Outsourcing Manpower Implications for Universal Banks

RIZAL TECHNOLOGICAL UNIVERSITY GRADUATE SCHOOL
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THE OUTSOURCING OF MANPOWER IN THE BUSINESS

OPERATION OF UNIVERSAL BANK
A Thesis Presented to
the Faculty of the Graduate School
Rizal Technological University
City of Mandaluyong
In Partial Fulfilment
of the Requirements for the Degree
Master in Business Administration
Deana Pauline M. Ortiz

April 2017
APPROVAL SHEET
This entitled THE OUTSOURCING OF MANPOWER IN THE
BUSINESS OPERATION OF UNIVERSAL BANK, prepared and
submitted by Deana Pauline M. Ortiz in partial fulfilment of the

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requirements for the degree Master in Business Administration, has been
examined and recommended for ORAL EXAMINATION.
__________________
Dr. Kathryn D. Tria
Adviser
_________________________________________________________
PANEL OF EXAMINERS
Approved by the Committee on Oral Examination with a grade of _____.
________________
Dr. Luisito C. Hagos
Chairman
____________________ _________________
Dr. Cecilia F. Jose Dr. Amadeo C. Lanuza Jr.
Member Member
Accepted as partial fulfilment of the requirements for the degree
of Masters in Business Administration.
____________ DR. EDNA C. AQUINO

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Date Dean
ACKNOWLEDGEMENT
My deep gratitude goes first to My God, My Saviour, from whom all
my strength and wisdom comes from. This is not possible without Him.
Thankful for my family who never fail to bring me all the inspiration
this world could offer. I love you unconditionally.
My sincerest gratitude for my Adviser, Dr Kathryn Tria, for her
enduring patience during the days I need most her guidance.
To the RTU Graduate School family, for being supportive to their
students endeavours, a heartfelt appreciation I offer.

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To my friends and colleagues at work, my Supervisors and Co-
workers, I extend to you my appreciation for keeping me inspired despite
the obstacles and challenges encountered at work, day in and day out.
To God be all Glory!
Thank you.
ABSTRACT
THE OUTSOURCING OF MANPOWER IN THE BUSINESS

OPERATION OF UNIVERSAL BANK
The main aim of this thesis is to study the implications brought about by
Outsourcing in a universal bank. It will enumerate the advantages and
disadvantages encountered in the business operations as outsourced
manpower is being utilized.
The problem enumerated the scope of work, the challenges faced in
daily operations and the benefits being obtained in manpower outsourcing.
The thesis is structured in five main chapters : THE PROBLEM
AND ITS BACKGROUND that includes problem and its setting, its scope and
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significance; THE LITERATURE addressing the academic background of the
study; RESEARCH METHODOLOGY showing the statistical approach of
gathering data based on surveys; PRESENTATION and ANALYSIS and
SUMMARY of FINDINGS and RECOMMENDATIONS discussing the results of
the study and the possible outcomes of the research done.
TABLE OF CONTENTS
CHAPTER I: THE PROBLEM AND ITS BACKGROUND
Introduction ....8
Theoretical Framework .13
Research Paradigm ....14
Statement of the Problem ...15
Hypothesis ....16
Significance of the Study.. ...17
Scope and Delimitation of the Study...18
Definition of Terms / Variables .20

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CHAPTER II: REVIEW OF RELATED LITERATURE
Review of Related Literature 23
CHAPTER III: RESEARCH METHODOLOGY
Research Method Used 39
Population Frame and Sampling Scheme .39
Description of the Respondents ..40
Research Instruments Used ...40
Data Gathering Procedure ..41
Statistical Treatment of Data ...42
CHAPTER IV - PRESENTATION, ANALYSIS
AND INTERPRETATION OF DATA ..43
CHAPTER V - SUMMARY OF FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS .62
REFERENCES ..71
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APPENDICES 73
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CHAPTER I
THE PROBLEM AND ITS BACKGROUND
Introduction
Outsourcing is one of the products of business advancements
nowadays. It is a trend that is becoming more common for companies with
extensive need for managing different departments with different services
offered. It has become one of the major industries in the world today.
Outsourcing means having a third- party provider to handle numerous tasks and
departments that do not necessarily need to be performed by the main office. A
practice used by different companies to reduce costs by transferring portions of
work to outside suppliers rather than completing it internally. Outsourcing is a
widely used business practice for organizations that are in an effort to improve
firm performance and add firm value when used properly; outsourcing is an
effective cost-saving strategy.
In these situations, how can financial service businesses remain in
charge of their own business and in control of business risks? How do they
know they are complying with their regulatory responsibilities? How will the
bank recognize the viability of obtaining outsourced manpower without
considering the pros and cons brought about by utilizing third- party service
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provider.
Outsourcing has the potential to transfer risk, management and
compliance to third parties who may not be regulated, and who may operate
offshore.
In this research, it aims to answer the questions on whether to
outsource or not within the banking firms. The analysis on why to outsource and
to what extent does outsourcing will go far in terms of accessibility, recruitment
and deployment procedures.
Industry research and surveys by regulators show financial firms
outsourcing significant parts of their regulated and unregulated activities. These
outsourcing arrangements are also becoming complex.
The Philippines is becoming a regional and global hub for shared
services centre corporate backroom operations, especially for financial services
such as accounting and bookkeeping, account maintenance, accounts
receivable collection, accounts payable administration, payroll processing,
asset management, financial analysis and auditing, management consulting,
inventory control and purchasing, expense and revenue reporting, financial
reporting, tax reporting, and other finance-related services such as financial
leasing, credit card administration, factoring and stock brokering; as well as for
logistics management, and cargo shipment management.
Outsourcing is the transfer of direct managerial responsibility, but not

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accountability, to an unaffiliated, third-party service provider who performs
services previously delivered by internal staff and management.
Reasons to outsource include reduced costs, enhanced
performance, and the ability to access superior expertise and industry best
practices, and a desire to devote scarce human resources to core businesses.
Seasonal bulk transactions contribute to the factors that prompt a universal
bank to outsource manpower to an external service provider. During peak
period, the applications and transactions coming from different banking
channels may increase in volume from time to time that full-time regular
employees may not accommodate at the agreed period in time. A third-party
service provider may provide better performance at a lower cost than in-house
providers because of economies of scale, specialization and tactical focus. Cost
savings may be secured by converting fixed costs to a variable cost structure to
accommodate fluctuations in labour and equipment needs. Additionally,
outsourcing can provide immediate access to expertise and best business
practices that may be too expensive to build internally or hire particularly in
areas such as technology. Several factors innate to outsourcing give rise to
potential operational, legal and reputational risks. One factor is that outsourcing
arrangements are binding contractual relationships with another legal entity,
typically an unaffiliated third party. The duration of contracts may be fairly

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lengthy, often five to ten years, during which time business needs and
environments can change significantly and in unanticipated ways.
Consequently, there is a risk that financial institutions may be locked into
agreements that reflect out-dated business realities. The contractual basis of
outsourcing coupled with this intrinsic business uncertainty contributes to legal
risk. Another risk factor is the unique concerns that arise from giving third
parties access to confidential data, strategic technology applications, or the
books and records of the institution. The potential for violations of confidentiality
by service provider employees contributes to operational, legal and reputational
risks. Outsourcing requires modifications to the institutions management
structures and practices to mitigate operational risk. An in-house coordination
and communication mechanism may also be needed to coordinate internally
among business units, externally among several service providers, and
between the internal and external groups. Outsourcing often makes
considerable demands on in-house staff to provide relevant information.
Potential dependency on the service provider may increase over time since
organizational learning is based mostly on experience, and therefore the
financial institutions capacity to learn may be diminished. Day-to-day
responsibilities, hands-on experience, and responding to changing business
needs provide a training environment for managers. As these processes are
transferred outside the organization with outsourcing, managers retained at the

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institution will need to develop alternative channels to keep their knowledge
base current and their skills sharp. Moreover, the next generation of managers
those with both technical expertise and knowledge of the business and the
institution will need to be developed.
However, despite the growing needs for outsourcing, there are
some encountered problems such as failure to cater and deliver the quality and
efficiency of services required to them. And absolute confidentiality of the banks
record is somewhat compromised for they shall divulge to outside manpower
force.
In Philippines, we have an ample number of local banks competing
globally through its quality of services offered to their clients. Due to
globalization the banking world has become more and more competitive in the
last decades. Almost every company is not only competing with other
companies in the same region anymore, but also with companies all around the
world. Almost every bank is not only competing with other banks in the same
region anymore to gain recognition but also trying to gain the over- all market
shares of consumers. And to deliver the best products and services in the
market, these banks must respond to more diversified corporate strategies for a
more improved services to offer. This bank needs third- party sources to
continue with the operations of the business. But, will these institutions still opt
for from getting outsourced manpower if this will post some fall-backs in
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exchange for beneficial ones?
Theoretical Framework
Research Paradigm
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Statement of the Problem
1.)What business operations are being outsourced by the respondent

