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Impact of Outsourced Staff on Service Quality Standards in the Hotel Industry

Discuss about the Impact of Outsourcing Staff for Hospitality Management.

This research is based on the topic, "How outsourced staff impacts the service standard/quality in the hotel industry". Nayak et al., (2016) stated that outsourcing is the symbol of growth and development in the contemporary times. It is an essential part of the corporate strategies of any kind of any kind of organizational activities in the hospitality industry. Modern days’ hotel managed has considered outsourcing of staff as a significant part of their functioning. This chapter will look into the researches done in hospitality management with by highlighting on the impact of outsourcing.

According to Hussain (2016), different luxury hotels such as Marriot and Hyatt have adopted the facilities of outsourcing. This system is important for attracting tourists on a wide range. The authors have defined outsourcing as an arrangement that has developed in the past years. The system of outsourcing of staff in the hotel industry has helped in annual maintenance of contracts and other such services. This operation can be independently adopted by the hotel industry or along with the chain properties. The advantage of outsourcing is that it affects the quality standards of hotels. It helps in removing the responsibility of offering different job opportunities, which leafs to additional cost for the hotels. Hyatt hotels have started their outsourcing operation in the finance department since 2010. Outsourcing of staff from other places must be a specialist in the similar sector, who has enough knowledge and experience about the hotel industry. It is effective in offering better output quality than the internal staff in terms of efficient service quality. Moreover, if outsourcing is done to another firm then the organization gets the scope to have an upper hand in comparison to the rival companies. Labor erosion is not an area of tension for the hotel managers anymore as they got the solution f outsourcing of staff.

The author, Kc (2017) served the purpose finding out about the quality standards by gathering information from the cleaning companies. A hotel in Finland used external supplier for their housekeeping department which helped in training the in- house staff regarding quality control and cleaning. There lie advantages and disadvantages of outsourcing staff in the hotel industry, which was evaluated in this research. The data was collected by interviewing the respondents of two different cleaning companies and two different hotels. In these places, the hotel managers and the managers of the cleaning companies were interviewed in addition to the supervisors and the members of the cleaning department. In the course of this research, qualitative method was used for collecting data by interviewing the individual sample. It is important to find out that the cleaning companies are reacting to the increase in service demand in the hotel industry. The processes and functions are undergoing major changes as a result, and getting new contracts by gaining reputation. However, recruitment of staff, training them and maintaining the service quality has become a barrier for the cleaning companies.

Outsourcing in the Hotel Industry

There are further researches done on the hotel industry to check the measures available by the service provider for maintaining better quality service. It is a common practice for the hotel industry to get over the issues of time and resources by outsourcing staff. It has a positive impact on the working of the hotel industries. According to Mugassa (2015) the maintenance of service quality standards is dedicated to the service providers while the tasks are being outsourced. They also find difficulty in surpassing the customer expectation with the intention of maintaining consumer satisfaction. This particular research was conducted by focusing on the outsourcing services between B2B firms. The outsourcing in the cleaning business industry was supported and countered with different arguments. With the increasing commonality of cleaning business to save time and money, the hotels wanted to shift their time and money on other valuable projects. It can be stated that outsourcing is beneficial on one hand, whereas on the other, challenging and dangerous for the service providers. The risk is posed in terms of not having total control over the actions, as the business is outsourced. Agreement plays an important part for smooth handling of the operations by the service providers. The key factors, which were identified in the maintenance of quality standards in the hotel industry, include SLA or Service Level Agreement and KPI or Key Performance Indicators. These significant factors in the outsourcing of staff in the hotel industry were helpful in understanding the impact.      

As per Zoghbi-Manrique-de-Lara, Ting-Ding & Guerra-Báez (2017), outsourcing of staff is a fatal issue in the contemporary economy of hotel industry. In the research study, the researcher has clearly investigated the topic to gather theoretical knowledge about the functions of this particular business to understand its significance, impacts and the opportunities that can be availed. The hotels nowadays, are adopting the system of outsourcing in order to provide variety of the services to the customers and employees. They have started this practice for better efficiency and improving their service quality. The tasks of the industry are easily sorted with the adoption of outsourcing practice. Moreover, outsourcing of staff helps the hotel industry to gain competitive advantage by winning over the rival hotels in the market. It is attainable as the cost and time is controlled with this practice. This research has helped the decision makers and the planners to get an idea about different elements of outsourcing such as improvement in performance, reduction in cost, specialization, flexibility and the availability of innovation in the hotel business. Most of the hotels feel the burden of adopting the practice of outsourcing as it leads them at the edge of competition. As the hotel, industry is booming nowadays, therefore, most of the luxurious and international hotels are taking help of outsourced staff as a significant business strategy. The following section will look into the interview conducted with a restaurant manager to find out his perception about outsourcing business.  

