IMPACT OF OUTSOURCING OF SERVICES ON STANDARD CHARTERED BANK STRATEGY

Outsourcing of Services on Standard Chartered Bank
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Introduction
Over the past decades, outsourcing has become an ever-growing phenomenon that is geared towards reduction of cost or time cycle as well as the accessibility to skilled professionals. In as much as there are numerous good reasons as to why a firm should outsource services, there are also numerous potential obstacles or problems that get associated with this kind of service. Outsourcing of services comprises some risk factors as well as several important or significant benefits. It should be pointed out that banking industry has been facing stiff competition, especially from those emerging banks. Such competitions from emerging financial institutions have been witnessed in areas related to service delivery as well as the general performance of the intended customers. The primary purpose of this paper is to give a greater in-depth analysis on some of the business operations that are outsourced by the standard chartered bank. Conversely it will establish or describe some of the challenges or impacts that faces standard chartered bank towards implementation of outsourcing strategy or commonly known as business process outsourcing BPO. The literature review section of this paper will entails those secondary sources from various authors that tend to exploit how outsourcing of services affect or benefits the financial institutions especially standard chartered bank (Bryce & Useem, 1998).

Notably, it should be pointed upfront that some of the business operations or financial activities that are outsourced by standard chartered bank include, information system, archiving, accounting, product design, auditing, cash sorting, security personnel, services related to market probe, facilities management, transport, training, transaction and monitoring of cards, services of network outsourcing as well as payroll duties. Some of the reasons as to why the standard chartered bank has been employing outsourcing service strategy can be attributed to the need for achieving cost efficiency, increased performance or the productivity rate of the firm, technical considerations as well as the need to concentrate on some of the core activities of the enterprise. Some of the challenges that have been seen to have faced standard chartered bank simply because of implementation of outsourcing strategy also gets attributed to inadequate capable and well versed service providers, inability to compliance with the contracts, financial risks, and the opposition from employer within the firm (McCarthy & Anagnostou, 2004).
Literature review
The concept and impacts of outsourcing strategy
According to Erepository.uonbi.ac.ke (2016) outsourcing is depicted as an arrangement whereby one company works to provide services to other company that provides in-house services. In this concept, outsourcing is depicted as one of the underlined approaches of management that acknowledges delegation of an external partner some of the important duties or responsibilities that were previously offered by that given firm. In general terms outsourcing of services entails the practice of purchase of commodities that were initially offered internally. In relationship to the context of standard chartered bank, outsourcing services or strategy in this context has been employed to describe all the subcontracting connections or interdependence between various firms. Ideally activities related to hiring of external employees to carry out a given service within the firm gets attributed to outsourcing activities since there is expectation that they will result in higher performance within that given firm (Bankingtech.com, 2016). Conversely such activities have been identified to have caused good control of resource use in both capital and labor.
Erepository.uonbi.ac.ke (2016) postulated that if the intermediate goods are not produced internally and therefore gets purchased from foreign n suppliers or manufacturers, and then is evident that this will result in a reduction of both capital investments and labor coast. In this context the strategy of outsourcing has therefore resulted to significant importance within the i9nstitrution of standard chartered bank. This aspect is supported by the fact that when there is no transaction cost, a company like the standard charter bank may decide to outsource its activities. This is because in most instances the market price of the major outsourced activities of standard chartered bank is said to be lower than their marginal costs (Kedia & Lahiri, 2007).
Grover et al. (1996) also showcased an interesting scenario by arguing that standard chartered bank is one of the main financial institutions with a core activity of banking. In this aspect, standard chartered bank has indeed invested and employed information technology that aid in improving its efficiency as well as the business effectiveness. Conversely, to aid and improve its primary business of banking, its management decided to concentrate on outsourcing non-fundamental banking services or operations. Just as already been noted above, standard chartered bank employs the strategy of outsourcing in order to ensure there is efficiency in its management sectors a factor that indeed result to high productivity rate. For instance, Lee (2001) postulated that the tendency of outsourcing the call center services, security, payroll, email services, as well as cleaning as already been demonstrated by standard chartered bank is indeed beneficial. As already been witnessed in the performance of standard chartered bank, the strategy of outsourcing has indeed expanded the shareholder value.
