Abstract:
The purpose of this research was to assess the opportunities and challenges of business
outsourcing at Jimma town governmental organizations. The study covered Commercial bank of
Ethiopia (CBE), Jimma University and ethiotelecom. Secondary data from documents and
primary data collected through questionnaires and interview were used to address the
objectives. The findings of the study show that the outsourced services created the three
organizations a great opportunity to save managers cost and time, gave more attention for the
core functions of the institutions rather than non- core areas and 85.1%CBE, 76.9%JU and
86.2% ethiotelecom replied the effectiveness of organization increased. On the other side, the
outsourced employee did not consider themselves as permanent organization staff and they are
worried about their future walk of life, this leads to low employee belongingness and
(79.1%CBE, 59.6%JU and 70.7% of ethiotelecom) agreed to loss of control over the service
providers. Behaviors like, low morals of those supplied staff as compared to organizations staff
and conflict of interest among outsourced and permanent employees especially in case of fringe
benefits between the two were the major challenges of the organizations. In addition to these, the
results confirm that it takes longer time to select third party service provider especially in Jimma
University and ethiotelecom. Finally, it is recommended that the three organizations should deal
with the service provider to overcome outsourcing challenges, perk up the outsourcing team
through benefits as per the service provider staff; revise the service level agreement and to build
morals of outsourced staff. It is also recommended to adapt the best practice and scale up
outsourcing strategy to other service giving organizations in the town in order to give quality
service and more attention for the core functions of their org
