| Abstract: | This study was conducted to outsourcing and its benefits and challenges at Development Bank of Ethiopia and to come up with the possible solution to minimize the existing problems. The researcher used both primary and secondary data sources. In order to get relevant data from the target population, questionnaire and interviews were used. The questionnaire was distributed to 252 employees on the basis of stratified random sampling and the data collected were analyzed using descriptively. Results show that due to outsourcing the major reasons and benefits are able to save time and money, helped to save costs and personal work, helps the bank to give more focus to its core functions, helped the bank to focus on more strategies. In the meantime the bank has also faced several challenges such as: poor handling of the Bank’s resource and high maintenance costs, problems of controlling outsourced staffs during working hours, problems of quality of services, lack of ownership and belongingness, lack of clear communication. Based on the findings of the study, the research recommended to minimize poor handling of resources and the high maintenance costs, the bank prepared mentally and physically through proper and continuous training and should set up controlling and monitoring actual equipment condition, to decrease service delivery time service provider, DBE should discuss and facilitate a personal transportation mechanism, to understand the value of the bank’s document, the bank should give free induction training, in order to increase employee belongingness and ownership, the bank should give gift certificates and intrinsic rewards that are experienced internally. Finally the bank should recruit some effective outsourced workers into permanent workers to increase others’ employees moral and belongingness |
