance, local sourcing

of essential spare parts to serve the needs of educational institutions,

hospitals, research institutes and private sector industries

� To engage in useful techno-scientific practical outreach/training progress

and projects for enhancement of techno-scientific literacy level of

populace, essential for rapid techno-economic progress

Finally since 1992, the Institute has achieved massive productions of items which

include: telescopes, microscopes, potentiometer, medical stethoscopes, student

transformer trainers, lens grinding machines, wood turning lathe machines

industrial ball mining machines for solid mineral pulverization, bioreactors, glass

blowing etc. As one of the leading research institute in the country, the science

equipment development institute (SEDI) Enugu recorded wonderful achievements

in the area of excellence. She won the 1st position in the exhibitions at the third

world academy of science conference at Abuja in 1995 and merit award for

excellence in engineering and manufacturing of science equipments in the Nigerian

society of engineers’ exhibitions in December, 1996 and a lot more. In conclusion,

the introduction of government policies on down-sizing and right-sizing in

government institutions gave rise to SEDI undergoing outsourcing of some

services to external providers (Vendors) inform of contracts.

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CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

2.1 AN INTRODUCTION

The researcher ventured into the views of others to find out what there are in the

form of books, journal, periodicals, articles, seminars, workshops conference

paper, news papers and magazines existing which deals on the subject matters of

this research work. To this end, Politt and Hungler (1978:79) defined literature

review as ‘the symmetric identification, location, scrutiny and summary of written

materials that contains information on a research problem’ Going by this definition

,the researcher will now look into the views of some of these writers as regards to

the meaning and concept of human service outsourcing services in the public

sector, performance and expenditure in other words” experts opinion is sort on

how to ensure efficiency and effectiveness of the policy in the general public

particularly in PRODA and SEDI Enugu, beginning from the known to the

unknown and through the vital work views of these experts on the field.

2.2 GENERAL APPROACH TO HUMAN SERVICE OUTSOURCING

Government organizations are not too different from large corporate firms in that

both have cost savings and operational prominence and efficiency as core

objectives in carrying out their functions and mandates. To this background,

Tholons (2010) said that: It is with these objectives that government executives

began to consider the outsourcing model for public sector functions. Among the

bigger spenders in public sector outsourcing are the US, UK, Canada, India, Hong

Kong, Japan and Singapore – who have been reported as the most experienced

governments in outsourcing public sector processes from where Nigeria public

sector drew their inspiration about outsourcing. These engagements often entail the

provision of IT solutions for public sector segments such as pensions and social

security, taxation, assets registration, welfare programs such as food stamps

distribution and financial assistance for the unemployed, and other governance

initiatives. Furthermore Bandoh (2003) added that as governments have strived to

become more technologically efficient, more attention has been given to public

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sector outsourcing and to outsourcing – or the contracting out to a private sector

provider – certain processes within the government is not an entirely new concept

for the public managers. She further expatiated as follows: that Government has

long been applying this practice to its various operational needs; that this business

model – contracting out government projects from infrastructure constructions to

consulting services – has been practiced with the growing popularity of the New

Public Management (NPM) concept; that what this governance concept basically

champions is the streamlining of government functions and services by adopting

methods and best practices from private sector companies and organizations; that

NPM entails prioritization of efficiency and cost effectiveness in spending

taxpayer money; that it puts paramount importance to expertise in performing

certain functions within the government, treating each citizen as a customer who

needs to be served with utmost competence and efficiency. She concluded saying

one remarkable factor that NPM also advocates is the use of technology in

improving the often slow and overbearing bureaucratic protocols experienced in

government transactions such as claiming of welfare benefits and applying for

various licenses or permits. This is where outsourcing conveniently comes in and

outsourcing government contracts is one practice that is recommended by

practitioners and advocates of NPM because this business model combines the use

of technology with technical expertise, two elements that are often in short supply

in government agencies.

2.3 DEFINITION OF HUMAN SERVICE OUTSOURCING

Outsourcing, according to Okorie (2010) is the delegation of one or more business

processes to an external provider who then owns, manages and administers the

selected processes based on defined and measurable performance matrices. The

specific processes include human resource outsourcing, this vary from organization

to organization. While some organizations may outsource virtually all of their

human resource processes (HRP) others may opt for selective specific approach or

resourcing as an acceptable management tool for restructuring and refocusing

corporate affairs and business, it challenges management to build flexible

organization centered on the core competencies and activities of their business

policy and objectives. In making this strategic decision, organizations gain more by

outsourcing non-core activities (of the business) to service providers (transfer of

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responsibility for one or more activities (or functions) normally Performed in-

house to a qualified vendor or service provider). This is usually for a specified

period of time and at a negotiated fee, in accordance with stipulated terms of

service level agreement (SLA). In essence, the organizations are increasingly

making decisions to send certain parts of the business out to a provider whose

"core competency" is that part of the business. To Leavy (2004) human resource

outsourcing is about making a decision with far-reaching implications-not just for

the entire organization. It requires careful planning and implementations involving

the representatives of all potential users of the services provided. The goals and

expectations of the outsourcing process should be well articulated, funded, etc in a

detailed project plan.

2.4 OUTSOURCING SERVICES AS MANAGEMENT TOOL

In his own opinion on the subject matter Babu (2005) saw human resource

outsourcing model as an acceptable management tool for restructuring and

refocusing the corporate affairs, goals and objectives, will result in cost saving and

overhead reduction, staffing flexibility, development of in-house staff etc. it will

result in the shading of non-core corporate activities and right focusing of valuable

material and human resources or core activities, thereby repositioning the

organization for effectiveness, efficiency and competitiveness. Organizations of all

sizes (and industries) are outsourcing parts of their human resource business

processes to effect improvements in efficiency, service performance and cost

reduction. Service providers are also moving away from the traditional stereotype

human resource service delivery model (with increased access to better technology,

at a reduced cost) to more flexible models and efficient delivery of quality.

Rothman (2003) added, the rationale for outsourcing is essentially the same in

both public and private sectors. Common financial drivers of human resource

outsourcing includes; (i) To save money (ongoing expenditures), (ii) to avoid huge

capital outlay (involved in engaging enormous human resource activities), (iii) to

turn a fixed cost into a variable one that is reducing the workforce which reduces,

human resource costs proportionally.

Still on the opinion, Drezner (2004), in his write-up on the advantages of human

resource outsourcing explained some reasons why companies or organizations go

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outsourcing. This includes huge cost savings, enhancing of revenue and increased

performances on core business functions.

The most imperative ones are that outsourcing are intended to strengthen the

company’s position to focus on its core business functions because it frees up

company’s resources (especially time and money) from performing non-core

activities. These freed Resources can be used more productively and efficiently in

managing core business operations.

