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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE 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.

1.2   STATEMENT OF THE PROBLEM

In recent years, organizations have outsourced an expanding variety of activities including human resource functions in an attempt to improve service and product quality, reduce production cycle times, lower costs, increase their focus on core competencies, and, in general, enhance organizational performance. Organizations appear to be focusing on a relatively narrow set of functions and are contracting with outside suppliers to perform the others. Despite the trend toward Human resource outsourcing, evidence of its performance effects is scarce. Appealing arguments have made the case both for and against outsourcing as a means of achieving long-run competitive advantage. On the one hand, by outsourcing human resource management tasks to specialist organizations, organizations may better focus on their most value-creating activities, thereby maximizing the potential effectiveness of those activities. In addition, as outsourcing increases, costs may decline, and investment in facilities, equipment, and manpower can be reduced). On the other hand, anecdotal evidence suggests that increased reliance on outsourcing may lead to reduced innovation (Kotabe, 1992), eventual competition from outsourcing partners (Bettis et al., 1992), and reductions in control of the task in question. Thus, the performance effects of outsourcing are uncertain.

1.3   AIMS AND OBJECTIVES OF STUDY

The main aims of the study are to examine the human resource outsourcing and performance of selected food and beverage firm in Ogun state. Other specific objectives of the study include:

1.  To examine the effecting of human resource outsourcing on organization performance.

2.  To determine the relationship between  human resource and the profitability of an orgnaisation.

3.  To identify the benefits derived in outsourcing human resource functions in most of the food and beverages firms in Ogun state.

4.  To proffer solution to the above stated problems.

1.4   RESEARCH QUESTIONS

The study came up with research questions so as to ascertain the above stated objectives of study. The research questions are stated as follows:

1.  What is the effecting of human resource outsourcing on organization performance?

2.  What is the relationship between human resource and the profitability of an orgnaisation?

3.  What are the benefits derived in outsourcing human resource functions in most of the food and beverages firms in Ogun state?

1.5   STATEMENT OF RESEARCH HYPOTHESIS

H0: human resource outsourcing has no impact on performance of the food and beverage firms in ogun state.

H1: human resource outsourcing has significant impact on performance of the food and beverage firms in ogun state.

1.6   SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

The findings from this study will be useful to the management of most food and beverage firms and all other corporate organizations in Nigeria on how they can use Human resource outsourcing as a tool for organizational performance and effectiveness.

This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.7   SCOPE/LIMITATIONS OF THE STUDY

This study on the impact of outsourcing human resource functions on organizational performance in most food and beverage firm will cover Human resource outsourcing approaches in the food and beverage firm with a view of identifying its effect on organizational performance and effectiveness.

LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

HUMAN RESOURCE: are the people who make up the workforce of an organization, business sector, or economy. "Human capital" is sometimes used synonymously with "human resources", although human capital typically refers to a more narrow view (i.e., the knowledge the individuals embody and economic growth).

OUTSOURCING: obtain (goods or a service) by contract from an outside supplier.

PERFORMANCE: an act of presenting a particular activity, this activity might be profitability competence or customers’ satisfaction ability.