VOLUME 6 ISSUE 3, 2021 447 Outsourcing and Task Autonomy of Outsourced Staff: Evidence from Ecobank Southeast Nigeria Chinegbonkpa Hope Amarachi Nwakanma Department of Industrial Relations and Personnel Management Michael Okpara University of Agriculture, Umudike nwakanma.chinegbonkpa@mouau.edu.ng Ifeanyi Prinuel Onyeonoru Department of Sociology University of Ibadan ip.onyeonoru@ui.edu.ng Ugochukwu Ugwumba Ikeije Corresponding Author Department of Industrial Relations and Personnel Management Michael Okpara University of Agriculture, Umudike uu.ikejie@mouau.edu.ng Abstract Organizations’ quest to maintain competitive advantage and maximize profit has made outsourcing one of the most popular management strategies in Nigeria. It has challenged the old practice where banks relied solely on their internal resources to perform both core and non-core banking activities. However, previous studies on outsourcing have reported inconsistent findings on the effects of the practice on workers. This study therefore, analyzed the effects of outsourcing on the task autonomy of outsourced staff in Ecobank Nigeria Limited. Labour Market Segmentation Theory was employed as theoretical frameworks while Quasi-experimental design was adopted. Relevant data were collected using structured questionnaire and In-depth interview. In quantitative data analysis, descriptive statistics and Chi square were employed while qualitative data were content analysis. Finding from the study revealed that the outsourced staff didn’t have the freedom to make decisions pertaining their work leading to low task autonomy. This was due to their perceived low level of trust, allegiance and commitment to their bank. Mode of employment was significantly associated with employee task autonomy. The study therefore concludes that the jobs of the outsourced staff were low in task autonomy due to their status as outsourced staff. Banks therefore, need to design a balanced work structure to improve the quality of work of the outsourced staff so as to enhance their task autonomy. Keywords: Outsourcing, outsourced staff, core staff, task autonomy, Ecobank mailto:nwakanma.chinegbonkpa@mouau.edu.ng mailto:ip.onyeonoru@ui.edu.ng mailto:uu.ikejie@mouau.edu.ng 448 Introduction As part of change in managerial strategy to the stiff competition that came after the consolidation exercise in Nigerian banking industry, banks have embraced the use of outsourcing on a large scale (Ohikhena, 2017; Kabuoh, Chigbu & Abasilim, 2014). As a result, the outsourcing of banking activities has recorded a tremendous growth in the last two decades. Within this period, banks have outsourced not only their non-core activities but also their core activities in huge volumes. According to a study conducted by Deloitte in 2016, outsourcing in financial services grew by 16% in 2014 and 36% in 2016 and financial service sector presented the highest future outsourcing growth opportunity (Deloitt, 2016). Outsourcing of business, IT services and applications have also grown particularly in banks (Accenture, 2013). However, the major reasons often adduced for the adoption of this practice have been the need for banks to cut excessive cost and maintain a competitive edge over other banks. Banks have been able to enhance increased productivity and business growth through cost saving, improvement in their core competencies, increase in competitive advantage and access to specialized expertise and skills as a result of outsourcing. This management practice has also opened Nigerian banks up for partnership with external service providers with implications for the task autonomy of the outsourced staff. But this development is not without implications for the outsourced staff of the banks as there are observed difference which exists between the outsourced and core staff in the areas of work conditions, tasks, as well as their job characteristics particularly their task autonomy. As articulated by Hackman and Oldham (1980), task autonomy is the extent to which a job gives the job holder freedom, discretion and independence in making decisions in areas of scheduling, procedures, methods, sequence and quality control. Specifically, outsourcing (especially staff outsourcing) creates disparities between the permanent staff and outsourced staff in the area of task autonomy. Thus, there is difference between the outsourced and core staff in the area of the type of tasks they perform, how the tasks are performed and with whom they perform the tasks which has implications for their task autonomy (Davis-Blake & Broschak, 2009) Outsourcing is often associated with disparities between the outsourced and core staff in several aspects of work. First, is in the area of employment status. Outsourcing (especially staff outsourcing) comes with segregation of employees into core and outsourced (Nwakanma & Onyeonoru, 