Compliance with the act and the numerous resulting duties can be a huge

administrative burden on the company thereby deviating from the Company’s time

and resources from its core business. It allows companies focus its efforts on the

important part of developing and considering their Core business functions safe

with the knowledge that all statutory obligations are being met.

2.5 THE GENERAL PERSPECTIVE OF OUTSOURCING

Generally in the public sector of our economy, Engardo (2006), referred to

outsourcing as not only for cost reductions but saw the Human resource

outsourcing model as an acceptable management tool for restructuring and

refocusing the corporate affairs, goals and objectives that will result in cost saving

and overhead reduction, staffing flexibility, development of in-house staff etc. it

will result in the shading of non-core corporate activities and right focusing of

valuable material and human resources or core activities, thereby repositioning the

organization for effectiveness, efficiency and competitiveness. Organizations of all

sizes (and industries) are outsourcing parts of their human resource business

processes to effect improvements in efficiency, service and cost. Service providers

are also moving away from the traditional stereotype human resource service

delivery model (with increased access to better technology, at a reduced cost) to

more flexible models and efficient delivery of quality.

2.6 OUTSOURCING, PERFORMANCE AND EXPENDITURE INITIATIVE

IN PUBLIC SECTOR

Contracting outsourcing for the delivery of services poses administrative

challenges, and it may require a large initial investment. Administrative

challengesincluding measuring, performance, administering contracts, overseeing

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the employees, and determining responsibility and accountabilitylead to higher

explicit and implicit costs. To produce the optimal mix of services, a government

agency should be aware not only of the pure accounting cost (regulatory,

administrative, transaction, and efficiency), but also of the economic (implicit)

cost. Once the government agency is aware of the various costs, it should include

these costs as a consideration in its cost-benefit analysis (Callahan and Massey,

1997)

In determining whether to outsource the delivery of services, a cost-benefit

analysis is valuable. The objective of this analysis is to improve the clarity,

credibility, and usefulness of the information for decision making purposes. For

cost estimates and comparisons to be helpful, they must be completed in a

consistent and systematic manner. One issue is the ability to accurately calculate

the government agency’s true costs and the savings as a result of contracting out. A

second issue is the ability to assign a monetary value to the improvements arising

from the contracting out of public services. (Greenberg and appenzeller, 1998)

Although cost savings and performance may increase, it is important to weigh the

benefits of the savings against the impact on the clients receiving the service. For

example, will the outsourced service remain accessible to the client? Will the

service be of the same quality? Will the service be equitable? Other factors that are

important to consider are the administrative and technological support systems

needed, the client base to be served, the type of program to be contracted out, and

any desired objectives. To include client satisfaction in performance monitoring,

site visits and satisfaction surveys can be administered to ensure clients of the

outsourced program are satisfied with the level and quality of services they are

receiving (Yates, 1997)

2.7 SOME NOTABLE CRITICISMS OF HUMAN RESOURCE

OUTSOURCING

Out-sourcing service in another perspective has been criticized with the following

points.

Quality Risks: quality risk is the propensity for service to be defective, due to

operations-related issues, such as opportunism, information asymmetry client

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organization and service provider poor communication, lack of suppliers’

capabilities, or poor service level agreement contract enforceability, quality fades

(service provider’s deliberate reduction of quality of inputs to achieve unearned

profit) (Gilley and Rashead, 2000 Baase,2008).

Quality of service: The degree of service level agreement (SLA) is a strong

measure of the quality of service in human resource outsourcing. Service level

agreement may be lacking in poorly defined contract terms, poorly executed

objectives measurement and reporting or may contain forced design to match lower

price etc, (Tas and Sunder, 2004).

Poor qualifications of service providers and failure to deliver the promised human

resource transformation, the service provider may replace quality staff with less

qualified people to make wider profit margin and force higher cost of service on

client organizations.

Failures to deliver the promised human resource transformation are common in a

labour market like human resource outsourcing where indecent service providers

can do things cheaper and faster and deliver low quality promised human resource

transformation.

Client organizations’ are usually reluctant to invest in corporate human resource

transformation, once an outsourcing contract is in place, therefore making further

human resource management transformation difficult if not impossible (Engardo,

2006; Gilley and Rasheed, 2000).

2.8 POOR RECOGNITION OF HUMAN SERVICE OUTSOURCING IN

NIGERIAN PUBLIC SECTOR ENTERPRISES

Human resource outsourcing in the public sector has remained low and inadequate

since the 1970s due to poor support of the human resource outsourcing market.

Generally, every human resources development policy is designed to increase the

efficiency and effectiveness of workforce, to develop and harness workforce

potentials, to assume higher responsibilities, and to motivate workforce to

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constructively contribute to corporate and national operational efficiency and

effectiveness.

Also, human capital development Objectives in the public sector are geared toward

the effective management and development of the following needs: effective

policy design and management, projects and programs implementations.

Provision of social services and good governance, effective administration of

government activities;

However these policy measures are yet to impact human resource management and

outsourcing in the public sector organizations.

According to Igun (2004), the 21st century modernity concept is characterized by

the emergence of theoretical knowledge dependant society with constant changing

levels of competence and expertise necessary for continuous growth and

prosperity. Proactive human resource development and productive human

resources outsourcing activities can-not take place in a situation of unfocused

policy formulation and implementation. The public sector is not yet adequately

equipped and prepared for these challenges, due to the following anomalies:

Poor budgetary allocations and implementations,

Lack of political will,

Policy inconsistency,

Competent human resources constraints,

Poor project approach

Poor governance conditions and corruption,

These inhibitors and more, lead to inefficient use of available capacities. Indeed,

serious capacity gaps (ratio of deviation between required and actual workforce to

the required workforce) exist in most ministries, departments and agencies. The

quality and quantity of technical knowledge and skills in the public sector are

decreasing by the day due to several major factors mentioned above.

2.9 THE OBJECTIVES OF THE OUTSOURCING POLICY IN THE

PUBLIC SECTOR:

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Anaekwe (2011) opined ‘the overall policy objective is the promotion of an

enabling institutional, regulatory, technological, and infrastructural environment

for the sustainable development of Outsourcing services in Nigeria. The specific

objectives include:

Actualization of the goals of needs policy of the Federal Government in the area

of cost reduction and waste control in public sector of the economy.