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universal bank for the past 3 years in terms of:
1.1 Administrative Operations
1.2 Credit Operations
2.) What are the manpower skills outsourced by the universal bank for the
past 3 years?
3.) What are the implications of outsourcing manpower skills in terms of:
3.1 ADMIN OPERATIONS- Advantages
3.1.1 Savings
3.1.2 Efficiency
3.1.3 Quality of Service
3.2 ADMIN OPERATIONS - Disadvantages
3.2.1 Savings
3.2.2 Efficiency
3.3 CREDIT OPERATIONS Advantages
3.3.1 Savings
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3.3.2 Efficiency
3.4 CREDIT OPERATIONS Disadvantages
3.4.1 Savings
3.4.2 Efficiency
4. What are the problems encountered in the manpower outsourcing of a
universal bank?
5. What are the implications of outsourcing to improve operations in the
universal bank?
Hypothesis
There is no significant difference between hiring outsourced manpower and
regular full- time employees for a universal bank to maintain and improve the
quality of its output.
Significance of the Study
The research aims to illustrate the jobs being outsourced in a universal
bank for the past 3 years (2013-2016) and enumerate the factors and reasons
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why to outsource it. The beneficial and adverse impacts and effects of
outsourcing with the business operations of universal banks will also be focused
on with the study. To enumerate the implications brought about by outsourcing
today and in the future time being. The study will show its readers the different
functions that is being outsourced and its effect on the over-all performance of
the bank. It aims to establish if efficiency and quality of the outsourced
manpower force is at par with those full- time regular employees. This study will
help banks managers to decide whether to outsource or not. To address
whatever issues outsourcing partakes in the daily operations of the firm and to
consider as well the job sectors that is ideally capable of hiring external service
providers.
The universal banks that outsourced manpower in their daily business
operations in particular will benefit from this study. The local banking industry
may be able to determine the advantages and disadvantages of outsourcing
people and be able to use it in decision- making schemes and managerial
strategies. Top executives may be able to anticipate imminent threat to
organization by knowing the adverse effects of outsourcing and at the same
time maximize the optimum benefits if proven beneficial to the firm.
Scope and Delimitation of the Study
The study will focus on the impact and implication of outsourcing in the
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business operations of a universal bank for the past 3 years, most particularly in
the Administrative and Credit department of Auto and Home Loans Unit. It will
enumerate the reasons why some of banking firms result to hiring outsourced
manpower in the daily operations of the business. Be able to identify the
benefits as well as the disadvantages brought about by outsourcing. It will focus
mainly on the operations in the administrative and credit operations of a
universal bank. The study will focus mainly on outsourcing manpower in the
administrative and credit operations such as auto and housing loans .Since
these are the main focus of the research, it will deal with the back office
operations of a certain universal bank. This study will help managers create
sound decisions in the regular operations of the business.
The study will observe the impacts manifested by the outsourcing within
the business and will enumerate all irregularities being recorded in the
operations. Managers, full- time employees will be the benefactors of this study.
The outsourcing company will be subject for some interviews on how they
manage people in behalf of the vendor company they cater with both in- house
and off- site their offices.
The study will not include banking firms that solely operate with their own
regular employees and do not utilize outsourcing in the business operations.

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Definition of Terms/Variables
Outsourcing - Outsourcing is an arrangement in which one company
provides services for another company that could also be or usually have been
provided in-house.
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Third-party service provider - Third party service provider means a
professional organization engaged by a company to provide services for and in
the name of the organization to their clients. A very good example is BPO Call
centers engaged by companies to offer assistance to their customers by third
parties (not related to the parent organization ).
Overhead costs- Overhead is those costs required to run a business, but
which cannot be directly attributed to any specific business activity, product, or
service. Thus, overhead costs do not directly lead to the generation of profits.
Overhead is still necessary, since it provides critical support for the generation
of profit-making activities.
Industrialize - The process in which a society or country (or world)
transforms itself from a primarily agricultural society into one based on
the manufacturing of goods and services.
Economies of scale- Economies of scale is the cost advantage that
arises with increased output of a product. Economies of scale arise
because of the inverse relationship between the quantity produced
and per- unit fixed costs.
Loan portfolios- is one of the largest assets and a chief source of
revenue for banks, but is also a great source of risk to a bank's safety and
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soundness.
Telemarketing- the marketing of goods or services by means of telephone
calls, typically unsolicited, to potential customers.
Fraud mitigation- A false representation of a matter of fact;
whether by words or by conduct, by false or misleading allegations, or by
concealment of what should have been disclosed that deceives and is
intended to deceive another so that the individual will act upon it to his or her
legal inquiry.
Mitigation is the action of reducing the severity, seriousness, or painfulness of
something. Fraud mitigation therefore, means to reduce the gravity or
seriousness of the fraud committed.
Underwriting- is the process that a lender or other financial service uses to
assess the creditworthiness or risk of a potential customer.
Service level agreement (SLA)- sets out what services the supplier is to
provide and to what standards. The service level agreement forms part of the
contract between you and your outsourcing partner.
SLAs are complex documents that should be well defined. It may be
worthwhile getting advice from a service management consultant or a
commercial lawyer. See choose and work with a solicitor. You must be
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involved in drawing up the SLA together with the supplier.
CHAPTER II REVIEW OF RELATED LITERATURE
Outsourcing seems to be a very controversial factor in the business world
and it affects every aspect in the firm such as administrative and credit
department.
Outsourcing is the process of assigning a company's business processes
to an external agency in lieu of enhancing service quality, driving innovation or

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deriving benefits of lower labor costs. When outsourced to organizations
located in other countries or to foreign subsidiaries, Outsourcing often takes the
form of offshoring, also known as offshore outsourcing. The effects of
outsourcing are subjective to the industry and the purpose for which the same
was undertaken. However across industries outsourcing is primarily undertaken
to enable companies to generate better revenue recognition and to provide
them an added competitive differentiator. While done with the best of intentions,
outsourcing has a telling effect on quality of products and services delivered as
a consequence of this, either enhancing or lowering quality. Outsourcing is often
undertaken to provide enterprises a competitive advantage by delegating
business process to external agencies and realizing the benefits of low labour,
better quality and improved innovation. While this provides a good picture of the
fair side of the coin, most managers however need to grope with the possible
shortcoming of the process and the corresponding impact on the company's
core processes. To best analyse the opportunities presented it is essential to
reflect upon the advantages vis--vis the disadvantages of outsourcing.
Some of the observed benefits include increased speed in delivery of
outsourced services, frees management time, enabling companies to focus on
core competencies while not being concerned about outsourced routine
activities, reduced cash outflow and optimizes resource utilization.

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Originally, outsourcing may have evolved in Japan where it was well-
known and accepted as a large part of the economy. By the 21st century, it had
become a global phenomenon that continued to grow in scale, favoured by
organizations that saw it as a way to cut costs and gain resources or specialist
knowledge. Outsourcing often involves the substitute of a workforce from a
high-wage country for workers in developing countries who may be paid as little
as 10 or 20 per cent of their wage. These countries are a valuable resource for
companies wanting to reduce their costs as there is an almost unlimited supply
of educated workers waiting for jobs.
Even though outsourcing does not involve load elimination, it may
involve a partial shedding of what until that time had been a government
responsibility (Savas 1982). Outsourcing can potentially provide an opportunity
to reduce services by allocating less resources in the contract than were being
used to provide the service through government personnel. Sometimes the
result can be less service being provided (e.g., limb pick-up once every three
months rather than once every two months). Perhaps more frequently, however,
the reduction in service is likely to occur because of reduction in quality of the
personnel providing the service. Workers in the private sector, in many areas
such as sanitation that are frequently outsourced by governments, tend to be
paid less and receive fewer benefits than comparable government workers
(Pierce andSusskind 1986). 3

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The Agency Cost Theory (ACT), developed by Ross (1973),
Mitnick (1975, 1986) and Jensen and Meckling (1976), examines the reasons
for principal-agent relationships and the problems inherent in them. Jensen and
Meckling (1976, p.308) define an agency relationship a contract under which
one or more persons (principal(s) engage another person (the agent) to perform
some service on their behalf which involves delegating some decision making
authority to the agent.
The focus of the agency theory is on determining the most efficient
contract (behaviour-oriented versus outcome-oriented that governs the
relationship between a principal and an agent (Eisenhardt, 1988). The choice
between a behaviour-based contract (e.g., hierarchy governance e,
insourcing) and outcome-based contract (market governance, outsourcing)
depends on the agency costs, which are the costs incurred as a result of
discrepancies between the objectives of the principal and those of agents.
The Transaction Cost Theory (TCT), introduced by Coase (1937)
and developed principally by Williamson (1975, 1979, 1981, 1985), maintains
that the organization of economic activity depends on balancing production
economics, such as scale, against the cost of transacting. Transactions are
here the exchanges of goods or services between economic actors, who are
technologically separate units, inside and/ or outside the organization