2021). The outsourced staff are often seen as the temporary staff while the core staff are seen as the permanent staff. Second is in the area of working conditions, where for instance, difference in pay and benefits are often high for the permanent staff and low for the outsourced staff; job security in which the outsourced staff are always at greater disadvantage than the permanent staff; and their experience with their job characteristics which is reflective of their statuses as core or outsourced. Existing studies have reported inconsistent findings on the effects of outsourcing on the outsourced staff. For instance, some researchers have argued that outsourced staff are significantly disadvantaged relative to core staff in the areas of well-being, nature of tasks and job characteristics (Kompier, Ybema, Janssen & Taris 2009; Ang & Slaughter 2001; Michael & Michael 2012; Nwakanma & Onyeonoru, 2021). Other authors claim otherwise and argued that outsourcing enhances the job characteristics of outsourced staff thereby diminishing that of the core staff (Fisher, Wasserman & Wolf, 2006); and core staff have lower levels of satisfaction and wellbeing compared to their counterparts (European 449 Commission, 2006). While the debate in this area is generally inconclusive, empirical research is needed to establish more precise conclusions on the matter. Based on the premise of the foregoing, the authors hypothesized that employment status is significantly associated with employee task autonomy. Therefore this study focused on empirical findings on such issues as the nature of effects outsourcing has on the task autonomy of outsourced staff. Specifically it aimed at examining the effects of outsourcing on the task autonomy of outsourced staff with particular reference to Ecobank Nigeria Plc. Conceptual Review Just as there is diversity in the terminology used in outsourcing research, there is also a lack of consensus in literature about what the term actually means (Barrar & Gervais, 2006). These Differences in the use of terminology and definitions can be attributed to different propositions made by authors, based on the purpose of their studies. Some authors have referred to outsourcing as 'make or buy' (Espino-Rodriguez & Padron-Robaina, 2006) while others have used terminologies such as subcontracting, contracting, sourcing, etc. interchangeably to refer to the practice. In addition, most authors agree that outsourcing means going outside the organizational boundaries to acquire determined products and services (Espino-Rodriguez & Padron-Robaina, 2006). Whereas others see it as ''the transfer of responsibilities or activities to a third-party” (Kotabe & Mol & 2009; Ghobrial, 2005). However, understanding outsourcing only in terms of procuring activities without capturing the strategic nature of the practice is faulty (Gilley & Rasheed, 2000). This is because outsourcing is a strategic decision to externalize certain activities to maintain and/or improve competitive advantage. This approach to outsourcing provides organizations with sufficient information on potential activities to be outsourced so as to avoid competitive decline. Therefore, doing a situational analysis is very crucial to choosing the right outsourcing strategy (Momme, Moeller & Hvolby, 2000). In line with that, Espino-Rodriguez and Padron-Robaina (2006) defined outsourcing as a strategic decision that entails the external contracting of determined non-strategic activities or business processes necessary for the manufacture of goods or the provision of services by means of agreements or contracts with higher capability firms' to undertake those activities or business process, with the aim of improving competitive advantage. Organizational Justifications for Outsourcing Organizations engage in outsourcing for diverse reasons depending upon their vision and purpose for the practice. However, Cost reductions have been reported as the most crucial reason for outsourcing (Okafor, 2012; Kabouh, Chigbu & Abasilim, 2014; Orogbu, Onyeizugbe & Alanza, 2015). Human Resource outsourcing is a strategy organizations use to cut costs in the face of an economic downturn (Seth & Sethi, 2011). Managers see it as a better response to cost reduction (Greer, Youngblood & Gray, 1999). This dimension happens to be the finance-driven idea connecting Human Resource outsourcing (Turnbull, 2002) and gives credence to the most influential approaches in the analysis of outsourcing - the transaction cost economics (TCE). According to transaction cost economics, reduction in the cost of production and transaction is the basis on which organizations will make outsourcing decisions (McIvor, 2008). The growing pressure on organizations to remain competitive is another motivation behind outsourcing (Insinga & Werle, 2000). Outsourcing is therefore a necessary response