Developing a globally competitive Information technology enabling services

Sector in Nigeria towards making Nigeria a regional Outsourcing hub in West

Africa;

To achieve lower unemployment rates through the policies of right size and

down sizes in public sector, particularly amongst the highly skilled graduates that

are increasingly being faced by a competitive job market;

Facilitating the diversification of the national economy through the development

of a vibrant outsourcing sector and further strengthen the economy in

Promoting Local and Foreign Direct Investment in outsourcing infrastructural

development in Nigeria;

For the Acceleration of Human Resources and ICT Infrastructure development to

support the growth in human service outsourcing business;

To ensure an integrated and coherent efforts coordination among State, Local

and Federal Government in the development of appropriate capacities conducive

for economic environmental growth in the development of the outsourcing policy

in the public sector;

2.10 ADVANTAGES OF HUMAN RESOURCE OUTSOURCING

(i) Focus on Core Activities and the limitations of back-office non-core operations

(that consume valuable resources at the expense of the core activities), escalate the

need to outsource such activities to allow the focusing on those business activities

that are important and create greater value, (Gerasis, 2002).

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(ii) Reduced overhead cost and efficiency savings: faster human resource

processes and throughout (reduced overheads, cost staffing level and service time),

complex back-office functions incurring consistent and unreasonable costs are

good reasons for outsourcing, (Drezner, 2004 Babu, 2005)

(iii) Operational control: operations whose costs are running out of control must

be considered for outsourcing. Strategic business units tending towards difficult to

control and poorly managed areas are prime motivators for outsourcing. Also, an

outsourcing service provider(s) can bring better management skills to the

organization(s) than available in-house human resources, (Leavy 2004).

(iv) Staffing flexibility: outsourcing will allow operations (that have seasonal or

cyclical demands) to bring in additional resources when needed and released when

not needed.

(v) Effective supply chain management and fee-for-service-basis (transforming

fixed investment costs to variable costs that vary with duration of service level

agreement, (Willcocks et al, 2004).

(vi). Continuity and risk management: periods of high employee turnover will

add uncertainty and inconsistency to corporate operations. Outsourcing will

provide a level of continuity to the organization while reducing the risk associated

with substandard level of operation, (Rothman, 2003 Leavy, 2004).

(vii) Develop internal staff: on-site outsourcing of the project will bring skilled

Workforce (lacking in-house) needed by an organization to execute a large

Profitable project(s) and develop internal workforce, (Leslie, 2010; Engardo, 2006)

2.11 CONSTRAINTS OR DISADVANTAGES OF HUMAN RESOURCE

OUTSOURCING IN THE PUBLIC SECTOR

Human Resource outsourcing and effective utilization face several challenges in

Nigeria namely. poor financial resources (under funding) to enable better handling;

shallow priority to the utilization of local human resources and strangulating

neglect of tertiary, training and research institutions; challenge of talent retention

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and their effective utilization in the public sector; lack of adequate support to key

institutions in the public sector that support human capital development and

outsourcing efforts; declining interests in training due to poor budget allocation

and implementation and poor training needs evaluation and monitoring; unfocused

proliferation of tertiary training and research institutions; declining quality of

outputs of development institutions; high turnover rate of skilled and technical staff

in the public sector due to poor conditions of service and compulsory early

retirement .corruption and fraudulent practices, resulting in funds mismanagement

and associated vices, (Obadan, 2003 Okorie, 2010).

2.12 SUGGESTED REMEDIAL STEPS FOR EFFECTIVE HUMAN

SERVICE OUTSOURCING

Notably remedies that may quick fix the poor situation of human service

outsourcing as outlined thus by Obadan (2003): pursuit of high rate of economic

growth and developmental activities as bases for the development of human

resource outsourcing and service providers needs. Others include:

i) provision of enabling socio-political and economic environment for

sustainable professionalism in the public service, that will encourage and

support human resources outsourcing,

ii) Institution of a frame work for a more systematic approach to HRD and

outsourcing (such as adequate funding of training and research activities,

rehabilitation of tertiary and training institutions, provision of facilities for

the utilization of skills acquired,

iii) adequate remuneration packages to retain capacity and encourage

outsourcing etc,

iv) adoption of innovative maintenance method (to enable tertiary institution

graduates acquired the necessary complementary practical skills),

v) Checks and sanctions against corrupt practices etc vii) recognition of human

resource outsourcing as a priority and a key vehicle to professional and

competitive public service, (Okorie, 2010).

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2.13 REFERENCES

Babu, M. (2005) Myth: All Outsourcing Is Off shoring

www.computerworld.com

Curled, N and Bailey, D. (1999) Telework: The Advantages and challenges of

Working; Organizational Dynamics vol 28 No 2.

Drezner, D.W. (2004): The Outsourcing Bogeyman: www.foreignaffairs.org

Engardio, P. (2006): Outsourcing: Job Killer or Innovation Boost? Business Week

Forbes G. and Steven B. (2006): A Framework for Business Continuity

Management, International Journal of Information Management vol 26 No 2

Gilley, K.M., and Rasheed, A. (2000): Making More by Doing Less: An Analysis

of

Out-sourcing and its Effects on Firm Performance: Journal of Management,

vol 26 No 4

Gareiss, R (2002): Analyzing the Outsourcers. Information Week.

Igun U.A. (2004). The Challenges of Human Development (I & II): The Guardian

June 18th and 21st.

Kobayashi-Hillary, M. (2007): India Faces Battle for Outsourcing news. bbc.co.uk

Krugman, P (2006): Feeling No Pain: New York Times March 6.

Leslie, A (2010); HR Outsourcing: The Guardian, APRIL 27TH

Leavy, B. (2004): Outsourcing Strategies: Opportunities and Risk. Strategy and

Leadership, vol 32 No 6.

Nwanevu, E (2005): Out souring as a proactive service initiative: Business day

Nov. 4th.

19

Obadan M. (2003): Capacity Building for Development (I & II): The Guardian

Dec. 5 & 8

Okorie N.E. (2010) Growing Corporate Excellence and Effectiveness Using

Business Process Outsourcing Model: Issues, Dimensions, Challenges and

Prospects. In Press.

Okorie N.E. (2010). Contemporary Human Resources Management in the

Nigerian Public And Private Sectors Organizations: Issues, Dimensions and

Consequences: The 36 Enterprises International Research Journal for

Development. Vol. 3 No. 1 June 2010

Okorie N.E. (2010c): Achieving Corporate Renaissance and Excellence through

Proactive Corporate Reform Strategies in Economic Meltdown. In press.

Rothman, J. (2003): Eleven Steps to Successful Outsourcing: A Contrarian's View:


Tas, J. and Sunder, S. (2004): Financial Services Business process outsourcing

20

CHAPTER THREE

3.0 RESEARCH DESIGN AND METHODOLOGY

3.1 INTRODUCTION

This chapter focuses on the procedures, the techniques and the sources of data

treatments applied in the research to arrive at the end results, since the purpose of

the work is to determine the impact of human service out-sourcing in the public

sector with emphasis on financial performance. In this regard, the research will

also provide and analyze data on such variables that relates to the subject matter

and the adequacy of the policy in PRODA and SEDI as public sector

organizations. More so, in the choice of the research methodology, the researcher

decided to make an extensive use of questionnaire and oral interviews designed as

would be appropriate to the findings expected (see instruments of data collections).

