Training and Development Outsourcing Strategy and Operational Performance of Commercial Banks in Kenya

Abstract

This study examines the relationship between training and development outsourcing and operational performance in commercial banks in Kenya. Commercial banks have grown considerably over the past decade; this has come with sharper competition and mounting pressure on performance, particularly in customer satisfaction, operational efficiency, and competitiveness. In response, many banks have turned to training and development outsourcing, engaging external training providers to access specialised expertise and contemporary skills that may not be readily available internally. The study was anchored on Transaction Cost Economics, Resource-Based View, and Systems Theory. A cross-sectional research design was used to analyse and empirically test the relationship between the variables. The target population comprised 38,840 employees of the 38 licensed commercial banks headquartered in Nairobi and selected branches, from which a sample of 385 respondents was selected through stratified random sampling. Data were collected using structured questionnaires, which were piloted before the main data collection, and reliability was assessed using Cronbach's alpha, yielding a coefficient of 0.78. Analysis was carried out in SPSS version 25.0 using descriptive and inferential statistics: simple linear regression tested the relationship between training and development outsourcing strategy and operational performance. The findings revealed that training and development outsourcing strategy significantly and positively enhances the operational performance of commercial banks in Kenya (β = 0.942, B = 0.908, p < .001). The strategy explains 88.8 per cent of the variation in operational performance. The outsourcing of training and development therefore contributes to improving the operational efficiency of commercial banks by strengthening the workforce and resulting in improved operational performance.