Lee & Kim (1999) demonstrated that there are also serious challenges that encompass standard chartered banks in its bid to employ outsourcing strategies. He tends to explain that successful implementation of a given and individual strategy within any firm is said to have taken more duration than its formulation. This aspect has indeed challenged the attention of managers of standard chartered bank towards execution details a factor that caused failure in attaining the set objectives. Some of the challenges may get attributed to identification as well as the inclusion of the top executive stakeholders in the implementation programs. Gilley & Rasheed (2000) added that standard chartered bank has not witnessed any potential benefit since the inception of outsourcing related services within its management sectors. This aspect is because acquisition of services from the external enterprises does not guarantee the standard chartered bank some of the competitive advantages in the business arena. The author projected that these challenges are stimulated by various factors that relates to inadequate service providers, lack of control, fear of losing job, inability to determine the cost of contact, inadequate support from the organization as well as loss of vital skills (Hsieh & Woo, 2005).
Kakabadse & Kakabadse (2002) also pointed out that the strategy of outsourcing has also led to tremendous changes on how the framework of standard chartered bank gets regulated. For instance it has been noted that the strategy makes the liberalization of market to exist with a lot of restrictiveness a factor that leads to reduction in the interest margins as a result of pressure from the customers. This aspect also fosters mergers and reorganizations within this particular banking sector that indeed results to more increased demands of traditional ways of banking operations such as emphasis on customers rather the quality of products or services given by the bank. The author also demonstrated that the strategy of outsourcing is linked to the pressure that is geared towards the production of enhanced transparency or risk management, reduction of cost, as well as navigation of the changing financial environment. However, Fixler & Siegel (1999) postulated that as resources in standard charter bank becomes extremely strapped; they have indeed turned and resorted to outsourcing as the surest means of reducing cost within the organization.
Kishore et al. (2003) conducted a comprehensive study in various financial sectors like the standard chartered bank and realized that in most instances, the bank forms a clear outsourcing objectives but when their implementation is not carried out as stipulated dissatisfaction is accounted as a result. Conversely the author explained that standard chartered bank has moved an extra mile and is working towards hiring external parties to ensure they provide their customers with all related services. It is therefore a trend that has emerged more common in the banking sectors and is providing services that are said to be intrinsic in business managerial. What is interesting is that in most instances standard chartered bank has worked to outsource the whole information management of the firm that includes the planning and installation of business workstations.
Collins & Millen (1995) asserted that this makes outsourcing to become one of the vital strategic decisions in the firm that has over a period of time allowed the standard chartered bank to develop the abilities needed to compete fairly in the business arena. It is this fact that standard chartered bank has employed it to foster their performance as compared to other related financial institutions. Ideally well-structured outsourcing strategies have been witnessed to have helped in situations where there are market imperfections and that there is knowledge gaps. Outsourcing strategies, therefore, employ qualified skills to fill in such gaps so as to attain high productivity and increased customer retention (Olsen, 2006).
Conclusion
In a nutshell, it is evident that in as much as there is a tremendous rise in the application of outsourcing strategies in banking sectors like a standard chartered bank that operates globally, there are several empirical investigations of the same. There is various scholastic research work that demonstrates that indeed the concept of outsourcing is very instrumental especially in the banking sector. However, this paper has also demonstrated some of the adverse impacts of this strategy about the performance of the standard chartered bank. Some of the positive impacts of this strategy concerning the performance improvement that was witnessed in the standard chartered bank get attributed to high productivity rate, low cost of production, and high rate of customers’ certification. This may results in the better competitive advantage of a firm than other emerging related firms.
It is indeed true that standard chartered bank has increased its performance ability as a result of those services that are outsourced from external organizations. However, some of the adverse impacts of this strategy have also been addressed and are related to fear of job loss, loss of control, and the inability to sustain the organization support. The strategy has been seen to have led to the loss of competitive skills with the standard chartered bank since managers tend to leverage their skills. Indeed it is, therefore, important to weigh these impacts before a given firm can employ such strategic decision in their business management. This is because it has both the negative and positive impacts some of which are brought about by poor implementation methods.

References
Bankingtech.com. (2016). The next phase of outsourcing: change the bank with digital transformation » Banking Technology. Retrieved 2 October 2016, from http://www.bankingtech.com/296122/the-next-phase-of-outsourcing-change-the-bank-with-digital-transformation/Bryce, D. J., & Useem, M. (1998). The impact of corporate outsourcing on company value. European Management Journal, 16(6), 635-643.
Collins, J. S., & Millen, R. A. (1995). Information systems outsourcing by large American industrial firms: choices and impacts. Information Resources Management Journal (IRMJ), 8(1), 5-14.
Erepository.uonbi.ac.ke. (2016). Implementation Of The Business Process Outsourcing Strategy In Standard Chartered Bank. Retrieved 2 October 2016, from http://erepository.uonbi.ac.ke/bitstream/handle/11295/13427/Ghikas%20Noela%20N_Implementation%20of%20the%20Business%20Process%20Outsourcing%20Strategy%20in%20Standard%20Chartered%20Bank%20Kenya%20Limited.pdf?sequence=3&isAllowed=yFixler, D. J., & Siegel, D. (1999). Outsourcing and productivity growth in services. Structural change and economic dynamics, 10(2), 177-194.
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