Outsourcing is a powerful strategic tool to cut cost, improve performance, and refocus on therncore business functions. However, the outsourcing practice of CBE is confronted withrnweaknesses such as; lack of support from internal stakeholders and top management, lack ofrnwell defined service level agreement and unable to get committed outsourced staffs . Thisrnthesis was designed to identify effect of outsourcing noncore business functions on therncompanyâ€™s performance the case of Commercial Bank of Ethiopia. Data were collectedrnthrough questionnaires, interview and internal documents of the Bank. Descriptive statisticrnand frequency, correlation and regression were utilized to analyze the data. Interpretation isrnmade on the mean, frequency, and percentage of data. The studyâ€™s result has implied that thernoutsourcing practice of non-core business functions of the Bank has unsolved problems. Theftrnof properties, both the security staffs and drivers lack commitment and loyalty, have ethicalrnproblems and lack of support from stakeholders and top management as expected. On thernother hand some benefits are obtained by outsourcing the non-core business functions of thernBank. Among these outsourcing helps the Bank to focus on its core function, helps tornminimize operating cost, avoid major investment in HR and reduce administrative burden ofrnHRM of the Bank. Finally, the researcher suggests that the Bank should work hard to reversernthe adverse impact of outsourcing by conducting due diligence on the delivering qualityrnservices, increasing customersâ€™ satisfaction and improving competitiveness & efficiency. Thernbank also ensures service providerâ€™s related work experience, ethical considerations,rntechnical capabilities, the resource possessed are in a position to fit the requirements.