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(Williamson, 1981). The analysis of transactions focuses on achieving efficiency
in their administration. In this perspective, organizational success depends on
managing transactions efficiently. Organizations exist to mediate the economic
transactions among members inside and/ or outside the organization (Ulrich
and Barney, 1984).
The Transaction Cost approach offers a method of evaluating the relative
advantages of the different internal and external organization forms for handling
transactions. This theory also provides an excellent framework for analysing the
outsourcing option, since the essential choice here is between using an
outsourcing option, since the essential choice here is between using an
outsourcing service provider (a market mechanism) and providing in- house
services (an organizational hierarchy) (Elam, 1988; Clemons and Row, 1989;
Apte, 1990; Lacity and Hirschheim, 1993b). First, the theory seems to be very
useful for investigating the outsourcing option as an economic reorganization of
IS Departments. Second, the theory seems to be useful for formulating an
action plan that reduces transaction cost and thereby improves the benefit one
can realize through outsourcing.
According to James Bucki on an article written titled Top 7 Outsourcing
Advantages, the top seven advantages of outsourcing are :
a.) Focus on Core Activities- In rapid growth periods, the back-office

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operations of a company will expand also.
This expansion may start to consume resources (human and financial) at
the expense of the core activities that have made your company
successful. Outsourcing those activities will allow refocusing on those business
activities that are important without sacrificing quality or service in the back-
office.
Example: A company lands a large contract that will significantly increase
the volume of purchasing in a very short period of time; Outsource purchasing.
time. Outsourcing the human resource function would reduce the risk and allow
the company to keep operating.
g.) Develop Internal Staff - A large project needs to be undertaken that requires
skills that your staff does not possess. On-site outsourcing of the project will
bring people with the skills you need in your company.
Your people can work alongside them to acquire the new skill set.
Example: A company needs to embark on a replacement/upgrade project
on a variety of custom built equipment. Your engineers do not have the skills
required to design new and upgraded equipment. Outsourcing this project and
requiring the outsourced engineers to work on-site will allow your engineers to
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acquire a new skill set.
Often weighed with the advantages before any decision on outsourcing
is undertaken, there are some cons that outsourcing has to offer to our firms.
This includes possible loss of control over the banks business processes.
Problems regarding to quality of output and turn- around time is compromised.
Possible shortcomings in performance versus the expected results.
By delegating responsibilities to external agencies companies can wash
their hands off functions that are difficult to manage and control while still
realizing their benefits. To summarize among the reasons to outsource,
companies undertake outsourcing and offshoring for a variety of reasons
depending upon their vision and purpose of the exercise. While this may vary
from company to company, the fruits of labour are visible among some of the
leading enterprises worldwide, where in outsourcing and offshoring have
become a core component of day to day business strategies.
Outsourcing has been considered as a field of investigation in many
different fields, spanning from the management of information systems to the
international business. Despite the heterogeneity of its definition, scholars
agree that the decision to outsource concerns a reliance of firms on external
sources of inputs, services, processes, or other value- adding activities,
balancing the span of activities that a firm performs internally versus those that
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are acquired from outside. Defining outsourcing as the decision to outsource
activities previously made in- house by recurring to medium- or long- term
agreements, also including the transfer of activities and personnel to third
parties. This perspective is also compatible with the further development of the
phenomena of outsourcing that have been registered during the past decade
(offshoring, global sourcing, smart sourcing, etc.)
As a result of these diverse perspectives in research, studies often
produce contradictory results. Such a heterogeneous puzzle implies that
scholars and managers have to face some unanswered questions (De
Fontenay & Gans, 2008): the impact of outsourcing in the performance among
others. Although it has not always been specified in clear terms, the main
motivation (antecedent) and expected result (outcome) turn around the
potential contribute to the value creation through the potential decrease of
direct and indirect costs related to some activities of the firm.
The aim of the study is to show which the main variables are that
have impacts on business performance related to outsourcing. In such a
sense, outsourcing cannot be approached as a simple make or buy decision,
but, instead, it should be considered as a corporate strategy, put in place by
top management to improve the performance of firms (Marchegiani et al.,
2010). From this perspective, the development and maintenance of
competencies might be necessary to achieve a competitive edge against

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competitors and drain resources, allowing top management to improve
performance.
An article entitled The Advantages of Outsourcing Benefits written
by Small Business Chronicle (by Liza McQuerrey), suggested that the
following are the most common advantages of outsourcing.
Access to Superior Level of Expertise
Rules and regulations governing complex health care and financial
planning often require administration by individuals with superior levels of
industry-related training and education. Employing a reputable and
experienced vendor to handle these duties on behalf of your company may
result in more accurate, detailed services than could be provided by an in-
house staff. Representatives of major insurance companies receive ongoing
training and education about the products they service and are typically
knowledgeable about new products and industry changes.
Time-Saving Benefits
Administering benefits often falls to the human resources or
accounting departments of an organization, which typically have a full
workload in addition to handling benefits. Outsourcing benefits can free up the
time of these departments, which in turn can lead to greater productivity.

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Cost-Saving Benefits
In addition to the potential cost savings realized by not employing an
in-house benefits coordinator, outsourcing benefits may result in lower
premium co-payment costs for a company. If outsourcing benefits allows
employees to participate in larger group health and retirement plans, costs to
the employer may decrease as well.
Increased Employee Privacy
Health and financial matters tend to be sensitive issues which
employees may not feel comfortable talking about with a benefit-coordinating
co-worker they see on a daily basis. Outsourcing benefits allows employees to
maintain a sense of privacy, which can also lead to less animosity in the
workplace. For example, if an employee is angry about being denied a
particular aspect of health care she feels she is entitled to under her plan, she
may take her frustrations out on an in-house benefits coordinator, creating a
toxic work environment. If benefits are outsourced and she has a neutral
outside company representative to deal with, frustrations remain outside the
workplace.
Reduction of Potential Liability

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Employers who administer employee benefits in-house may be at
legal risk if employees ever decide to litigate over an issue they feel is related
to a breach of confidentiality from in-house benefits administrators. For
example, if an employee is facing a serious health issue she has kept quiet,
and management terminates her employment because of performance issues,
she could potentially charge that she was fired because the company had
knowledge of her health issues. Likewise, if an employee who borrows against
her 401(k) plan is discharged, she could potentially claim the company was
aware of her personal financial struggles. Outsourcing benefits places the
burden of confidentiality on the contract vendor. 7
Piecework.
According to an article entitled Workplace Issues, piecework is any
type of employment in which a worker is paid in piece rates.
Employees paid in piece rates or commission payments are paid by
results instead of getting an hourly or weekly pay rate. This means that the
amount the employee earns each week will vary depending on how much
work they do.
When paid piece rates or commission payments, an employee has to get at

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least: a.) the minimum pay rate (if there is one) set out in an award
or registered agreement
b.) the national minimum wage (where no award or registered agreement
applies).
There has to be a written and signed piecework agreement setting out
the pay rate per piece and how it is measured. An employer has to keep the
agreement as part of their records and give a copy to the employee.
If there is no signed piecework agreement, the employee is not considered a
pieceworker and must get the minimum hourly or weekly rate in the award for
the type of work they do.
If the agreement is varied, it must be agreed to in writing by the employee and
employer.
Advantages of Piece Rate Basis of Outsourced Manpower
1. Encourages productivity (the opportunity to earn more money
motivates some employees to increase productivity)
2. The potentially high earnings attract efficient workers
3. Less need for supervision

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4. Individuals have more scope for pride in their work
Disadvantages
Complicated systems of calculation may be hard for some workers to
understand.
1. Earnings can be less stable, predictable or secure.
2. The guaranteed basic pay is usually lower than it would be under
pure time rates.
3. Cost effective (since the company is only paying for work
completed).
4. Slower employees may not complete many work units per hour (If
their production is low, then they will get paid less) 8
5. With the advancement of modern business technology, outsourcing
plays a vital role in the day to day process of banking industry, specifically
a universal bank. Outsourcing may be in the form of delegation of
administrative and credit functions of the organization to speed up and
optimize the regular operation of the business.
6. This universal bank has outsourced manpower in
administrative and credit department. Telephone verifiers, field credit

