HUMAN RESOURCE OUTSOURCING AND PERFORMANCE OF SELECTED FOOD AND BEVERAGE FIRM

HUMAN RESOURCE OUTSOURCING AND PERFORMANCE OF SELECTED FOOD AND BEVERAGE FIRM

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

The majority of food and beverage companies in Nigeria have stepped up their human resource outsourcing efforts over time. Nigeria’s fast food business is currently buzzing with activity and receiving a lot of attention both domestically and internationally. These claims are supported by industry trends like quick outlet growth, strategic collaborations (particularly with enterprises in the oil and gas industry’s downstream sector), and the entry of international players, among others. Every economy, whether developed, developing, or less developed, has a variety of industries, including textile, chemical, food and beverage, service, and manufacturing. These industries compete with one another for resources, infrastructure, market share, and relevance; in order to compete successfully for profit maximization, businesses deploy creative and new weapons. Unfortunately, the idea of outsourcing hasn’t gotten much attention despite being one of the key factors in Nigeria’s fast food industry’s amazing growth and performance. Also, it’s unclear how outsourcing affects a company’s success. Past research on outsourcing have shown mixed results; some believe there is a favorable correlation between outsourcing and performance outcomes, while others claim there is no correlation or even a detrimental impact (Rothaermel and Deeds, 2001). Sometimes, outsourcing without adequate management supervision might lead to employment losses. According to Ghodeswar and Vaidyanathan (2008), while companies assert that outsourcing is done to boost company efficiency, many individuals whose businesses outsource their business activities may experience issues similar to those experienced by employees who have been downsized. While businesses assert that outsourcing is done to boost operational effectiveness. Those who are fortunate enough to still be employed by the company following the consequences of outsourcing, however, believe that their chances of doing so are slim because they could be the next to lose their employment. According to Hammer (2001), because outsourcing contracts typically include a specified length, it could be challenging to terminate the agreement if the outsourcer is dissatisfied with the service. Reversing the situation and bringing the services in-house will be expensive. Yet, the available literature and observable online discussions with corporate executives have demonstrated the benefits of outsourcing as a means of lowering production costs and raising firm profits. Little research has, however, been able to connect it to returns on marketing investment. The contribution attributed to marketing (net of marketing spending) divided by the marketing “spent” or “risked” is known as return on marketing investment (ROMI). A relatively new statistic is ROMI. Because marketing is not the same as other “return-on-investment” measurements, it is not comparable. Marketing funds are often “risked” rather than “tied” up in plants and inventories.

1.2 STATEMENT OF PROBLEM

In an effort to boost organizational performance, improve service and product quality, shorten production cycle times, cut costs, raise focus on key competencies, and outsource an ever-growing range of tasks, including human resource services, in recent years. Companies appear to be concentrating on a small number of tasks and hiring outside vendors to handle the rest.

Despite the trend toward outsourcing human resources, there is little proof that it improves performance. Both persuasive arguments for and against outsourcing as a strategy for gaining a sustainable competitive advantage have been made. On the one hand, firms may be able to better concentrate on their most value-creating operations by outsourcing human resource management chores to specialized groups, maximizing the potential effectiveness of those activities. Moreover, expenses may decrease and investments in facilities, equipment, and labor may be scaled back as outsourcing increases. A greater reliance on outsourcing, on the other hand, may result in less innovation (Kotabe, 1992), potential competition from outsourcing partners (Bettis et al., 1992), and a loss of control over the work at hand, according to anecdotal evidence. Outsourcing’s consequences on performance are so unknown.

1.3 AIMS AND OBJECTIVES OF STUDY

Examining the performance of a chosen food and beverage company in Ogun state and outsourcing of human resources are the study’s key objectives. Other study goals in detail include:

To investigate how outsourcing human resources affects an organization’s performance
To ascertain the connection between human resources and an organization’s profitability
to determine the advantages of outsourcing human resources services in the majority of food and beverage companies in Ogun state.
To propose a solution to the aforementioned issues.

1.4 RESEARCH QUESTIONS

To determine the aforementioned study’s aims, research questions were developed. The following is a list of the research questions:

What impact does outsourcing human resources have on how well a business performs?
What connection exists between an organization’s ability to profit from its human resources?

What are the advantages of outsourcing human resource tasks in the majority of food and beverage companies in Ogun state?

1.5 STATEMENT OF RESEARCH HYPOTHESIS

H0: The performance of the food and beverage companies in the state of Ogun is unaffected by human resource outsourcing.

H1: Ogun State’s food and beverage companies perform much worse when human resources are outsourced.

1.6   SIGNIFICANCE OF THE STUDY

The importance of this study is as follows:

The majority of food and beverage companies as well as all other corporate organizations in Nigeria will find the study’s findings beneficial in determining how they may use human resource outsourcing as a strategy to improve organizational performance and effectiveness.
This study will also be used as a resource for other academics and researchers who are interested in conducting additional research in this area, which, if put to use, could lead to the development of fresh explanations for the subject.

1.7   SCOPE/LIMITATIONS OF THE STUDY

Human resource outsourcing strategies in the food and beverage firm will be covered in this study on the impact of outsourcing human resource functions on organizational performance in the majority of food and beverage firms with a view to identifying its effect on organizational performance and effectiveness.

Limitations OF STUDY

Financial constraints – A researcher’s ability to find relevant materials, literature, or information and collect data efficiently is often hindered by a lack of funding (internet, questionnaire and interview).
Time restraint: The researcher will do this investigation together with other academic activities at the same time. As a result, less time will be spent on the research project.

1.8 DEFINITION OF TERMS

Human resources are the people who make up an organization’s, industry’s, or country’s labor force. Although “human resources” and “human capital” are sometimes used interchangeably, human capital usually denotes a more limited perspective (i.e., the knowledge the individuals embody and economic growth).

OUTSOURCING: Getting (goods or a service) from an outside source through a contract.

Performance is the act of demonstrating a specific skill, such as profitability acumen or customer satisfaction prowess. Project Division;.