3.2 RESEARCH DESIGN

The research design of this project is a cross-sectional survey which is secured by

the questionnaire administered and returned from PRODA, SEDI and also by the

oral interview which was carried out on the human service out-sources workers;

structured to give an insight to the findings. Best results were achieved by

embarking on face to face conversations (oral interview) that were arranged in the

form of questions and answer method. A stratified random sampling technique was

applied to arrive at the finite (target) population as discussed below. The

questionnaire which was the major instrument of the research findings was

structured in a simple multiple choice question asking for the opinion of the

respondents concerning the subject matter. Primary and secondary data available

were sourced and employed .Simple statistical and mathematical method were

employed to determine the percentage rating on respondent’s opinions. Finally, the

chi-square (X2) was applied for the testing of hypothesis and the determination of

the degree of freedoms (5%) and the level of confidence (95%) followed.

21

3.3 POPULATION STUDY

Population is defined by the Oxford Advanced Learner of Current English as the

total number of people who inhabit an area, region, or country, or the number of

people in a particular group who inhabit an area. To this regard, PRODA and SEDI

staff nominal roll was used to arrive at the general staff strength which included

450 PRODA staff, 350 SEDI staff and six (6) selected out-source service

providers in their respective orders below:

To PRODA, four out-source services are maintained with the headship of a

vendor as follows:

-Dan vigilance security services limited

-Santana security services limited

-Darby and Joan environmental trimming & cleaning services

-Darby and Joan office cleaning services

While to SEDI, two out-source services are maintained, one with a head-ship

of a vendor and the other for direct payment as follows:

-Klenev Ventures, cleaning services

-Contracted Security Services directly being paid by SEDI on a private

arrangement.

However, the nature of the research investigations made it imperative to

concentrate on PRODA and SEDI staff population only as could be seen in the

sample size bellow and which was classified into two categories of staff: the senior

and junior staff (see table one) below under the determination of sample size.

3.4 SAMPLE METHOD

Stratified random sampling technique was applied for the selection of the sample

elements so as to build –up the target population. Secondly, the simple direct

random sampling was also applied in the selection of relevant interviewees who

are mostly from the out-source workers who are made up of two categories of

workers: The direct workers (without vendor) and the indirect workers (with

vendor), (see 3.3) above.

22

3.5.1 DETERMINATION OF SAMPLE SIZE

The researcher did not find it essay reaching every member of the two

organizations excluding that of the outsource services staff who in turn constitute

the total population of 800 workers. In view of the relatively large population of

the two organizations being studied, the researcher adopted a sampling technique

approach so as to concentrate on a rather manageable unit of the entire population.

Consequent upon this, the population size was obtained, using BOURLEY

FORMULA. The two organization’s sample population was determined as stated

and worked out below for the finite (target) population using the Bourley formula:

n=N/1+Ne^ 2

Where:

n=desired sample size

N=Total Population

E= limit of tolerance error (5%)

1= constant in the series

To assign values to these symbols above, a simple random sampling approach ‘the

Bourley formula’ was used to actually select the finite population out of the total

population size of the 800 staff. These were made up of both senior and junior

workers of both PRODA and SEDI in ENUGU respectively. The sample size was

calculated thus:

n = 800/1+800(5%) 2

= 800/1+800(0.05)2

= 800/1+800(0.0025)

= 800/1+1.1.125

= 800/2.125

= 266.6 approx = 267

23

TABLE: 3.5.2 SAMPLE SELECTION

3.5.2b STRATUM POPULATION SAMPLE SIZE

OFFICE

LOCATION

TOTAL

POPULATIO

N

NO OF

SENIOR

STAFF

NO OF

JUNIOR

STAFF

SAMPLE

SIZE

PRODA

ENUGU

450 300 150 150(56%)

SEDI ENUGU 350 278 72 117(44%)

TOTAL 800 578 222 267(100%)

SURVEY DATA 2012

The sample size was purposively distributed between the two organizations, where

150(56%) staff represent PRODA Sampled finite Population, While 117(44%)

represent SEDI staff, following the target population of 267(100%) as substituted

or calculated above.

3.6.0 SOURCES OF DATA COLLECTION

3.6.1 PRIMARY DATA

The primary data was collected through the field survey employed from three

PRODA office locations (Ekulu, Independence layout and Emene) in Enugu urban,

The SEDI office location at Akwuke in Enugu municipality.

The SIX (6) Out-source services providers: PRODA four and SEDI, two. The data

includes: questionnaires, oral interviews, observations and official records from the

accounting units of the two organizations under study.

3.6.2 SECONDARY SOURCES OF DATA

The secondary sources of data collection being the additional information were

sourced from text books, journals, public service rules/circulars (official records),

and lecture notes and of course from electronic media, via internet websites. These

bulks of literatures helped the researcher immensely by providing him with

24

valuable materials to the subject matter and these constituted a source(s) of guide

to the primary data already employed

3.7.0 INSTRUMENT OF DATA COLLECTION

3.7.1 QUESTIONNAIRES:

A 267 copies of written questionnaires were distributed to selected members of

PRODA and SEDI staff as follows: PRODA=150, SEDI=117 making a total of

the 267 and out of which 200 copies were returned as in Table 4.1.5 of chapter

four. The questions were designed and developed by the researcher to suit the

academic research purposes. These questions were structured in a multiple choice

questions that needed an answer of various degrees, indicated by ticking the best

options.

The options included but not limited to Yes, No, Don’t Know, true, partially true,

not true. Based on the research objectives, the researcher used direct questions like:

Do you think that out-sourcing services is a measure of cost reduction and waste

control in Nigeria wage financing? Two, Human out-source services had helped to

enhance public revenue in your organization, to what extent do you agree?

In fact about 17 optional questions were asked in which respondents were

expected to give a corresponding answers that are relevant to the research topic

which is purely dependent on the nature of their individual findings. The value of

questionnaire in this study cannot be over-emphasized as the use of it constituted

the most reliable result of the data collection. The use of questionnaire allowed the

respondents to express their opinions in writing without fear or favor.

To support the questionnaire, oral interviews were conducted, as the opinions of

the interviewers were of immense benefit and necessary too. The procedures

carried out in the collection of the data were used for the analyses of items and also

for the evaluation of the cost and revenue implications of outsource services in the

public sectors.

25

3.7.2 INTERVIEW METHOD

The interview method as an instrument of data collection in this research work

actually assisted the research work to a large extent. The researcher interviewed

each respondent face to face. The information or the responses gathered were

confirmed and subsequently compared with the objective of the work thereon.