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investigators, administrative functions such as documents filing and MIS
units maintenance and the like. While putting the duties and responsibilities
to third party service providers, supervisors and managers of the firm are
able to focus on the more crucial aspects and be able optimize their
expertise in the core practices and decision making factors of the bank.
7. While we consider the economic benefits brought about by
outsourcing, by obtaining the same performance and quality catered by
regular full- time employees at a lower rate, it is imperative also to take into
consideration some factors that may occur during outsourcing. Does
confidentiality be given importance when we hire third party service
provider? Do we not compromise the integrity of our policies by disclosing
pertinent information of our clients and the banks information as well?
Responsibility lies in the hands of the management of the firm when
hiring outsourced personnel. Bound by terms and conditions, it is empirical for
them to render close monitoring and strict management. Imposition of random
quality check is required to ensure compliance to policies and procedures.
Through outsourcing, we may delegate certain tasks to hired manpower, but we
must not entitle them fully of the access and confidential databases that only
regular full- time employees are equipped with.
There are multiple benefits brought about by outsourcing. Lower
maintenance costs, considering minimal remuneration expenses for contractual

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employees, faster and more efficient production output due to massive hired
workers this universal bank may obtain and easier to manage organizational
framework due to their strict adherence to the rules the management imposes.
But all of these options boils down to one point to elucidate Is outsourcing
beneficial for a universal bank? Will it bring me more profit or will it just ruin my
organizational chart and business strategies.
According to an article written by Dr. Manisha Seth and Dr. Deepa
Sethi titled Human Resource Outsourcing: Analysis Based On Literature
Review, general, employers consider using outsourcing for a number of
(overlapping) perceived benefits (Shen, Cooke, & McBride, 2004). First, it
allows them to concentrate resources on their core business activities where
they have expertise and are likely to do best. Second, it enables firms to profit
from the rising comparative advantage of specialized service providers who
may have expertise in the areas concerned. Third, it provides firms with greater
flexibility and productivity by using temporary subcontractors to cover fluctuating
demands for labor (Cooke, 2001). This just-in-time deployment of human
resources also brings other advantages of saving direct costs (e.g., reducing
headcount and overtime working) and indirect costs (e.g., cutting administration
and backup costs, saving recruitment and training costs, saving absenteeism
costs, and reduced industrial relations problems). Fourth, outsourcing creates
opportunities for firms to shift the burden of risk and uncertainty associated with
PAGE 18
the business to someone else (National Economic Development Office [NEDO],
1986; Williamson, 1985). In addition, outsourcing enables firms to keep future
costs down by selecting the most competitive tender for renewing the contract
(Domberger, 1998). 9
Weighing down decision- making scheme seem troublesome to the
executives. But as managers unravel the in- depth needs of the firm, option
may be easy. Adapt to modern phase of business world. Outsourcing is a
choice and a chance. Latest trends do not guarantee advancements. But
through proper implementation and correct management of in the firm, we will
fully obtain fully the benefits offered by outsourcing.
While there are many benefits and rewards to outsourcing certain
business processes to offshore service provides, there are also risks and trade-
offs to this strategy.
It is important that a companys executive management team is
informed about the reasonable risks of an outsourcing project, the potential
costs and mitigation strategies. Equally, employees, customers and other
stakeholders should also be kept informed as the project unfolds, Managing
expectations is not difficult, but it is frequently overlooked as a risk, because it
involves confronting problems before they arise.
The intellectual property of companies includes business plans,

PAGE 18
trade secrets and other proprietary knowledge. Outsourcing presents a
considerable risk of theft or hacking of this property to client companies. In
addition there is the challenge of securing the confidential information of
companies customers and, in some instances, patients when outsourcing
business processes. In order to mitigate this risk, it is necessary to develop
stringent safeguards and protocols when outsourcing. Technical safeguards
include the protocols governing access to information; physical safeguards will
protect buildings and equipment from unauthorized access; and administrative
safeguards stipulate policies and procedures for operations, the conduct of
employees and the use of security controls. An outsourcing service provider
should adopt an information security risk management strategy that complies
with best practice.10
CHAPTER III RESEARCH METHODOLOGY
Research Method Used

PAGE 18
This study used a case study research design involving quantitative
methods. The quantitative approach was used to quantify incidences in order to
describe current conditions and to investigate the impact of outsourcing in the
operation of local banks gained from questionnaires. The qualitative approach
was used to explain the events and describe findings using interviews and
documentary analysis. This will enable the researcher to gain better insights
and understanding of the study involved.
Population Frame and Sampling Scheme
Since it is not possible to study whole universe, it becomes necessary
to take samples from the universe to know about the characteristics of the
study. The total population will include 120 respondents from Credit
Department of Auto and Home Loans Department of the bank comprises of 80
managers and 40 staffs. The population are handling and leading a group of
contractual employees or those directly handled by third- party source or what
we termed as outsourcing manpower. These people were chosen to represent
the total group of population because they have direct involvement with the
daily operations utilizing outsourced people. They will provide the accurate
information and logic in management of outsourced labor within the
organization.
Description of the Respondents

PAGE 18
The study population will include managers and rank-and-file employees
in a local banks Credit Departments Main office operating using outsourcing
their own respective departments and units. Total of 120 population, that
includes 80 managers and 40 rank- and-file regular employees were included
in this research study. Purposive sampling technique was used to select
managers and staff to participate in the study.
Research Instruments Used
Primary and secondary data are used in the conduct of this study.
Structured questionnaires and interview materials represented the primary data
source while secondary data was collected from online sources (internet) and
company manuals.
Document analysis was also utilized for a more concrete basis of
deriving actual conclusions for the study. Qualitative or focus group discussion
is also considered for a more detailed comprehension of the regular operations
and management of outsourced manpower in the institution.
Data Gathering Procedures
Data was collected using questionnaires, interview materials and
document analysis. Personal interviews were also implemented to gain insights,
explore the views, experiences, beliefs and motivations of individual participants

PAGE 18
directly managing outsourced workforce. Focus group use group dynamics to
generate qualitative data.
Likert Scale and self- administered questionnaires were used to cover
the study of all aspects of variables. Likert scale represented a five- point
response indicator that is:
5 = Strongly agree; 4= Agree; 3= Neutral; 2= Disagree; and 1= Strongly
Disagree.
Likert Scale is a bipolar scaling method, measuring either positive or
negative response to a statement. Additionally, interview questionnaires were
executed with managerial positions to gain more insights in the conduct of the
study. The manuals used by the bank in operations and handling of outsourced
personnel were also reviewed to gather pertinent details in the study.
Secured a letter of authorization from the University as a request and
permission to conduct the study. A covering letter accompanied the
questionnaires explaining the purpose of the study and the questionnaires were
distributed directly to the respondents in their respective areas for filling and
were collected after 1 week following its dispatch and filling.
Statistical Treatment of the Data

PAGE 18
Quantitative and qualitative methods were used. Quantitative data were
collected, edited and coded. The descriptive statistics was applied through the
use of frequencies and percentages to get the respondents views on each of
the study variables. These data were tabulated and interpreted.
The position/ rank and tenure in organization were asked to respondents.
They were given questionnaires and respond to the statements given using the
Likert scale. These will then be the basis of the study and conclusion.
CHAPTER IV PRESENTATION, ANALYSIS AND
INTERPRETATION OF DATA
This chapter provided the gathered data and the researchers analysis
PAGE 18
and interpretation of the results of the distributed surveys. The data were
presented in a clear and concise form, in a tabular format. Most of the
respondents preferred not to write their and remained anonymous. This is to
maintain the confidentiality of the insights coming from the participants and
refrain from being biased with the opinions provided.
It is assumed that the attributes of the respondents influence their
behaviour and answers on the survey questions. Of particular significance to
the achievement of the goals and objectives of the study which is to be an
instrument of analysis of the institution to gauge where it is now and where it is
heading, thus what changes are to be made is to be able to answer the
research questions.
1. ) Business operations that are being

outsourced (as to tenure )
Table 1 : Tenure of Admin Operations outsourcing

Clerical functions
PAGE 18
*SA- Strongly Agree; A- Agree; N- Neutral; D- Disagree; SD- Strongly Disagree
Table 1 presents the respondents tenure of outsourced manpower in the
administrative unit doing clerical works such as telephone verification (credit
investigation), encoding, MIS documentation and other secretarial jobs
(scanning, sorting, etc). Majority of the respondents have outsourced these
functions for more than 3 years (99 out of 120 respondents).
This explains the timeline of the tenure being undertaken by the
universal bank as to when they started to outsource clerical works in the admin
unit of the firm.
Table 2 : : Tenure of Admin Operations outsourcing Clerical
function
PAGE 18
Table 2 represents respondents answers as to how many years the
Credit Operations department is outsourcing clerical functions such telephone
verification (credit investigation), encoding, MIS documentation and filing and
other secretarial jobs (scanning, sorting, etc). Majority of the respondents have
outsourced these functions for more than 3 years (111 out of 120 respondents)
from 2013-2016.
Table 3: Tenure of Admin Operations outsourcing Messengerial function

