Information technology outsourcing and employee morale in the South African banking sector

Abstract

The objective of this research study was to conduct an extensive examination of the effects of IT outsourcing on IT employees’ morale in the South African banking sector. The study specifically focused on a practice of outsourcing where a certain percentage of IT employees are permanently transferred from a bank to an IT vendor company. The research analyzed the effects of IT outsourcing on the morale of IT employees in five different facets, based on job satisfaction. The five facets are Fringe Benefits, Pay, Communication, Promotion and Operating conditions. These facets were specifically selected because they are at the core of employee concerns in any outsourcing process. A quantitative research method was used, and data collection was based on a Likert scale questionnaire which specifically asked questions, based on the mentioned five facets with each facet having four questions. The collected data was converted into numeric scores and summed up to have one score total per facet for each participant. Data analysis included a combination of Descriptive Statistics and Parametric analysis. The study revealed that IT outsourcing where some employees are permanently transferred from a bank to an IT vendor company has a level of negative effect on IT employee morale. The biggest contributor of this negative morale change was found to be lack of clear Communication, uncertainty of the new Operating Conditions and possible loss of Fringe Benefits. The study also found that morale change is similar for employees who were transferred vs retained and employees of different job levels. The main recommendations include but are not limited to: Revise each affected employee’s job specification and discuss this with them to alleviate uncertainty about new operating conditions. Change communication frameworks should be introduced and any major communication should come from a high influence position, such as the CEO or CIO. There should be fair alignment of current benefits with those of the new employer with no grace periods. There should be a proper handover of each employee to their new employer if transferred to discuss their career development and aspirations, their performance and prospects of a raise or a promotion.