A survey data in form of official circular collected from the accounting units via

the salary and wages offices of the two organizations in addition to the interview

conducted among the staff of these offices were also instrumental to the research

findings

3.8 METHOD OF DATA COLLECTION

As stated earlier on, one type of questionnaire was prepared and circulated by hand

to the staff of Project Development institute (PRODA) Enugu and also to the staff

of Science Equipment Development institute Akwuke, Enugu. The researcher gave

the respondents two weeks to complete the questionnaire. These questionnaires

were later collected at the expiration of the two weeks. Secondly as also pointed

out earlier, interviews were conducted and all the information gathered were more

or less used to validate the already gathered information on the questionnaires.

3.9 VALIDATION OF INSTRUMENTS

The data employed were considered valid through the responses obtained from

private discussions carried out and with some test- sample copies of the

questionnaires as these also were distributed to selected members of PRODA and

SEDI workers in which their responses gave the desired results as some workers

see the policy as a welcome development while some were evasive. The general

test-run results obtained within the two government parastatals under study on

whether the human service out-sources introduced in their organizations have

anything to write home about or not was encouraging. This first-hand response(s)

gave the researcher the courage to go ahead with the research work on ‘The

impact of human service out-sourcing in the public sector performance and

expenditure’ The questionnaires were then restructured to accommodate the

26

corrections discovered based on the reactions obtained in the test sample questions.

This is as a result of on the job experiences of the core staff of the two

organizations who are all working within their corporate environments. Finally, the

questions administered were distributed equally to all categories of employees in

PRODA/ SEDI from where the validation was ascertained and actualized.

3.10 METHOD OF DATA ANALYSIS

In the analysis of data of this research work, the researcher employed a simple

statistics and mathematical method to analyze the respondent opinion on the

questionnaire and for the determination of the percentage ratings on the research

questions. Data for the analysis will be summarized in tabular forms, bar-charts or

pie-chart where necessary and the chi-square will be used for the testing of the

hypothesis and to determine the degree of freedom. (df) of the application. The

chi-square symbol is represented as follows:

X2 = ∑Fo-fe) 2

Fe

Where:

E = summation of result

X2 = chi-square

fo = observed frequency

fe = expected frequency

Degree of freedom (df) is represented or calculated thus:

Df = (r -1) (c -1)

Where: r = number of rows

C = number of column

DECISION RULE:

Reject null hypothesis (Ho) if the chi-square (X2) calculated value (observed) is

greater than the table or critical value (expected), otherwise accept the alternative

hypothesis (Hi)

27

3.11 ANALYTICAL TOOLS

Extensively used in the research work were questionnaires in addition to oral

interview. In the analysis, the chi- square constituted the major tool on this

research work which will be summarized by use of tabular distributions in the form

of bar-chats or pie chats where the need arises. Electronic calculator will be used

where some rigorous calculations is needed or required. The chi-square table will

also be used to compare results findings.

28

CHAPTER FOUR

4.0 DATA PRESENTATION, DATA ANALYSIS AND TESTING OF

HYPOTHESES

This chapter relates to permutations and analysis of data based on summaries of the

responses obtained from the respondents through the use of questionnaires which

in effect was targeted towards producing a detailed analysis and presentation of

data collected from the questions administered to PRODA/SEDI staff respectively.

For clarity of understanding, the researcher decided to analyze the administered

questionnaires returned according to classes or batches in which they were

collected. As a matter of fact emphasis was placed on the questionnaires

administered which relates to earlier formulated hypothesis. The researcher also

used a simple percentage rating. Graphical representations in the analysis of the

questions and finally applied chi-square for the testing of the formulated

hypothesis which dealt on the prospects, problems, limitation and possible

implications of out-source services in the public sector of Nigeria economy

4.1.0 SOCIO- ECONOMIC CHARACTERISTICS OF THE WORKERS

Table 4.1.1 Age Distributions of Respondents

S/N AGE NO %

1 18-30 61 30.5

2 31-43 70 35

3 44-60 69 34.5

Total 200 100

Source: survey Data 2012

Table 1 above shows the age brackets of the respondents with the following age

range: 18-30 years are 61 respondents and represented by 30.5%; 31-43 years are

70 respondents represented by 35% and 44-60 are 69 respondents represented by

34.5%. The researcher found it necessary using age distribution to determine

various reasoning and understandings of the working class on out-sourcing policies

of the government.

29

Table4.1. 2 Academic Qualifications of Respondents

S/N ACADEMIC

QUALIFICATIONS

NO %

1 SSCE/GCE 41 20.5

2 ND/NCE 19 9.5

3 HND/BSC 79 39.5

4 MBA/MSC/ACA 55 27.5

5 PHD /ABOVE 6 3

TOTAL 200 100


The above tabulations in table 2 reveals that the academic qualifications of 41

respondents (20.5%) are SSCE/GCE holders, 19 respondents (9.5%) are holders of

ND/NCE, 79 respondents (39.5%) are holders of HND/BSC 55 respondents

(27.5%) are holders of MBA/MSC/ACA and 6 respondents (3%) are holders of

PhD & above.

Table4.1. 3 Hierarchy of Staff Respondents

S/N CATEGORIES OF STAFF NO OF

RESPONDENTS

%

1 Top management 19 9.5

2 Middle management 59 29.5

3 Intermediate staff 81 40.5

4 Junior staff 41 20.5

Total 200 100


Table 3 above reveals that 19 respondents (9.5%) are top management staff, 59

respondents (29.5%) are middle management staff,

81 respondents (40.5%) are intermediate staff, while 41 respondents (20.5%) are

made up of core junior staff of the two institutes under survey.

30

Table 4.1.4a Cost of paying 20 core staff over 20 out-source workers

compared

CORE STAFF (20) MONTHLY

PAYMENT

GROSS PAY

BASIC PAY 18,000 X 20 360,000

HOUSE ALLOWANCE 1500 X 20 30,000

TRANSPORT ALLOWANCE 2000 X 20 40,000

MEAL SUBSIDY 500 X 20 10,000

UTILITY ALLOANCE 300 X 20 6,000

TOTAL 22,300 X 20 446,000

OUT-SOURCE STAFF MONTHLY

PAYMENT

GROSS PAY

FIRST CLASS SECURITY 20,000 X 5 100,000

SECOND CLASS SECURITY 15,000 X 5 75,000

THIRD CLASS SECURITY 10,000 X 10 100,000

ALLOWANCE NIL NIL

TOTAL 275,000


Table 4.1.4b percentage reduction in cost and increase in revenue

OFFICE TOTAL PAY CUMULATI

VE

%

CORE STAFF(A) 446,000.00 446,000.00

OUTSOURCE STAFF(B) 275,000.00 721,000.00

DIFFERENCE (A) - (B) 171,000.00

PERCENTAGE INCREASE 446,000/721,000X100/1 62

PERCENTAGE DECREASE 275,000/721,000X100/1 38

PERCENTAGE COST

REDUCTION

171,000/721,000X100/1 24

Source: Survey Data, 2012

The table 4.1.4b above shows that it takes N446, 000.00 (62%) to pay 20 core staff

of the Institute per month, while N275, 000.00 (38%) is spent in paying 20 out-

source workers in a month, thereby making a cost reduction and increase in

revenue of N171, 000.00 (24%) from out-sourcing

31

TABLE 4.1.5: ADMINISTRATION OF QUESTIONNAIRE

S/N OFFICE

LOCATI

ON

QUESTIONNAIR

E

ADMINISTERED

QUESTIONNAIR

E RETURNED

QUESTIONNAIR

E NOT

RETURNED

1 PRODA 150(56.2%) 100(50%) 50(74.6%)

2 SEDI 117(43.8%) 100(50%) 17(25.4%)

TOTAL 267(100%) 200(100%) 67(100%)


