Outsourcing in the Hospitality Sector – Issues & Perspectives
Module code: TH60041G
Tutor: Hilary Allen
Student number: 21122719
Outsourcing in the Hospitality Sector – Issues & Perspectives.
Nowadays, while companies are faced with increasing opportunity to outsource activities they need to make the right outsourcing decision. Although, there are many advantages for outsourcing,there are also risks and disadvantage in this practice. This essay will explain the term outsourcing and explain why organisations prefer to outsource some of its functions in today’s environment. This essay will try to analysis the advantage and disadvantage of the outsourcing process and its risks concerning the organisation in a first part, then an analyse will be made concerning thechallenges to make the most desirable outsourcing contract and there solution will be highlight. In a final part this essay will discuss about the future of outsourcing industry. The word outsourcing could be explain as the contractual association with a specialised outside service provider for work usually done in-house. Outsourcing could also be defined as the utilisation of external agents to achieveone or more organisational activities (Jacques, V, 2006). According to Bromage, (2000), ‘Outsourcing is one of the most important management ideas and practices of the past 75 years’.
In the hospitality industry most companies decide to outsource for many reasons, such as strategic reasons, which are improve business focus, gain access to World-class capabilities, accelerate reengineeringbenefits, share risks. The other reason are tactical reasons such as, reduce or control operating costs, make capital funds available, generate a cash infusion outsourcing can involve the transfer of assets from the customer to the provider, and secure resources not available internally, companies outsource because they do not have access to the required resources within the organisation (QuoquamTechnologies, 2002). For all this reasons companies prefer to outsource some part of their business, the services which are typically outsourced by chain hotel are, Administration, Accommodation with housekeeping and laundry, Food & Beverage, Maintenance & External, (SurroundingsLamminmaki, D. 2005). Outsourcing represents many advantages but also disadvantages and to recognize them it isimportant to understand how the industry of outsourcing is structured to meet the needs of client firms, (Goldsmith, 2003 cited in Schniederjans, 2005). Many companies in hospitality industry outsource their business to make cost saving or better cost control over the outsourced function because for example an Hotel restaurant which outsource their laundry will see better the amount spend rather than ifthey had to count the price of washing powder used, the wear of the washing machine, etc. Cost reduction has been the predominant motive for outsourcing, Another advantage for outsourcing is to realize staff reductions or minimize the instability in staffing, because with outsourcing companies need less employees its result directly on them turnover .Companies also outsource in order to decreasethe workload on their employees. Some companies outsource in order to eradicate disturbance and oblige themselves to focus on their core competencies. This can be particularly attractive benefits for companies. Companies outsource also to realize better flexibility, since the sale of assets that formerly supported an outsourced function can improve companies cash flow. Many suppliers demandlong-term contracts, which may minimise flexibility, (Grauman, K, 2000). The potential for improved flexibility may apply not only to the volume of output but also the ability of the organisation to change the product range in response to market condition, (Jennings, D. 2002). As with any process, there is a negative side and outsourcing presents some disadvantages and some risks, such as the loss of...
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