to 450 today’s hyper-competitive environment as no organization remains competitive in business today by relying solely on its in-house resources. Organizations focus their internal resources on the activities that give them a unique competitive advantage while outsourcing others (Corbett, 2004). Another reason organizations outsource is to enable them focus on their core competencies. Core competencies refers to the area in which an organization renders functions that produce results better than any of its competitors or external service providers. A lot of companies outsource some aspects of their operations in order to unburden themselves of the non-core parts of their businesses so as to focus on their core competencies that give them an advantage over their competitors (Akemushola, 2013). This gives credence to another influential approach in the analysis of outsourcing- the resource-based view (RBV) of the firm. This theory views the firm as a bundle of assets and resources that if employed in distinctive ways can create competitive advantage (McIvor, 2008). Other reasons why organizations outsource may include: development of in-house staff; to have access to some specialized skills, talents and expertise that are too costly and difficult to develop in-house (Fisher et al, 2006); to leverage and tap into a global knowledge base as well as have access to world class capabilities (Maidment, 2003). Outsourcing and Employee Task Autonomy Outsourcing has been argued to influence task autonomy of employees in organizations. Research have shown that outsourcing environment is highly monitored and controlled by the management. Employees working in outsourcing organizations face a mixture of control and commitment strategies; the work environment is highly controlled and performance is closely monitored and strictly measured against targets. Kessler & Coyle-Shapiro (1999) in their study on the impact of external activities (outsourcing) on employment relations from the point of view of the employee, found that employees indicated being wary of the new monitoring system that allowed new employers to monitor them much more closely and tightly. Some researchers have also observed that outsourcing places some restrictions on the decision-making capacity of the workers particularly the outsourced workers. For example, Ang and Slaughter (2001) reported after their study on information system and software professionals that organizations that outsource for labour give high autonomy to permanent staff. They are given the scope of the project alone, and they find out the project details themselves. On the other hand, contractors are given low autonomy in their jobs. They are given specific instructions (project specifications) on the ‘what’ and ‘how’ of the work and they do not have the ability to negotiate their work assignments. De Cuyper, De Jong, De Witte, Isaksson, Rigotti & Schalk (2007) in their review reported that temporary workers are vulnerable to job strain owing to poor job characteristics, most notably reduced control (less autonomy). Some other researchers have emphasized that outsourced job offers high autonomy particularly when such jobs are performed outside the client organizations. For instance, Fisher et al (2006) reported that outsourced work frequently offers opportunity for increased autonomy and role discretion, especially if the work is done on-site without direct supervision from the service provider organization. For example, decisions about how to proceed with a project must often be made quickly and without an opportunity to confer with home office managers. 451 Theoretical Consideration This study relied on the Labour market segmentation theory in explaining the issue of outsourcing and staff autonomy within the organization. Labour market segmentation theory explains how non-competing work groups form and are sustained and how they affect the working conditions and work experience of workers. Outsourcing is seen as a practice that polarizes the workers into core and outsourced. The core staff who are on permanent employment belong to the primary segment in the labour market while the outsourced staff belong to the secondary segment with differential opportunities, privileges, and prestige and work conditions. This gained more explanation from Basak (2005) who stressed that this polarization of the workers creates what may be referred to as ‘bad jobs’ and ‘good jobs’. While stability, high wages, social security coverage, existence of promotional ladders and good working conditions are associated with good jobs, the opposite is the case for the bad jobs. The quest to reduce employment cost, focus on core competencies, gain competitive advantage and increase productivity compel banks to source for labour outside the organizational boundaries (outsourcing). As a result, there is