PAGE 18
Table 3 manifests that Admin department of the subject universal bank is
outsourcing its messengerial functions for a relatively short span of time yet.
The functions that evolves under messengerial tasks are logistics assistance
such mail delivery to other departments, motorized credit investigators (CI field),
and other business and personal errands that is deemed necessary for the
operations. Majority or 97% of the respondents have been handling outsourced
manpower for this specific function for more than 1 to 2 years only.
Table 4 : Tenure of Credit Operations outsourcing Messengerial Functions

PAGE 18
1.1.D Messengerial Credit Operations
Table 4 manifests that Admin department of the subject universal bank is
outsourcing its messengerial functions for a relatively short span of time yet.
The functions that evolves under messengerial tasks are logistics assistance
such mail delivery to other departments, motorized credit investigators (CI field),
and other business and personal errands that is deemed necessary for the
operations. Majority of 120 population or 97% of the respondents have been
handling outsourced manpower for this specific function for more than 1 to 2
years only.
2.)Manpower skills that are outsourced by the Bank for the past 3
PAGE 18
years?
Table 5 : Manpower Skills Required
Table 5 shows the skills required by the universal Bank for the past 3
years (2013-2016). Based on the researchers survey, a total of 96
respondents or 80% of the total population agreed that credibility is the
foremost skill that the subject bank is requiring when recruiting outsourced
personnel. This is followed by reliability that earned 87 respondents
agreement or 72% of the total population. Competence has 78 votes or 65%
percentage of respondents share.
An article entitled The Advantages of Outsourcing Benefits written
by Small Business Chronicle (by Liza McQuerrey), suggested that the
company employing a reputable and experienced vendor to handle these
duties on behalf of your company may result in more accurate, detailed
services than could be provided by an in-house staff. Representatives of major

PAGE 18
insurance companies receive ongoing training and education about the
products they service and are typically knowledgeable about new products
and industry changes. Being a credible outsourced manpower entails a larger
picture of benefit that includes trust of the partner mother company.
3.)Implications of outsourcing manpower skills in terms of :
Table 6 : Admin - Disadvantages
Table 6 shows the results on the disadvantages of outsourcing
manpower skills in admin functions. Integrity and confidentiality of the banks
record are compromised ranked the most number of respondents who strongly
agreed with 57% share or 67 respondents.48 respondents or 40% of the
population have strongly agreed that having outsourced personnel, our

PAGE 18
company is subject to numerous legal requirements and accreditation
process to be accomplished while 30% or 36 respondents strongly agreed that
there will be less savings because it involves increased overhead to
accommodate outsourced personnel.
According to the An article entitled The Advantages of
Outsourcing Benefits written by Small Business Chronicle (by Liza
McQuerrey), employers who administer employee benefits in-house may be at
legal risk if employees ever decide to litigate over an issue they feel is related
to a breach of confidentiality from in-house benefits administrators.
Outsourcing benefits places the burden of confidentiality on the contract
vendor. There is always the risk in delegating responsibilities to outsourced
personnel.
PAGE 18
Table 7 : Admin- Advantages
Table 7 shows the implications of outsourcing indicating the advantages
recognized in the admin function of the bank. Efficiency in production output to
maximize the potential of the workforce resulting to increased in production
volume ranked the highest number of agreed respondents with 64 counts or
53% share of the percentage. 40% of the population agreed that outsourced
manpower is efficient that it requires less supervisory task in the part of the
supervisors role. 37% of the respondents agreed that there will be quality of
service because of the increased production output.
Based on the article written by Liza McQuerrey titled The
Advantages of Outsourcing Benefits, one of the benefits brought by
manpower outsourcing is the advantages of Piece Rate basis of Outsourced
Manpower that it encourages productivity (the opportunity to earn more money

PAGE 18
motivates some employees to increase productivity). The higher the required
number to meet the quota, the higher the volume it produces for the firm.
The potentially high earnings attract efficient workers.
Table 8 : Credit- Disadvantages
Table 8 is presented to illustrate the disadvantages seen by manpower
outsourcing in the credit functions of the bank. 57 % or 68 respondents
strongly agreed that integrity and confidentiality of the banks record are being
compromised. Majority of the population believed that if we outsourced people
in the organization, we are exposing the bank to possible threat to information
security.
According to Mark Brown, Director Risk & Information Security at Ernst &
PAGE 18
Young,, In the majority of cases, the controls imposed on suppliers will be
lacking compared with those imposed on internal capabilities. Taking into
consideration todays cyber threats, businesses could be putting themselves at
greater risk if cyber security standards are not uniformly upheld by their
contractors. Indeed the key risk that many businesses face when outsourcing
is that they themselves are not aware of what controls and policies should be
adhered to by the supplier.
48 of the respondents strongly agreed that there are numerous legal
requirements that should be accomplished whle 30% of the 120 population
believed that there will be increased in the overhead expenses on top of the
regular expenditures allotted for regular full time employees if we house our
outsourced manpower within the banks premises.
Table 9 : Credit Advantages

PAGE 18
Table 9 shows the implications of outsourcing indicating the
advantages recognized in the admin function of the bank. 53% of the
population agreed that outsourced manpower is cost- efficient because it
maximizes the full potential of the outsourced workforce to reach the
maximum volume of production output that bring more income to the firm.
33% of the respondents agreed that there will be quality of service because of
the production output. Efficiency in terms of management tasks because of
minimum supervision required has 48 counts or 40% share of the percentage.
According to the article published by Questia.com states that by
delegating responsibilities to external agencies companies can wash their
hands off functions that are difficult to manage and control while still realizing
their benefits. To summarize among the reasons to outsource, companies

PAGE 18
undertake outsourcing and offshoring for a variety of reasons depending upon
their vision and purpose of the exercise. While this may vary from company to
company, the fruits of labour are visible among some of the leading
enterprises worldwide, where in outsourcing and offshoring have become a
core component of day to day business strategies. This explains why there is
less supervisory functions required for managers that they could devout more
their time to more crucial decision- making situations.
Table 10 : Problems encountered in Manpower Outsourcing
Table 10 presents the problems encountered in manpower outsourcing.

Problems regarding confidentiality or sensitive informations of the bank are
being exposed to multiple outsourced personnel ranked the topmost problem
that 68 or 57% of the respondents strongly agreed.
Based on the article published by www.virtualdonewell .com, the

PAGE 18
intellectual property of companies includes business plans, trade secrets and
other proprietary knowledge. Outsourcing presents a considerable risk of theft
or hacking of this property to client companies. In addition there is the
challenge of securing the confidential information of companies customers
and, in some instances, patients when outsourcing business processes.
53% or 64 respondents strongly agreed that it is difficult to maintain an
outsourced workforce due to various documentations required to them while
40% of the population believed that if a company would retain an outsourced
manpower team, this must be subject to strict quality control scheme. SLAs or
Service Level Agreement, legal contracts, safety bonds and other are some of
the requirements in outsourcing. Otherwise, if these will not be complied as
deemed necessary, future conflicts and legal impediments will be faced by the
contracting companies.
Table 11 : Implications of Outsourcing

PAGE 18
Table 11 illustrates the implications brought about by outsourcing
manpower. Instead of having a high rate of unemployment, opportunities are
provided in different fields for people to earn income and help stabilize the
countrys economy. Based on the article published by The Balance,
(https://www.thebalance.com/how-outsourcing-jobs-affects-the-u-s-economy),
outsourcing also increases U.S. unemployment. The 14 million outsourced
jobs are nearly double the 7.5 million unemployed in the United States. If all
those jobs returned, it would be enough to also hire the 5.7 million who are
working part-time but would prefer full-time positions. This may be
contradicting to the results being obtained by the researcher but considering
the geographical location and the current situation of the Government of each
country being studied, possible there might be differences that may evolved.
PAGE 18
Cultural and governmental jurisdiction may differ.
It is notable that number #2 item has the second highest number of
respondents with 97 people or 81% of the total population that strongly are
agreed. Function at work that are dematerialized in nature passed on to
economies with a low-rate labor market, thus cost-efficient on behalf of the
proprietor. Savings is the foremost goal of this implication.
According to study done by Questia.com Library, outsourcing may have
evolved in Japan where it was well-known and accepted as a large part of the
economy. By the 21st century, it had become a global phenomenon that
continued to grow in scale, favoured by organizations that saw it as a way to
cut costs and gain resources or specialist knowledge. Outsourcing often
involves the substitute of a workforce from a high-wage country for workers in
developing countries who may be paid as little as 10 or 20 per cent of their
wage. These countries are a valuable resource for companies wanting to
reduce their costs as there is an almost unlimited supply of educated workers
waiting for jobs.
Manpower outsourcing has a lot of implications could offer to every
organization. Efficiency in the production process because it entails a
hastened mode of work process at a more affordable cost benefit. Outsourcing

