Security Service Outsourcing as a Make-Or-Buy Decision and its Relationship with Service Delivery Performance of Nigerian Deposit Money Banks.

Abstract

A key part of the make-or-buy decision is the strategic choice to outsource non-core services, and organisations must consider whether to provide services in-house or procure them from outside the business, especially if they are not traditionally part of the organisation's core activities. Security functions are a key component of banking in a non-core activity, yet they are an under-researched area particularly in developing economies. The study examined the factors influencing security-service outsourcing, the relationship between outsourcing information protection services (OIPS) and outsourcing property protection services (OPPS) and service delivery performance (SDP) and the moderation effect of vendor relationship quality (VRQ) on the relationship between security-service outsourcing and SDP in the context of deposit money banks in Nigeria. Descriptive survey design was used and structured questionnaires was used with purposive and stratified sampling techniques for the project, involving 221 management staff and security personnel of ten deposit money banks in Lagos State. Analysis of the data was conducted descriptive statistics, multiple regression analysis and hierarchical moderated regression. The most significant factors influencing outsourcing decisions were the characteristics of the vendor firms, the characteristics of the banks, socio-political factors and the competition in the industry. OIPS (B = 0.66, β = .59, t = 12.11, p < .001) and OPPS (B = 0.51, β = .43, t = 8.82, p < .001) both significantly and positively predicted SDP, jointly explaining 48.7% of its variance, F(2, 218) = 103.46, p < .001. The addition of VRQ increased the amount of variance explained to 77.2% (ΔR² = .285, p < .001), and the interaction of both factors of outsourcing resulted in a significant, moderating effect (ΔR² = .016, p < .001). The study indicates that there is a positive relationship between the quality-of-service delivery and security-service outsourcing, and that the quality of outsourcing is mediated by the quality of the outsourcing vendors' relationships. The study recommends that banks manage outsourcing carefully by actively selecting vendors, monitoring performance, carefully managing contracts, and building quality relationships with vendors