automatic division of workers into core and outsourced which is not determined by the individual differences in skills, qualification, capability or productivity but by managerial control strategies and internal labour market over which the workers do not have control. This differentiation comes with it high level of discrimination in the working conditions (job insecurity, low pay etc.) and working experience (lack of additional skills, autonomy, etc.) of the employees in the secondary job. Research Methods The design for this research was survey design. The research was conducted in the southeast region of Federal Republic of Nigeria. The study scope consists of all the branches of Ecobank in Abia, Imo and Enugu states. These comprised the managers at all levels, staff on permanent employment (core staff), as well as staff on temporary employment (outsourced staff). Ecobank was purposefully selected because of its staffing structure which comprises more outsourced staff (3,959) than core staff (2,639). The sample size for this study was 352 respondents which were drawn from the total number of staff of Ecobank branches in the three States under study. The sample size was made up of 134 core staff and 218 outsourced staff. A total number of 352 semi-structured questionnaire consisting of both closed-ended and open-ended questions were administered to the respondents. The study also adopted purposive selection of twenty respondents involved in in-depth interviews – based on their strategic occupational statuses and experiences - managers and union leaders. Data were analyzed and interpreted using descriptive statistics and simple percentages. Non-parametric test (Chi square) was used to test for association between mode of employment and employees’ task autonomy. 452 Results Level of autonomy of outsourced staff relative to the core staff Table 1: Distribution of Research Participants by the level of autonomy Panel Characteristics Distribution Percentage Which category of staff has more freedom to plan? Core 272 77.3 Outsourced 80 22.7 Total 352 100.0 Source: Field Survey (2021) Table 2: Descriptive Statistics on Mode of Employment and Freedom to Plan Work Mode of employment My job allows me the freedom to plan my work Yes No Don’t know Total Outsourced 72 (33.0%) 126 (57.8%) 20(9.2%) 218(100%) Core 86 (64.2%) 38(28.3%) 10 (7.5%) 134(100%) Total 152 (44.9%) 164 (46.6%) 30(8.5%) 352(100%) Source: Field Survey (2021) Hypothesis H0: There is significant association between employees’ task autonomy and mode of employment. H1: There is no significant association between employees’ task autonomy and mode of employment. Table 3: Non-parametric Test of Association between mode of employment and Task autonomy Mode of employment My job allows me the freedom to plan my work Yes No Don’t know Total Outsourced 72 (33.0%) 126 (57.8%) 20(9.2%) 218(100%) Core 86 (64.2%) 38(28.3%) 10 (7.5%) 134(100%) Total 152 (44.9%) 164 (46.6%) 30(8.5%) 352(100%) Calculated chi square: 33.665; df: 2; Probability value: 0.000 453 Discussions In comparing the task autonomy of core and outsourced staff in table 1, it was found that core staff have more freedom to plan their work compared to their outsourced counterparts as indicated by (77.3%) of the respondents. Further investigations on task autonomy sought to compare the responses of core and outsourced staff to the question of whether their jobs allow them the freedom to plan their work. The result in table 2 revealed a high percentage of positive responses from core staff (64.2% of out of the total population of outsourced staff) as well as a high percentage of negative responses from the outsourced staff (57.8%). This finding was buttressed more by a manager whose comment showcased reasons for the disparity in autonomy in the jobs of outsourced and core staff. It showed that in Ecobank, supervisors closely monitor the outsourced staff to avoid taking blames of work not well done. The manager’s comment goes thus:- …the supervisors monitor them closely, give them the work schedules and decide the procedures so they work according to the laid down procedures. This is because so many of them don’t have this sense of responsibility. They feel they have nothing to lose, they feel they don’t belong here. I’ve once overheard an outsourced marketer telling her colleague that even if she puts her life down for the bank, they will still not acknowledge nor appreciate it. But that’s not true, we recognize their hard works, we also have bonuses and commissions for them to encourage them. You see, for them to have such mentality, anything can happen, they may not handle their tasks with utmost carefulness compared to the core staff who would do that having in mind that the outcome may affect their appraisals, promotions and even their jobs. Their supervisors do this knowing that they (i.e. supervisors