PAGE 18
is a good option when you have back-office functions that are complicated in
nature, but the size of your company is preventing you from performing them
at a consistent and reasonable cost.
Outsourcing can free up your business to focus on its strengths. This
can benefit your business by allowing your staff to concentrate on their main
tasks and on the future strategy.
The economy may be alleviated in terms of the employment rate. Higer
volume of workers may be required in outsourcing because there is a high rate
of employee turn over in terms of contractualization.
Contradictingly, based on an article published by Rappler (dated
February 4, 2017), Department of Labor and Employment (DOLE)
Undersecretary Dominador Say said they plan to release the new policy that
aims to end labor-only contracting this month. It will replace the existing
Department Order No. 18 (DO-18), the implementing guidelines of job
contracting under Article 106 of the Labor Code of the Philippines. Labor
groups argue that DO-18's introduction of a 3-way hiring scheme involving
employers, contractors, and workers, led to abuse.
The DO, which was set to be released last December 28, is now on its second
draft, and will consolidate all inputs from stakeholders. The department, early
PAGE 18
in January, opened the draft to comments from both the labor and
management sectors.
The deadline for submission of suggestions was set last January
26, but Say said inputs continue to pour in. This may cause the delay of the
finalization and release of the DO.
With the merits of this published articles, the fear of instability of tenure
for contractual employees may be abolished. This mandate may hamper the
threat of possible higher attrition rate or fast turn over of manpower workforce.
Outsourcing comes with risks. Some pitfalls of handing over direct
control of a business function may include numerous requirements to be
complied between mother company and the outsourced agency.
A service level agreement (SLA) is one of the requirements required for
outsourcing parties that sets out what services the supplier is to provide and to
what standards. The service level agreement forms part of the contract
between you and your outsourcing partner. This requires the services
provided, the standards of service, the delivery timetable, responsibilities of
supplier and customer, provisions for legal and regulatory compliance,
payment terms, how disputes will be resolved and other terms and conditions.
PAGE 18
If an outsourcing agency falls short of this, termination of its affiliation
might occur. The disadvantage that the mother company or the universal bank
may face will be the re organization of the work force thus, resulting to easy
turn over of manpower. Training and re training of manpower may be tedious
and causes delay in the production area.
CHAPTER V SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS
This chapter presents the summary or the research work
undertaken, the conclusions drawn and the recommendations made as an

PAGE 18
outgrowth of this study.
Summary of Findings
This study was conducted for the purpose of determining the benefits
and disadvantages brought about by outsourcing in a universal bank. It also
aims to identify the jobs being outsourced in the credit and admin function of
Auto and Home Loan Unit of the firm and to decide whether to employ
outsourced manpower in lieu of regular full- time employee.
The respondents are 120 regular employees of a universal bank (80
managers and 40 rank and file staff) who directly manages and deal with
outsourced personnel in the Admin and Credit Department. Using the
quantitative method, the researcher will be able to quantify the respondents
insights and ideas indicated by the current condition of the workplace while the
qualitative approach was used to explain descriptively the findings during
interviews, documentary analysis and focus group discussion (FGD).
Based on the research conducted by the Researcher, manpower
outsourcing in the universal bank has numerous numbers of observations
being noted.
PAGE 18
1.) Business operations being outsourced by the respondent universal bank
in the Admin and Credit Department includes clerical and messengerial
functions. It involves encoding, telephone verifications/ credit investigations,
MIS data monitoring and other messengerial jobs.
2.) Efficiency in production when utilizing outsourcing because it will entails
the workforce to work rapidly because of the required number of production
output as brought about by the agreement of the contracting companies they
are affiliated.
3.) The disadvantage that has been remarkable in the conduct of this
research study is the confidentiality threat to data owned by the bank itself.
Integrity and confidentiality of the banks record are compromised when one
firm resorted to outsourcing.
4.) Most of the respondents agreed that one of the problems that an
outsourcing management may face is the exposure for possible
confidentiality threat. Sensitive informations maintained by the bank may be
accessible to multiple unauthorized user that will bring the clients privacy
and security at risk.
If the outsourcing disadvantages outweigh the advantages of
outsourcing, then you should avoid outsourcing those operations.
5.) When it comes to implications brought about by outsourcing, 95% of the

PAGE 18
120 respondents agreed that instead of having a high rate of unemployment,
opportunities are provided in different fields for people to earn income and
help stabilize the countrys economy. Many of them believed that
outsourcing particularly in the Philippines may help alleviate the economic
crisis in terms of unemployment because of its high demand at the current
market trend.
CONCLUSIONS
The conclusions that can be drawn from this study are carefully
discussed and enumerated.
A universal bank specifically in the Credit and Admin Department

PAGE 18
performing credit and administrative functions is utilizing outsourced
manpower or hiring third- party external service provider for their everyday
operations.
Several conclusions can be drawn from the conduct of this study.
Researcher has noted several findings that was obtained from survey
questionnaires, interviews, research articles, published materials and others.
The Admin and Credit Department of the universal bank being studied
are utilizing outsourced manpower with their clerical for more than 3 years
and messengerial functions for more than 1 year.
The skill that is being required by the universal bank in the employment of
their manpower personnel based on the surveyss response is being credible.
Credibility is one of the core characteristics of a worker. Outsourced
manpower can be believed and trusted, working with full integrity with
constant control and supervision.
Efficiency in production output to maximize the full potential of the
workforce, thus volume is increased. They are expected to have more number
of production because majority of the outsourced manpower works on a per
piece basis or the being paid based on the number of output. Quantity is given
importance in outsourcing. It comes alongside with the savings it will bring in
the company. Economical benefits is one of the factors being considered in

PAGE 18
manpower outsourcing.
Quality of service is being affected because of the exposure of the
banks sensitive documents and portfolios are being accessed by
unauthorized users especially those who are not part of the regular hired
employees. The life-blood of any business is the information that keeps it
running. If you have bank accounts of an individual with his or her personal
data attached to it or any other confidential information that will be transmitted
to the outsourcing company, there is a risk that the confidentiality may be
compromised
Outsourcing as a solution to high unemployment rate in the Philippines.
There are a number of opportunities due to high demand for outsourced
workforce because of the latest trend of the society and economy.
Clients select the Philippines as their business partner. This is primarily
due to the countrys low labor and operational costs. By bringing outsourcing to
the Philippines, foreign companies are able to afford doubling their production
and save much on other resources. Not only does this business process reduce
their production time, it also assures better quality of services as most
outsourcing company does.
RECOMMENDATIONS
PAGE 18
After identifying the advantages, disadvantages and the implications
brought about by outsourcing in a universal bank, the Researcher have come
up to some of suggested solutions and recommendations that might be
beneficial to direct users specially those who are supervising and managing
outsourced workforce personnel in banks as we
ll as other financial instituions may deemed applicable.
1.) For the past 3 years, business operations under Admin and Credit
Department of the Auto and Home Loans of the respondent bank includes
clerical and messengerial functions. They are operating from 1 to 3 years
consecutively. In order for these units to operate for a relatively longer
period of time, management must do the regular trainings and process
enhancements seminars for the outsourced personnel to be more diverse
and versatile when it comes to their duties. Job rotation is advised for these
people to be more versatile, resilient and be more skilled of their functions.
2.) To be able to address the confidentiality and security threat to protect
banks sensitive records, if the outsourced function involves sharing
proprietary company data or knowledge (e.g. product drawings, formulas,

PAGE 18
etc.), this must be taken into account. Evaluate the outsourcing company
carefully to make sure your data is protected and the contract has a
penalty clause if an incident occurs. To limit the access to authorized
personnel only and always have our system be password-driven.
3.) Rigid training and continues education in the work process must be
implemented for a more productive output. It is imperative for the
management handling contractual personnel to follow regular follow-
through with the everyday calibration with recent updates and process.
4.) Implement the Piece work or Piece rate basis of remuneration for our
outsourced personnel. This may help regulate, account and monitor
accurately the banks expenses based on the output of its manpower. This
may also be cost- efficient as compared to a high, fixed daily rate. One
benefit of this costing is the maximization of the full potential of the
workforce to produce accordingly based on the required production and it
also serves as motivation to earn more for those who are driven by
financial goals.
5.) To avoid the legal impediments brought about by manpower outsourcing,
management of the universal banks must obliged all external service