Percentage return (PRODA) 100/200 x 100 = 50%

Percentage return SEDI 100/200 x 100 = 50%

Table 4.1.5 above shows that 100(50%) of the questionnaires administered

represents the number of questionnaires returned from PRODA, while 100(50%) of

the questionnaires administered constituted the number of questionnaires returned

from SEDI. They both gave rise to 200(100%) the total population of study.

Table 4.1.6: Are you aware that your organization is out-sourcing some

services?

S/N RESPONSE NO OF

RESPONDENTS

%

1 YES 188 94

2 NO 12 6

TOTAL 200 100


Table 4.1.6 above reveals that 188(94%) out of 200 respondents are aware of the

government policy of out-sourcing some services, while 12(6%) respondents are

not aware. This strongly proves that government out-source services in the public

sector has created wider awareness.

Table 4.1.7: Do you think that the out-source workers exhibit special skills in

their services?

S/N RESPONSE NO %

1 YES 170 85

2 NO 5 2.5

3 DON’T KNOW 25 12.5

32

TOTAL 200 100


The above tabulated results indicates that a population of 170 representing 85% of

the respondents chose Yes ,5 out of same population, representing 2.5% said No,

while 25 out of the population sampled represented by 12.5% declined. This more

or less indicates that special skills are exhibited through out-sourcing services

4.2.0 TESTING THE HYPOTHESES

The hypotheses postulated in chapter one of this work are tested in this chapter

with data presented from table 4.1.1 through 4.1.7, using the chi-square symbol X2

= ∑(Fo-fe) 2

Fe

and the degree of freedom (df) determined by (R-1)(C-1)=N where

R is the number of rows and C the number of columns in the series while N is the

result of the occurrence.

PROCEDURE:

A frequency table is constructed. This will consist of the observed value (X2) and

the expected value (CV) as would be seen below. The statistical data is calculated

and the value compared with the critical value.

DECISION RULE:

Reject the hypothesis if x2 calculated is greater than the critical value, otherwise

accept.

4.2.1 Hypothesis 1

H1: There is significant increase in revenue in PRODA/SEDI as a result of the

human service outsourcing

H0: There is no significant increase in revenue in PRODA/SEDI as a result of the

human service outsourcing.

S/N RESPONSE NO %

1 YES 170 85

2 NO 5 2.5


TOTAL 200 100


33

CHI-SQUARE TABLE

RESPONSE Fo Fe Fo-fe Fo-fe2 Fo-fe^ 2/fe

YES 85 34 51.0 1201.00 75.5

NO 2.5 33 -30.5 930.25 28.19

DON’T KNOW 12.5 33 -20.5 420.25 12.73

100 100 ∑Fo-fe) 2

Fe

116.42


Degree of freedom = (df) 0.01% = (R-1) (C-1) = N

Chi-square x2 = 116.42 (observed value)

R = N0 of row = 3

C = N0 of column = 2

N = result

N= (3-1) (2-1) = 2

= (2) (1) = 2

D f = 0.01% = 9.210 (expected value)

Decision Rule

Since the chi-square x2 = 116.42 on the computation representing the observed

value and the degree of freedom (0.01%) is equal to 9.210 being the expected

value. The decision rule stands that since the observed (H1) is greater than the

expected (H0) the null hypothesis is rejected and the alternative accepted, that

there is significant increase in revenue in PRODA/SEDI as a result of the human

service outsourcing

4.2.2 Hypothesis 2

H1: out-sourcing services is a measure for cost reduction and waste control in

Nigeria wage financing?

H0: out-sourcing services is a measure for cost reduction and waste control in

Nigeria wage financing?

S/N RESPONSE NO %

1 YES 188 94

2 NO 12 6

3 DON’T KNOW 0 0

TOTAL 200 100


34

CHI-SQUARE TABLE


YES 94 34 60 3600 105.88

NO 4 33 -27 841 25.48

DON’T KNOW 2 33 -31 961 29.12

TOTAL

100 100 ∑Fo-fe) 2

Fe

160.48


Computation of degree of freedom (0.05%)

N= (R-1) (C-1)

Where:

= R = 3, C = 2

= (3-1) (2-1)

N = 2

Form the critical value of chi-square x2 =160.48 representing observed value while

in the distribution table, the critical value (CV) = 2 representing 0.05% which is

represented by5.991 (level of freedom)

Decision Rule:

In the above compilation of the hypothesis N0 3 the observed value is 160.48 while

the degree of freedom (df) is = 5.991. Since the observed value (160.48) is grated

than the expected value (5.991), the null hypothesis is rejected and the alternative

accepted that out-sourcing services is a measure for cost reduction and waste

control in Nigeria wage financing?

4.2.3 Hypothesis 3

H1: Out-sourcing service workers are performing better than the scraped core staff

of the institute

H0: Out-sourcing service workers are not performing better than the scraped core

staff of the institute

S/N RESPONSE NO %

1 YES 170 85

2 NO 25 12.5


TOTAL 200 100


35

CHI-SQUARE TABLE


YES 85 34 51 2601 76.5

NO 12.5 33 -20.5 420.25 12.73

DON’T KNOW 2.5 33 -30.5 930.25 28.19

TOTAL

100 100 ∑Fo-fe) 2

Fe

117.42



= (R-1) (C-1)

Where:

= R = 3, C = 2

= (3-1) (2-1)

N = 2



represented by5.991 (level of freedom)

Decision Rule:


the degree of freedom (df) is = 5.991. Since the observed value (117.42) is grated

than the expected value (5.991), the null hypothesis is rejected and the alternative

accepted that Out-sourcing service workers are performing better than the scraped

core staff of the institute

4.2.4 Hypothesis 4

H1: The human services outsourcing has significantly helped in controlling


H0: The human services outsourcing has not significantly helped in controlling


S/N RESPONSE NO %

1 YES 160 80

2 NO 30 15

3 DON’T KNOW 10 5

TOTAL 200 100

36


CHI-SQUARE TABLE

RESPONSE Fo Fe Fo-fe Fo-fe2 Fo-

fe^ 2/fe

80 34 46 2116 62.24

15 33 -18 324 9.82

DON’T

KNOW

5 33 -28 784 23.76

100 100 ∑Fo-fe) 2

Fe

95.82



N= (R-1) (C-1)

Where:

= R = 3, C = 2

= (3-1) (2-1)

= (2) (1)

N = 2



represented by 9.210 (level of freedom)

Decision Rule:


the degree of freedom (df) is = 9.210 Since the observed value (95.82) is greater

than the expected value (9.210), the null (H0) hypothesis is rejected and the

alternative accepted that the human services outsourcing has significantly helped in

controlling over-head cost and wastage in the public sector.