stand to take responsibility for their mistakes). IDI/female/Branch manager/Abia/2016 Another Union leader had this to say on the level of control and monitoring associated with their work as outsourced staff- As an outsourced staff, you are told what to do, when, how and where to do it as though you are a child. It makes one feel incapacitated and powerless. IDI/male/Union leader/Abia2016 Findings presented in table 3 above shows the association between the mode of employment and task autonomy. It revealed that, at the degree of freedom of 2, the P value was 0.000 which is less than the alpha level of significance of 0.05. Therefore, the null hypothesis that employees’ task autonomy is not significantly associated with the mode of employment is rejected while the alternate hypothesis that employees’ task autonomy is significantly associated with the mode of employment is supported. The above findings indicate that the job of core staff is high in task autonomy compared to their outsourced counterparts by the virtue of their employment status in the bank. This is because the job of core staff allows them more freedom to plan their work than that of the outsourced. This finding supports literature on the disparity in task autonomy between the core and the outsourced staff. For instance, researchers such as Ang and Slaughter (2001); European Commission (2006) reported that among other work characteristics, higher levels of autonomy and skill 454 development were found among the permanent employees compared to temporaries. Also, some other European Survey on Working Conditions (Benach, Gimeno, & Benavides 2002; Goudswaard & Andries 2002; Letourneux 1998) show that temporary workers experience less autonomy than permanent workers. Level of autonomy of outsourced staff relative to the core staff The jobs of the outsourced staff were low in task autonomy compared to the jobs of the core staff. The core staff had more freedom to plan their work compared to their outsourced counterparts. This was attributed to the bank’s policy of allowing their staff to exercise their initiative in planning their work within a permitted limit. On the other hand, Outsourced staff did not have this opportunity, they are given the work schedules and laid down procedures to work with. They also did not have the ability to negotiate their work assignments. Supervisors closely monitor them to avoid taking blames of work not well done. This was as a result of their perceived low level of trust and allegiance to the bank. They were also seen by managers as workers who do not display the same level of commitment and dedication as the core staff. This finding is in consonance with Ang and Slaughter (2001) report that organizations that outsourced for labour give high autonomy to permanent staff. Permanent staff are given only the scope of the project while they found out the project details themselves and they are also accountable and responsible not only for their own work but also the outsourced staff’s work as well. On the other hand, outsourced staff have low autonomy in their jobs. They are given laid down procedures (work specifications) on the tasks and how to perform them and have no ability to negotiate their work assignments. In another study by the European Commission (2006), it was reported that among other work characteristics, higher levels of autonomy and skill development were found among the permanent employees compared to temporaries. Some other European Survey on Working Conditions (Benach, et al., 2002; Goudswaard & Andries 2002) showed that outsourced workers experience less autonomy than permanent workers. The above result on removing autonomy from the job of outsourced staff supports one of the theories adopted for this study the ‘Labour market segmentation theory’ where work is characterized by segregation on the basis of the status of employees. Conclusion Autonomy which is associated with freedom, independence and discretion suggests that an employee has to schedule his work and decide procedures to be used to perform them and this promotes a sense of responsibility (Hackman & Oldham 1980). When a job provides an employee with the freedom to make decisions concerning work scheduling and procedures to be used to perform the tasks involved, the employee feels trusted and shows a high level of responsibility, involvement, commitment and trust. In the case of bank outsourcing, autonomy and control are totally removed from outsourced jobs, workers have a feeling of powerlessness and untrustworthiness. This results in employees showing low levels of trust, allegiance and commitment to their work and organizational goals. The study therefore concludes that the jobs of the outsourced staff were low in task autonomy due to their status as outsourced staff. 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