ANALYSIS OF HUMAN RESOURCE OUTSOURCING AND PERFORMANCE OF SELECTED FOOD AND BEVERAGE FIRM

ANALYSIS OF HUMAN RESOURCE OUTSOURCING AND PERFORMANCE OF SELECTED FOOD AND BEVERAGE FIRM

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

The activities of most food and beverage firms in human resource outsourcing have increased overtime in Nigeria. The Fast Food industry in Nigeria today is a beehive of activities and is gaining a lot of attention both within and outside the country. Industry trends such as rapid outlet expansion, strategic alliances (especially with companies in downstream sector of the oil and gas industry), and entrant of foreign players amongst others lends credence to these assertions. There exist in every economy, (whether developed, developing or less), various type of industries; manufacturing, service, food and beverage, textile and chemical. These industries compete among themselves for resources, infrastructure, market share and relevance, for successful competition, companies use creative and innovative weapons to compete favourably for profit maximization. However the concept of outsourcing has not received a lot of attention as considered being important elements that account for the growth and remarkable performance of the fast foods industry in Nigeria. Also the effects of outsourcing on firms’ performance are not completely clear. Previous outsourcing studies show contradictory results; while some claim a positive relationship between outsourcing and performance outcomes, others report no significant or even negative effects (Rothaermel and Deeds, 2001). Outsourcing without proper management control could sometimes result in job losses, According to Ghodeswar and Vaidyanathan (2008), a large number of employees whose organizations outsource their business activities may have similar problems to those employees that have undergone downsizing, while organizations claim that the basis for outsourcing is to increase business efficiency. however employees who are lucky to remain in the company after outsourcing effects believe that the possibilities of them staying in the company is low, because they could be the next in line to lose their jobs. Hammer (2001) posits that in situations where the outsourcer is not satisfied with the service, it could be difficult to break the contract because outsourcing contracts usually require a stipulated period. It will be costly to reverse the situation and return the services in house. Nevertheless, extant literatures and observed online interviews of business executives have shown that the positive outcome of outsourcing as a platform for reducing cost of production and for increasing the profit of firms. However, limited study have been able to link it with returns on marketing investment. Return on marketing investment (ROMI) is the contribution attributable to marketing (net of marketing spending), divided by the marketing ‘invested’ or risked. ROMI is a relatively new metric. It is not like the other ‘return-oninvestment’ metrics because marketing is not the same kind of investment. Instead of fund being ‘tied’ up in plants and inventories, marketing funds are typically ‘risked.

ANALYSIS OF HUMAN RESOURCE OUTSOURCING AND PERFORMANCE OF SELECTED FOOD AND BEVERAGE FIRM