PAGE 18
providers agency partners to furnish the required documentations required
for a full service accreditation to the bank. This is beneficial both for the
management of contracting parties. This is to also formalize, legalize and
enumerate the banks terms and conditions expected and required for the
everyday business operations. Set up a concrete SLA (Service Level
Agreement) at the onset of the contract and regularly update the terms and
conditions to check if parties are in compliance with the bounded contract.
6.) For the future implications of outsourcing, researcher suggests that Banks
management and the contracting agency must set their own respective
progressive plan on how to be diverse and transitional with the
management of outsourced personnel. Regular calibration and trainings
are required for the outsourced manpower. Comprehensive quality control
procedures must be discussed on a timely and regular basis for the
efficiency and effectiveness of the outsourcing of manpower in the
universal bank.
PAGE 18
REFERENCES
Introduction: Retrieved from

http://www.investopedia.com/terms/o/outsourcing.asp
https://en.wikipedia.org/wiki/Business_process_outsourcing_in_the_Philippine
s
http://www.newyorkfed.org/banking/circulars/outsource.pd
http://www.nbsusa.com/articles/Bank_Statement_ www Outsourcing.pdf
PAGE 18
Definition of terms: Retrieved from

https://en.wikipedia.org/wiki/Third-party_source
http://searchcio.techtarget.com/definition/outsourcing
http://.investopedia.com/terms/e/economiesofscale.asp
http://www.accountingtools.com/questions-and-answers/what-is-overhead.html
Review of Related Literature: Retrieved from

http://www.globalchange.com/outsourcing.htm (1)
https://www.flatworldsolutions.com/articles/pros-cons-outsourcing.php
http://iafor.org/archives/journals/journal-of-politics/Kazmierczyk-Macholak-
Outsourcing.pdf
https://iafor.org/archives/journals/journal-of-politics/Kazmierczyk-Macholak-
Outsourcing.pdf
http://www.nowcandoit.com/history-of-outsourcing-industry-in-the-philippines/
http://www.academia.edu/3065718/THE_EFFECT_OF_OUTSOURCING_ON_
ORGANIZATIONAL_PERFORMANCE_IN_PRIVATE_ORGANIZATIONS_IN_
UGANDA_A_CASE_STUDY_OF_UGANDA_TELECOMMUNICATION_LIMIT
ED
Ebooks Resources :
https://www.questia.com/library/sociology-and-anthropology/labor-and-
work/outsourcing (2)
https://www.questia.com/library/3020222/outsourcing-state-and-local-
government-services-decision-making (3)
https://www.researchgate.net/profile/Myun_Joong_Cheon/publication/2508859
30_Theoretical_perspectives_on_the_outsourcing_of_information_systems/lin
ks/55c8998008aeb975674755b2/Theoretical-perspectives-on-the-outsourcing-
of-information-systems.pdf (4)
http://smallbusiness.chron.com/advantages-outsourcing-benefits-17806.html
(7)
http://issuesatwork.weebly.com/outsourcing-and-piecework.html (8)
http://www.blr.dole.gov.ph/blr_files/vcgp/regional/ncr/ncr_bpo.pdf (9)
http://www.virtualdonewell.com/problems-with-outsourcing-and-overcome-
them/ (10)
PAGE 18
APPENDICES
Strongly Strongly
Agree Neutral Disagree Disagree
Agree
QUESTIONNAIRES 5 4 3 2 1
Part 1
1. Business operations that are being
outsourced :
1.1 A Clerical- Admin Operations
0-1 Year
1-2 Years
2-3 Years
3.1- 4 Years
1.1B Clerical - Credit Operations
0-1 Year
1-2 Years
2-3 Years
3.1- 4 Years
1.1C Messengerial - Admin Operations
0-1 Year
1-2 Years
2-3 Years
3.1- 4 Years
1.1 D Messengerial - Credit Operations
0-1 Year
1-2 Years
2-3 Years
3.1- 4 Years
PAGE 18
*** Choose Strongly Agree for the chosen

answer above
Strongly Neut Disag Strongly
Agree Agree ral ree Disagree
QUESTIONNAIRES 5 4 3 2 1
Part 2
2. Manpower skills that are outsourced by
the bank for the past 3 years
2.1 Reliability
2.2 Competence
2.3 Credibility
3. Implications of outsourcing manpower

skills in terms of :
3.1 Admin - Disadvantages

3.1.1 Savings
Increased overhead to accommodate in-
house outsourced personnel
3.1.2 Efficiency
Subject to numerous legal requirements and
accreditation process to be accomplished

Integrity and confidentiality of the bank's
record are compromised
3.2 Admin- Advantages

3.2.1 Savings
Efficiency in production output. Maximize the
full potential of the workforce, thus volume is
increased.
3.2.2 Efficiency
Management efficiency resulting to less
supervisory tasks.
Increased in production output
PAGE 18
3.3 Credit Operations - Disadvantages

3.1.1 Savings
Increased overhead to accommodate in-
house outsourced personnel
3.1.2 Efficiency
Subject to numerous legal requirements and
accreditation process to be accomplished

Integrity and confidentiality of the bank's
record are compromised
3.4 Credit Operations- Advantages

3.2.1 Savings
Efficiency in production output. Maximize the
full potential of the workforce, thus volume is
increased.
3.2.2 Efficiency
Management efficiency resulting to less
supervisory tasks.
Increased in production output
4. Problems Encountered in Outsourcing

4.1 Sensitive information of the bank are being
exposed to outsourced personnel
4.2 Difficult to maintain due to various

documentations required to form an
outsourced manpower workforce.
4.3 Subject to strict quality control measures

on the part of the supervisors handling
outsourced manpower.
5. Implications of Outsourcing
PAGE 18
5.1 It improves efficiency, cuts costs, speeds

up product
development and allows companies to focus
on their core competencies.
5.2 Functions at work that are dematerialized

in nature are
passed on to economies with low-rate labor
market, thus cost- efficient on behalf of the
proprietor.
5.3 Instead of having a high rate of

unemployment, opportunities
are provided in different fields for people to
earn income and help stabilize the countrys
economy.
PAGE 18
CONSENT COVER LETTER FOR SURVEY RESEARCH
Dear Participant,
I invite you to participate in a research study entitled The Outsourcing
of Manpower in the Business Operation of Universal Bank. I am currently
enrolled in the Masters Degree Program at Rizal Technological University in
Mandaluyong City, and am in the process of writing my Masters Thesis. The
purpose of the research is to establish the effects of utilizing outsourced
manpower in local banks.
Your participation in this research project is completely voluntary. You
may decline altogether, or leave blank any questions you dont wish to answer.
There are no known risks to participation beyond those encountered in
everyday life. Your responses will remain confidential and anonymous. No one
other than the researchers will know your individual answers to this
questionnaire.
If you agree to participate in this project, please answer the questions on
the questionnaire as best as you can. It should take approximately 15 days to
complete. Questionnaires will be collected personally by the researcher after

PAGE 18
the allotted time provided.
For any questions about this project, feel free to contact the Researcher
(Deana Pauline M. Ortiz at 09176256116).
Thank you for your assistance in this important endeavour.
Sincerely yours,
___________________
Deana Pauline M. Ortiz
CURRICULUM VITAE
DEANA PAULINE MACALINAO ORTIZ

Unit X-51 SCI Condominium, Makaturing St., Mandaluyong City
Mobile No. : 09176256116
Email: deanapauline_ortiz@yahoo.com
Telephone No. 02-5312148
WORK EXPERIENCES
Company Name : BANCO DE ORO UNIVERSAL BANK

PAGE 18
Consumer Lending Group- Auto, SBL Credit

Cycle
Position : AGENCY COORDINATOR ASSISTANT
JUNIOR ASSISTANT MANAGER 2
Date of last Promotion: March 1, 2016
November 2014- Present
Work Description
Responsible in monitoring the performance of external CI
agencies performing tele- verification and ocular inspection for auto loan
applications to ensure that performance is within agreed policy standard.
Duties and Responsibilities
1. Conduct check on quality of calls/ handling and give immediate
feedback to External Service Provider Team Leader.
2. Submit summary of quality check findings to CI Agency
Coordinator for review on a weekly basis and discuss findings to
ESP Operations Manager for action items on a monthly basis.
3. Monitors the error rate and contact rate of the agencies and
gives constant feedback on the said performance factors.
4. Consults CI Agency Coordinator regarding sensitive work
problems/ concerns of unusual occurrences that do not conform
to the standard procedures and recommend alternative
solutions to resolve the issue.
Other Administrative Functions