37

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMANDATIONS

5.1SUMMARY

The researcher employed all the data gathered. So as to find out the impacts of

human services outsourcing on the Nigerian public sector financial performance,

sampling two public sectors (government parastatals): PRODA and SEDI Enugu.

These helped the researcher to unravel the objectives of the research topic. Finally

the research topic was exhaustive in that people’s opinions varied but more are on

the affirmation that the policy is favorable in terms of increase in revenue and cost

reductions, better performance and improvement in skill acquisitions in the labour

sector due to competitions.

5.2.0 FINDINGS:

Having exhaustively gone through the research topic, the researcher was able to

arrive at the following findings in form of cost reduction. Increase in revenue,

better performance, improvement in skills and others as pointed out below.

5.2.1 OUTSOURCING AND COST REDUCTION IN PRODA/SEDI ENUGU

It was ascertained that the cost of paying about 20 core staff of the two institutions

when estimated and compared to are far higher than the cost of paying 20

outsource workers as could be seen in chapter four of this work. According to the

survey data received from the two organizations (over-heads cost offices) being

studied in addition with pay list data obtained from the service provider’s office, it

was ascertained that 20 core staff (between the grade level 01-03) who are paid a

minimum wage of N18, 000.00 each plus other allowances like house, transport,

meal subsidy and utility allowances when summed-up goes home with roughly

N20, 000.00-N25, 000.00 per month. While their counterparts of the outsource

employees go home with N15, 000.00 in a month. Going by this comparison, it is

clearly ascertained that over-head cost is actually reduced in the Institutions

studied.

38

5.2.2 INCREASE IN REVENUE

Invariably as a result of reduction in overhead-cost, human services outsourcing in

public sector, particularly in PRODA and SEDI as noted above, has also recorded

an increase in revenue of the same capacity which is the move toward cost

reduction and increase of revenue see table 4.1.4 of chapter four.

5.2.3 PERFOMANCE EVALUATION ON HUMAN SERVICES

OUTSOURSING

The study was able to discover that the human services outsource workers

perfumes better than the in-house workers due to the following reasons:

� Specialization in skills and service orientation which is their corporate

objectives

� Competitions among the various outsourcing organizations doing the same

jobs or services also called for improved performances

5.2.4 OVER-HEAD COST AND WASTAGE CONTROLL IN THE PUBLIC

SECTOR

The study ascertained that human services outsourcing has helped in controlling

over-head cost and wastage in the public sector as regards the introduction of

human service outsourcing and since cost remains the key factor in considering an

alternate model such as shared services or outsourcing financial Performance.

5.2.5 PROBLEMS OR DRAW BACKS ON THE SUBJECT MATTER

The researcher among other things was able to discover some draw backs on the

subject matter, following the questionnaires administered, personal/oral interviews

conducted as followed here-under:

QUALITY RISKS: Poor service level agreement contract enforceability, quality

fades and service Provider’s deliberate reduction of quality of inputs to earn more

profit.

39

Poor qualifications:

Poor qualifications of service providers and failure to deliver the promised human

services that is to say, the service provider may replace quality staff with less

qualified people to make wider profit margin and yet forcing higher cost of service

on client organizations.

Failure to deliver:

Some service providers fail to deliver the promised human resource service owing

the fact those indecent service workers can do things cheaper and faster and as a

result, delivering low quality services. Finally, client organizations’ are usually

reluctant to invest in corporate human resource organization, once an outsourcing

contract is in place; therefore making further Human resource management

transformation to becomes difficult and uninteresting.

Others include poor financial resources for interventions (under funding) that

would enable in the priority of the utilization of local human resources and the

strangulating neglect of low income earners. Poor budget allocation and

implementation and poor training needs evaluation and monitoring,

Corruption and fraudulent practices, resulting in funds mismanagement and

associated vices

Lack of checkmating the contract holders (service providers) on the affairs of his

employees as it concerns quality services performances that are commensurate

with the corresponding expenditures.

5.3 CONCLUSIONS:

In Conclusion, there is a strong public opinion in support of human service

outsourcing due to its perceived creation of employments to local labour market of

skills and service orientated business set ups and owing to the fact of the high rate

of unemployment in the Nigerian public sector (labour market) with these remarks,

human services out-source is seen by the researcher as a welcome development in

the public sector financial performance.

40

However, the overall Study Results on human services outsourcing remain

unrecognized generally but often effective tools for improvement and

transformation within public sector human resource (HR). Satisfaction levels with

shared services and outsourcing arrangements within public organizations are

overwhelmingly positive. Cost remains a key factor in considering an alternate

model such as shared services or outsourcing. Performance measurement and

measuring success in general - both for human resource (HR) overall and for

specific shared services or outsourcing arrangements remain a challenge for public

sector organizations in general and to PRODA and SEDI in particular.

5.4 RECOMMENDATIONS

To sustain human services outsourcing effectiveness, in the public sector, the

following options are recommended below based on the findings:

i. Adequate funding of human resource development including human

resource outsourcing to make financial leverage available to the service

industry should be considered by the government

ii. Government as well as the management of institutions outsourcing

should ensure adequate control on the over-head cost to avoid wastages

on the financial performance in the public sector.

iii. Since the services of security men, cleaners, drivers, carpenters,

casual laborers had been scraped in the public sector via, PRODA and

SEDI, there is obvious needs to out-source these services to

accommodate these class of labor for the reduction of crime rate in the

society, for an idle mind (hand) they say is the devil’s workshop.

iv. More efforts should be geared towards anti-corruption crusade, rule of

law; effective judicial frame works that will deter funds

mismanagement on both the service providers and his host

organization(s).

v. The outsource services providers should be monitored to see that

adequate services are given that will be in line with the organizational

objectives

vi. Efforts are required from both the government on the part of providing

adequate funding and in the same vein requiring more efforts from the

41

service providers on the part of performance efficiency (more skilful

workers).

vii. Government annual budgets should take cognizance of outsource services

providers and their employees in the public sectors since they are parts

and parcel of the Nigerian citizens.

viii. Finally, the management of the two institutions under study and other

corporate entities outsourcing should endeavor to appoint qualified

service providers so as to maintain qualitative performance.

ix. There should be harmonized or symbiotic relationships between the

management of corporate bodies outsourcing (PRODA/SEDI) with the

service providers (vendors) respectively to avoid deviations from the set

corporate objectives of the institutions (parastatals)

x. .Any organization outsourcing some services should be conscious of the

problems or draw-backs that are associated with human service

outsourcing of which few are outlined as in my findings, (see caption

5.2.5 above).