Benefits and Drawbacks of Outsourcing Staff in the Hotel Industry

From the literature review and interview of the restaurant manager, different theories and concepts came to the forefront. For instance, as per the research carried out by Casey & Rosskam (2018), it was found out that the first few questions were related to the demography of the respondents such as age, gender, educational qualification and designation. Given below is a chart to make a clear picture of the demographics.

Demographics of respondents

Fig: Demographics of respondents

Source: Espino-Rodríguez & Lai, (2014)

From this figure, it can be analyzed that out of a total sample size of 61, the respondents were selected in the age group of 20- 30 years, 31- 40 years and 41- 50 years. According to the gender, 65% were male and 34% were females. The respondents of the survey included managerial and departmental heads from different luxurious hotels. The sample consisted of individuals who have done graduation, diploma and post- graduation. Given below is the table of outsourced activities along with their frequency and percentage.

Outsourcing is not only limited to certain departments but also has spread in the entire hotel industry. As per the interview of the restaurant manager, they have adopted the practice of outsourcing due to the lack of staffs in the hotel and the busy season calls for fast and quick service. He has totally supported the practice of outsourcing as it was found out in the previous section of literature review. Most of the previous researches conducted among the hotels has analyzed that outsourcing of staff is an important part for cutting cost and overcoming time constraints. The restaurant manager stated in the interview that they did not want to waste money on training and recruiting many novice staff. Therefore, they followed the practice of outsourcing staffs who were already expert in their field.

Kruesi, Kim & Hemmington (2017) found out the trends are changing in the task of outsourced housekeeping. It was defined as a process of purchasing goods and services from external suppliers. Throughout the interview and literature review, it was analyzed that cost cutting was the most important factor in the outsourcing business of the hotel industry. The positive impact was felt in terms of cost by outsourcing staff from other companies. The benefit was faced in terms of gaining competitive advantage in comparison to the rival hotels in the market. The companies have hurriedly started restructuring their business by outsourcing their activities to enhance their business.

Factors Involved in Maintaining Service Quality Standards in the Hotel Industry

According to Ferrary (2015), the research conducted between the B2B firms was intended to focus on the popularity of the recent trend of outsourcing in the hotel industry. The key factors were identified which boosted the service quality standards in the hotel industry such as management of facility, measurement of performance, service quality, significant performance indicators and the gap model as a framework of the research. The information that was gathered from the interview evaluated helped the researcher to draw probable conclusion about the research topic. The service level section was found out to be prime responsibility of the parties who were involved in maintaining the quality standards of the hotels. It is explained that the service facilities, which are provided to the customers should be agreed by all the parties involved in the process of outsourcing. Security was found out to be another important factor in terms of service quality, which dealt with the security of the customers through variety of measures (Espino-Rodríguez & Ramírez-Fierro, 2018). Performance was measured as a significant factor with respect to the maintenance of quality standards in the hotel industry. The key factors, which were identified, formed the basis for hotel management to supervise the performance level. It further helped in reporting several incidents to find out the problems and seek for their remedies.

It was found out from the interview of the restaurant manager that they rely on the outsourced staff only after finding out that the internal staffs will not be available for the specific activities on a particular time. They do not depend entirely on the outsourced staff as it takes up more cost of the company to pay them higher salary. In terms of service quality, the manager replied that the outsourced staffs are unable to work smoothly and wait for the supervisors’ advice, unlike the internal staff members. The reason that he explained behind this was the acquaintance of the internal staff members with the SOP of the hotel rather than the outsourced ones. From the literature review, it was found out that service quality was dependent on a number of factors, which are given below.

 Six service quality criteria

Fig: Six service quality criteria

Source: Armstrong & Matters, (2017)

From the given figure, it can be stated that each of the criteria plays an important part in considering the service quality as good or bad. Roper (2017) mentioned that service quality depends more on performance level of the service providers rather than the perception of the managers. It is evident that good service quality cannot be achieved if service performance is not up to the mark. Thus, performance measurement becomes an important part for the service providers to improve their performance and maintain consistency on the offering of quality service to the customers. It was analyzed from the literature review that performance measurement is an important tool for the hotel industry to make sure that the activities carried out in the company are going in the right direction. As it is a continuous and consistent process, therefore it acts as a controlling factor in the measurement of performance. It helped in gaining knowledge regarding the efficiency of the operational activities carried out in the hotel industry as per the set performance criteria. The manger of the restaurant also pointed out that the outsourced staffs are mainly assigned with the tasks of setting up the table and serving food to the customers. This is helpful for the hotels to gain competitive advantage in terms of upgrading service quality by taking better care of the guests. He also added that the biggest hurdle that they face is in terms of cost saving of the staff members. They often find it difficult to balance between both the factors by keeping up to the service quality and reduce cost at the same time. The main purpose of the business managers is to maintain service quality along with cost saving, as it was found out in the literature review.