1. Review and check billing of CI Agencies.
2. Prepares and consolidates the accruals of the unit.
3. Performs other tasks that may be assigned from time to time.
Company Name : BANCO DE ORO UNIVERSAL BANK

Consumer Lending Group- Auto, SBL Credit
Cycle
Position : CREDIT OFFICER (ANALYST)
JUNIOR ASSISTANT MANAGER 1
July 2012- November 2014
Work Description
Responsible in facilitating credit processing of secured consumer
loan applications Conducts internal checking and gathers sufficient,
PAGE 18
relevant and reliable information necessary to determine whether an

applicant is creditworthy or not. Assist Lending Officer to make proper and
sound evaluation of the account for purposes of granting loans to various
clients of the bank.
Duties and Responsibilities

1. Performs NAPU (New Accounts Processing Unit) processes
accurately within acceptable turn-around time using the various
systems used internally by the bank. Uses these system checks to
check the credit worthiness of the client.
2. Credit Investigation- Gathers personal information of the client thru
telephone conversations within the acceptable turn-around time.
3. Ensures standards on proper customer service are done
consistently. Be guided by the CI script, uses proper tone of voice
and exercises acceptable manner of conduct.
4. Uses on-line checking to validate legality of business/ employer and
for 3rd party verification.
5. Accurately encodes gathered information in the Banks Front-End
System.
Other Functions
1. Recommend outright rejects based on internal checking.
2. Identify credit initiated programs and perform call-outs.
3. Give timely feedback during regular meetings to resolve issues and/
or improve process.
4. Propose/ Implement procedural and system enhancements.
5. Perform other functions as maybe assigned from time to time
according to the established productivity and service quality
standards.
Company Name : JP Morgan Chase and Company Bank N.A.

Position : MODIFICATION QC PROCESSOR- RFS
PRODUCTION QUALITY CONTROL- QUALITY
PAGE 18
CONTROL SPECIALIST II
November 2010- June 2012
Work Description
Responsible for the review of Loss Mitigation workouts, with

focus on verifying the accuracy of the Loan Underwriting review
and analysis of our customers financial ability and property
information, to ensure the most suitable workout was arrived at
and the terms of the workout are
Review income documents provided by customer or the Loan

Underwriter to ensure they meet all underwriting requirements
for applications on modification of existing home loans.
Enter all modification qualification data in modification tools and

verify the accuracy of the entries, ensuring that all steps
undertaken are within guidelines. Points of validation are based
on these guidelines established by Investors and Internal
Policies and Procedures.
Identifies the risk on daily portfolios and segregates by severity,

level of priority or as directed.
Prepare and deliver complete loan modification file to

underwriting; verifies the accuracy of documents provided,
system updates and interdepartmental hand-off process for
each workout.
Work on special projects or other duties as assigned.
Company Name : BANK OF THE PHILIPPINE ISLANDS

Position : CREDIT ANALYST
(JULY 2005- OCTOBER 2010)
Work Description
Credit Investigation Unit
o Pre-screens individual application for initial

investigation.
PAGE 18
o Conducts phone verification on applicant data.

o Prepares credit scoring of applications for evaluation.
Pre Processing Unit

o Reviews and checks veracity, completeness and
sufficiency of information on application forms
received as well as basic documentation
requirements.
o Checks applicants/ spouses info versus the RM
system, to check applicants dealings within and
outside the bank via the Unibank Negative Data
Bank (NDB) for possible adverse records.
o Enables to deny credit card applications having
negative records and dealings within and other
banks as well as pending legal cases that matched
the system.
Company Name : SACRED HEART ACADEMY- PASIG CITY

Position : ACCOUNTING ASSISTANT
MAY 2004- JUNE 2005
Work Description :
Assists the Chief Accountant in preparation of
Companys Book of Accounts, Financial Statements,
Payroll and other Clerical works.
Assists the Cashier in preparation of the Daily Cash
Reports and performs the daily audits for Cash
Inflows of the Company.
EDUCATIONAL BACKGROUND
Post- Graduate Education:

2013- Present
Rizal Technological University- Mandaluyong City
MASTERS IN BUSINESS ADMINISTRATION
TERTIARY EDUCATION:
1999- 2003 Wesleyan University- Philippines Cabanatuan City
Bachelor of Science in Accountancy
Date Graduated: April 2003
PAGE 18
ON THE JOB TRAINING:

Land Bank of the Philippines- Accounting Center- Cabanatuan City,
Nueva Ecija
Secondary Education:
1995- 1999 COLLEGE OF THE HOLY SPIRIT- TARLAC CITY
Date Graduated: March 1999
Primary Education:
1989- 1995 San Isidro Central Elementary School- La Paz, Tarlac
Date Graduated: March 1995- Valedictorian
CAREER CIVIL SERVICE PROFESSIONAL ELIGIBLE
Has attended various seminars and training including ANTI-
MONEY LAUNDERING ACT (2005)
SKILLS
Ability to communicate to all levels within an organization

Strong customer service ethics and ability to be empathetic and
accept ownership
Well-developed problem solving skills
Goal/Career oriented and self-motivated
Able to work under pressure with minimum supervision
Lead, manage and implement program/initiative
Advance Knowledge in MS Excel/ MS Word
With leadership skills handling group of individuals within levels
of organization
PERSONAL INFORMATION:
Date of Birth : January 18, 1982
Place of Birth : Tarlac City
Civil Status : Married (with 3 children)
Name of Spouse : Nomar Dela Cruz Ortiz
Name of Parents : Danilo F. Macalinao and Cynthia Rivera Macalinao (D)
Reference available upon request.

PAGE 18

Outsourcing Manpower Implications for Universal Banks

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RIZAL TECHNOLOGICAL UNIVERSITY GRADUATE SCHOOL

THE OUTSOURCING OF MANPOWER IN THE BUSINESS

Deana Pauline M. Ortiz

This entitled THE OUTSOURCING OF MANPOWER IN THE

BUSINESS OPERATION OF UNIVERSAL BANK, prepared and

submitted by Deana Pauline M. Ortiz in partial fulfilment of the

requirements for the degree Master in Business Administration, has been

examined and recommended for ORAL EXAMINATION.

Approved by the Committee on Oral Examination with a grade of _____.

____________ DR. EDNA C. AQUINO

My deep gratitude goes first to My God, My Saviour, from whom all

this world could offer. I love you unconditionally.

My sincerest gratitude for my Adviser, Dr Kathryn Tria, for her

enduring patience during the days I need most her guidance.

To the RTU Graduate School family, for being supportive to their

students endeavours, a heartfelt appreciation I offer.

To my friends and colleagues at work, my Supervisors and Co-

workers, I extend to you my appreciation for keeping me inspired despite

To God be all Glory!

THE OUTSOURCING OF MANPOWER IN THE BUSINESS

Outsourcing in a universal bank. It will enumerate the advantages and

disadvantages encountered in the business operations as outsourced

manpower is being utilized.

The problem enumerated the scope of work, the challenges faced in

daily operations and the benefits being obtained in manpower outsourcing.

The thesis is structured in five main chapters : THE PROBLEM

significance; THE LITERATURE addressing the academic background of the

study; RESEARCH METHODOLOGY showing the statistical approach of

gathering data based on surveys; PRESENTATION and ANALYSIS and

SUMMARY of FINDINGS and RECOMMENDATIONS discussing the results of

the study and the possible outcomes of the research done.

CHAPTER I: THE PROBLEM AND ITS BACKGROUND

Theoretical Framework .13

Research Paradigm ....14

Statement of the Problem ...15

Significance of the Study.. ...17

Scope and Delimitation of the Study...18

Definition of Terms / Variables .20

CHAPTER II: REVIEW OF RELATED LITERATURE

Review of Related Literature 23

CHAPTER III: RESEARCH METHODOLOGY

Research Method Used 39

Population Frame and Sampling Scheme .39

Description of the Respondents ..40

Research Instruments Used ...40

Data Gathering Procedure ..41

Statistical Treatment of Data ...42

CHAPTER IV - PRESENTATION, ANALYSIS

AND INTERPRETATION OF DATA ..43

CHAPTER V - SUMMARY OF FINDINGS, CONCLUSIONS AND

THE PROBLEM AND ITS BACKGROUND

Outsourcing is one of the products of business advancements

nowadays. It is a trend that is becoming more common for companies with

extensive need for managing different departments with different services

departments that do not necessarily need to be performed by the main office. A

practice used by different companies to reduce costs by transferring portions of

work to outside suppliers rather than completing it internally. Outsourcing is a

effective cost-saving strategy.

In these situations, how can financial service businesses remain in

bank recognize the viability of obtaining outsourced manpower without

Outsourcing has the potential to transfer risk, management and

In this research, it aims to answer the questions on whether to