42

Bibliography

R O Ugwuoke (June, 2005): Public Sector Accounting New Improved Edition

(Kinsman Publisher, Enugu)

A S Homby (2004) Oxford Advance Learners Dictionary Of Current

English (New Revised Edition)

Okorie (2010) Public Sector Organizations: Issues and Prospects

Nwabueze E O (2010) Paper presentation, National Open University of Nigeria:

E-Mail:[email protected]

Nwabueze E O (ibid) Challenges of Human Resource Outsourcing in Nigerian

Public Sector Organizations: Issues and Prospects

Igun U.A. (2004). The Challenges of Human Development (I & II): The Guardian

June, 18th and 21st.

Kobayashi-Hillary, M. (2007): India Faces Battle for Outsourcing news.bbc.co.uk

Krugman, P (2006): Feeling No Pain: New York Times March 6.

Leslie, A (2010); HR Outsourcing: The Guardian, APRIL 27TH

Leavy, B. (2004):

Outsourcing Strategies: Opportunities and Risk. Strategy and Leadership,

vol 32 No 6.

Nwanevu, E (2005): Out sourcing as a proactive service initiative: Business day

Nov. 4th.

Obadan M. (2003): Capacity Building for Development (I & II) The Guardian

Dec.

5 & 8

Okorie N.E. (2010) Growing Corporate Excellence and Effectiveness Using

Business Process Outsourcing Model: Issues, Dimensions, Challenges and

Prospects. In press.

43

Okorie N.E. (2010). Contemporary Human Resources Management in the

Nigerian Public and Private Sectors Organizations: Issues,

Dimensions and Consequences: The 36 enterprise international research

journal for development vol. 3 no 1 June, (2010)

Okorie N.E. (2010): Achieving Corporate Renaissance and Excellence through

Proactive Corporate Reform Strategies in Economic Meltdown In Press.

Rothman, J. (2003): Eleven Steps to Successful Outsourcing: A Contrarian's View:


Tas, J. and Sunder, S. (2004): Financial Services Business Process Outsourcing.

Unyimadu. S.O. (2007): An Introduction to Project Management and Feasibility

Studies: Benin City: Harmony Books Nigeria.

Wikipedia (2010): Offshore Outsourcing/Information on Offshore Outsourcing

Resources Process Issues. http://www.offshoreoutsourcing.org

P. Unanka and Chows (2002): Analytical Management, Senti publishers, Enugu

Onodugo V, Ugwuonah G. and Ebinne E. S (2010) Social Science Research,

Principles, Method & Application, el-demo publishers, Enugu

PRODA Enugu (2010) Investment Potentials in PRODA: Pamphlet

Nweke (2011) Impact of Stress on PRODA Employees Performance: project work

Okoro (1995) School Drop Out, Mobilization Strategies for Self Reliance in Enugu

State: project work

44

PRODA/SEDI Annual Report (1982) Pamphlet, Page 2

Department of Accountancy,

Faculty of Business Administration,

School of Post Graduate Studies,

University of Nigeria,

Enugu Campus.

July, 2012.

Dear sir/Madam,

A QUESTIONAIRE ON

IMPACT OF HUMAN SERVICES OUTSOURCING ON THE NIGERIAN

PUBLIC SECTOR FINANCIAL PERFORMANCE

I am a student of the school of post graduate studies, university of Nigeria Enugu

campus. I am conducting a research project on the above topic, using Projects

Development Institute (PRODA) and Science Equipment Development Institute

(SEDI) both in Enugu State as a case study; in partial fulfillment of the

requirements for the award of Master Degree Certificate in Accountancy.

Please you are required to complete the attached questionnaire as objectively as

you can.

You are assured that all the information supplied will be confidently used, purely

for academic purpose. Thanks.

Yours faithfully,

Okoro Peter O

45

INSTRUCTIONS:

PLEASE TICK ( ) Where Appropriate

PART (a) BIODATA

1. Sex: male ( ) female ( )

2. What is your academic qualification?

(a)SSCE/GCE O’LEVEL ( ) (B) ND/NCE ( )

(c) HND/BSC ( )

(d) MBA/MSC/ACA ( )

(e) PHD AND ABOVE ( )

3. What is the name of your organization?

(a) PRODA ( ) (b) SEDI ( )

4. How long have you worked in your organization?

(a) 1-10yrs (b) 11-20yrs (c) 21-35yrs.

5. What category of worker are you?

(a) Top mgt ( ) (b) middle mgt ( ) (c) intermediate/Senior staff ( )

(d) Junior staff ( )

PART (B) GENERAL QUESTIONS

6. Are you aware that your organization is out-sourcing some services?

(a) Yes ( ) (b) No ( ) (c) Don’t know ( )

7. If yes what services are being out-sourced?

(a) -----------------------------------------

(b) -----------------------------------------

(c) -----------------------------------------

(d) -----------------------------------------

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8. Do you think that the out-source workers exhibit special skills in their services?


9. Do you think that the cost of out-sourcing in your organization is significantly

higher than the in-house cost of rendering the human services?


10. Do you think that out-source service(s) is a measure for cost reduction and

waste control in Nigeria wage financing?


11. Do you think that out-sourcing services providers make their profits at the

expense of their employees?


12. Do you think that out-sourcing services employees lack formal education?

(a) True ( ) (b) partially true ( ) (c) not true ( )

13. Quality control is best achieved through out-sourcing some services in the

public sector, do you agree?


14. How would you rate the quality of service (s) rendered by the out-source

service workers to that of the former in-house staff in your organization?

(a) Higher than ( ) (b) Lower than ( ) (c) On average

15. Human out-sources services had helped to enhance public revenue in your

organization, to what extent

(a) To a large extent ( ) (b) To a larger extent ( ) (c) Don’t agree

16. Out-source services has positive impact in the public sector and the economy,

do you agree?


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If your answer is no, please give reason(s)

(a)………………………………………………

(b)………………………………………………

17. The human services outsourcing has significantly improved skills acquisitions

among the outsourcing organisations in the sector. Is this statement true in your

own assessment?


If your answer is yes, what led to the improvements?

(a)……………………………………………………

(b)……………………………………………………

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