Factors influencing the outsourcing decisions: a study of the banking sector in Pakistan

The purpose of study is to find the outsourcing practices in banking sector of Pakistan and to what extent they influence the perception of decision makers towards outsourcing. The literature review shows the relationship of factor such as perceived benefits, perceived risks, roadblocks and criticality of outsourcing decisions and the impact of these factors on decision making. A model is developed showing the relationship of these variables. To test this model hypothesis of these four variables is generated. The data is collected through 87 questionnaires in some representing banks of Pakistan like Al-falah bank, UBL, Punjab bank, M.C.B. Reliability and consistency of instrument is tested through exploratory factor analysis and reliability analysis. The data is then analyzed through correlation, regression and the Cronbach’s alpha test. The model is statistically fit by having perceived benefits a very significant influence on the attitude towards outsourcing while other variables such as perceived risk, roadblocks and criticality has no influence on attitude towards outsourcing decisions. But there is an overall impact of these variables on the perception of decision makers. This highlights the thinking of our Pakistani decision makers that they are now more concerned on the quality, improvement of their process and service instead of cost cutting. The implications regarding study were the hesitation of respondents and study conducted in developing country like Pakistan. Most of the study on outsourcing was on its theoretical impacts and more likely in developed countries. The study is implied only for this specific area according to its culture and practices.