Introduction
What is Outsourcing?
Outsourcing can be defined as a business relationship in which two or more companies work together to achieve a collective advantage. Rugman et al (2003)
If you look back ten – fifteen years ago outsourcing in hotels was not a popular concept but more recently with the downturn in the economy in the nineteen nineties more and more hotels are turning to outsourcing to help increase their revenues and maximize their profit potential. The use of outsourcing enables firms to maximize their resources and to reinforce their competitive advantage. One of the most popular areas for outsourcing in hotels would have to be the Food and Beverage sector. The decision to outsource by many hotels has been
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The service provider re engineers the work of specific functions and at the end of the contract the client regains full responsibility and control.
6. Joint venture outsourcing involves the use of a niche in the given market and setting up a new company. The client provides the staff and the assets. The profits from the company will be divided out as in the agreement.
7. Equity stakes is the strengthening of the outsourcing agreements by either the client or the provider of the equity stake in the other.
What can be outsourced?
Within a hotel almost every department can be outsourced but not only in hotels in any industry almost any function can be outsourced. Outsourcing can be undertaken in some of the following ways of a business process.
- Traditional Services
- Current and new services
- Core competencies
- Projects
Robinson et al (1995)
Every hotel and property will have many different valid reasons on whether to outsource or not to outsource. The main operations in a hotel that are most likely to be outsourced are;
- Specialist services where specialised personnel or skills are required
- Functions that would have fast changing IT requirements
- Operations where recruitment of employees and training of employees is of a high cost to the hotel
- Operations that are labour intensive
- The operations which are the commonplace
Robertson et al (1995) cited in Fox (2005) p 13
Outsourcing within the Hospitality Industry
Within the
It is a concept that has evolved from a manufacturing perspective to a strategic perspective, which views the concept as a way for organizations to focus and be more competitive. The basic premise of outsourcing is that a specialist organization can perform a particular service more efficiently than can internal operations because a specialist organization has an inherent advantage in producing and delivering a service. Superior technology, management skills, or economies of scale may contribute to this perception. The type of sourcing relationship depends on whether a long-term or short-term need exists. To save funds used for benefits for regular employees, temporary workers are hired. In this case, the organization (outsourcer) provides all necessary resources except the workers, who are provided by the vendor. For long-term services, the vendor has full responsibility for delivering the service; the outsourcer provides only a liaison.
Hotels- the most important accommodation subsector which provide the greatest total employment within the tourism industry at the global
(Pearlson,2001). Cost is the most important factor when the enterprise make a decision of insourcing or outsourcing. If the company produce the products or service on its own, there are costs more than producing, which can include investments of researching, training, and equipment.The investment of insourcing can be a lot more than the outsourcing because of economies of scale.Outsourcing providers can gain significant savings from economies of scale, which client companies usually can’t get on its own(Pearlson,2001). This benefit could be magnified in IT outsourcing.In the case of Project Harmony, as a food company, Campbell soup was a lack of sufficient scale within their own IS departments and IT technical expertise, so the saving between outsourcing and insourcing was significant.To conclude, cost reducing is the first of core benefits of outsourcing due to economies of
As we discussed in class, every business is faced with these issues and they are important to managers making strategic decisions. One of the first things learned about business is that if there is no demand for a good or service, the firm that provides it will not continue to exist. Over time the hotel industry has continued to change with market conditions and make itself attractive to business
The hotel industry is a very hard industry to enter into, due to one of the biggest obstacles, which is brand recognition. Right now there are a few large hotel chains that make a large footprint in the market. It is hard for a new entrant to come into the industry and compete with these large hotel chains without bringing something new to the table. Many large chains in the industry dominate the industry due to economies of scale due to franchising.
Outsourcing is when a company purchases products or services from an outside supplier rather than performing the same work within its own facilities, in order to cut costs. In other words, outsourcing is an organization's contractual relationship with a specialized outside service provider for work traditionally done internally by that organization. The decision to outsource is a major strategic one for most companies because it involves weighing the potential cost saving against the consequences of a loss in control over the product or service. Some common examples of outsourcing include manufacturing of components, computer programming services, tax compliance and other accounting functions, as well as payroll and other
Outsourcing is a process of a company obtaining the services from an outside vendor. These services can be of different forms like IT services for a software company, voice services for a customer support industry, legal services for companies and small part suppliers for manufacturing companies etc. The main reason for a company to outsource its services is cost savings
“Outsourcing refers to the contracting or subcontracting of noncore activities to free up cash, personnel, time, and facilities for activities in which a company holds competitive advantage”(Barlow, 2012). Outsourcing contributes speed to the operations within a business, gives a business the freedom of choosing the best possible supplier applicable to their business and also requires less of an effort from the management sector. The majority of businesses outsource in order to get jobs done quicker and more efficiently [comma] which is solved by hiring a specialist instead of giving your particular business the training and skills necessary to tackle the job at hand. For example, Apple outsources thousands of manufacturing jobs to countries like China, Korea in order to save time and money.
The hotel has four vital choices, as indicated by ansoff's model, we can sort the techniques. The first procedure is to offer the hotel and put resources into an alternate endeavor. It will go under enhancement procedure on the grounds that they plan to put another venture in new market. This is a dangerous method on the grounds that business is moving into new market with practically no experience.
A common definition of outsourcing is the takes part of their business and give it to another company to complete. The main industries that take
Outsourcing refers to hiring an outside, independent firm to perform a business function that internal employees might otherwise perform. Many organizations outsource jobs to specialized service companies, which frequently operate abroad. The outsourcing trend stands to continue; the latest wave of outsourcing impacts the information technology field. IT outsourcing includes data center operations, desktop and help desk support, software development, e-commerce outsourcing, software applications services, network operations and disaster recovery.2
T H E P O W E R O F X E R O X
The hotel industry is one of the most prolific industries in Australia due to its presence in society and, the impact it has on the nation’s economy. Advances in technology since the end of the 20th Century have allowed the service market of a hotel to develop rapidly (Hilton Melbourne South Wharf
Q1. TAKING ACCOUNT OF THE ORGANIZATIONAL CONTEXT, WHAT ARE THE PARTICULAR HUMAN RESOURCING CHALLENGES OR ISSUES THAT WILL NEED TO BE ADDRESSED IN SETTING UP A NEW HOTEL OF INTERNATIONAL FIVE-STAR QUALITY?
Service is the most important aspect when it comes to handling a hotel. A hotel’s main objective is to provide the best service and tend to all of the guests’ needs and requirements. If there is no service then there would be no business. When running a business, the costumer is always placed first. Poor services can results in a complaint from a guest. But that complaint can be used to better the business in the future.