Interview with a Restaurant Manager

As per Aasland & Tyldum (2016), outsourcing is the responsibility of one company to tie up with another company for the betterment of their service quality. It was found out from the previous researches that the tasks, which are outsourced to other companies, could be conducted within the company itself but finance and lack of staffs becomes a barrier. However, outsourcing has become an integral part in the contemporary hotel industry for improving service quality and increasing the net revenue along with cost- cutting. The study has found out that the services which are outsourced mainly includes laundry, cleaning, purchasing, catering, security, leisure and other similar activities. The manager of the restaurant agreed to this and mentioned that the reason behind outsourcing the activities to external staffs is due to the three factors of supplier expertise, brand image and enhancing internal efficiency. The outcome of the research has highlighted that the outsourcing of activities by the hotel industry I different parts of the world can be the primary reason behind for the uneconomical and inconvenience conduct of the activities (Espino-Rodríguez & Ramírez-Fierro, 2017).  In the course of this research the advantages and disadvantages of outsourcing was found out, which are given below:

Advantages

  • Fast and expert service
  • Boosting the internal staff
  • Focusing on the important activities rather than the side business
  • Maintaining consistency and continuity
  • Risk management
  • Sharing of risk between partners
  • Reduction in costs
  • Flexibility in working hours and timing
  • Efficiency control
  • Control on operational activities
  • Reduction in overhead cost

Disadvantages

  • Layoff among the staffs
  • Arranging the deliverables in a sequential manner
  • Underlying costs
  • Negative reputation and ill- will
  • Problem with maintaining proper quality
  • Security and confidentiality might be at stake
  • Lack of customer focus (Aasland & Tyldum, 2016)

The study and research on the outsourcing activities among the hotels in Tanzania has highlighted the financial approaches which is given below in a tabular form

a summary of the benefits

Fig: a summary of the benefits

Source: Nadda, Rafiq & Tyagi, (2017)

Hence, it can be concluded from the manager’s interview and the literature review that outsourcing is an important part in the hotel industry and it has benefitted them in terms of improving quality and reducing cost. The outsourced staffs do not need to be trained, as they are already expert in their own field. There are also challenges faced in this process of outsourcing activities, which are detailed in the course of this paper.

References

Aasland, A., & Tyldum, G. (2016). Opportunities and risks among the migrant workers in the hotel industry in Oslo.

Armstrong, R., & Matters, R. T. (2017). Modern slavery: risks for the UK hospitality industry. Progress in Responsible Tourism, 67.

Casey, M., & Rosskam, E. (2018). Organizing and collaborating to reduce hotel workers’ injuries. Unhealthy Work: Causes, Consequences, Cures.

Espino-Rodríguez, T. F., & Lai, P. C. (2014). Activity outsourcing and competitive strategy in the hotel industry. The moderator role of asset specificity. International Journal of Hospitality Management, 42, 9-19.

Espino-Rodríguez, T. F., & Ramírez-Fierro, J. C. (2017). Managers' attitudes toward hotel outsourcing in a tourist destination. An approach from the benefits and risks perspective. Tourism Management Perspectives.

Espino-Rodríguez, T. F., & Ramírez-Fierro, J. C. (2018). The Relationship Between Strategic Orientation Dimensions and Hotel Outsourcing and Its Impact on Organizational Performance. An Application in a Tourism Destination. Sustainability, 10(6), 1769.

Ferrary, M. (2015). Investing in transferable strategic human capital through alliances in the luxury hotel industry. Journal of Knowledge Management, 19(5), 1007-1028.

Hussain, S. (2016). Outsourcing Housekeeping: An insight into two cleaning companies, SOL and N-Clean, in Helsinki, Finland.

Kc, S. (2017). Quality assurance on outsourced operation: a case of cleaning service company.

Kruesi, M., Kim, P. B., & Hemmington, N. (2017). Evaluating foreign market entry mode theories from a hotel industry perspective. International Journal of Hospitality Management, 62, 88-100.

Mugassa, P. M. (2015). An analysis of outsourcing hotel services in Tanzania. TEAM Journal of Hospitality and Tourism, 12(1), 51-66.

Nadda, V., Rafiq, Z., & Tyagi, P. (2017). Effectiveness and Challenges of Recruitment process outsourcing (RPO) in the Indian Hotel Sector.

Nayak, N. P., Pai, A., Prabhu, N., & Khurana, A. (2016). Manager’s Perspective on Hotel Outsourcing Services.

Roper, A. (2017). Vertical disintegration in the corporate hotel industry. Current Issues in Tourism, 20(1), 1-6.

Roper, A. (2018). Ring the changes: the industrial evolution of the corporate hotel industry. New Vistas, 3(2), 34-39.

Zoghbi-Manrique-de-Lara, P., Ting-Ding, J. M., & Guerra-Báez, R. (2017). Indispensable, expendable, or irrelevant? Effects of job insecurity on the employee reactions to perceived outsourcing in the hotel industry. Cornell Hospitality Quarterly, 58(1), 69-80.

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