The main goal of this study was to explore the influence of Labour outsourcing process on the performance of Kenya’s Banking Sector. The study used descriptive research design since it deemed suitable for this kind of study. It used stratified random sampling and the selection of the respondents using a questionnaire that had a blend of different kinds or modes of questions to get feedback from respondents. The target population for the study consisted of employees working in selected banks in Nairobi County. The sample size used in this study was 132 human resource employees, out of a population of 199 employees. A pilot test was carried out to test the validity and reliability of the research instruments used in the study. The analysis of the findings of the study were measured using the Statistical Package for Social Sciences (SPSS version 21). The study used the Multiple Linear Regression Model for testing relationships existing among variables, more so the predictor variable and the dependent variable. The study established that organization capacities had a statistically significant relationship with perfomance. The study also found that labour costs had a strong posotive correlation with perfomance. The study found that risk management was statistically significant to perfomance. Further, benefit administration had a significant positive relationship with perfomance. The study concludes that organization capacities, labour costs, risk management and benefit administration has a positive influence on performance of the Kenyan Banking Sector. The study recommends that the management of banks should constantly conduct capacity audits. This would enable the organization to understand the existing competencies in the organization and the competencies needed in the company due to the volatile business environment. The study recommends that the management of banks in Kenya should focus on reducing labour costs. This can be done by reducing the amount of labor employed or changing working hours. The study recommends that the banks should review their risk management procedures from time to time. This is because as the business environment is volatile new business risk keep emerging and therefore the organization should be in the know. The study recommends that banks should improve on the employee benefit programs they provide. This is because the employees need keep on changing and the management should always understand their employees.

Keywords: Outsourcing, Organization capacities, Labour costs, Risk management, Benefit administration.

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