1. What is outsourcing?
• The concept of taking internal company
functions and paying an outside firm to
handle them.
• A formal agreement with a third party to
perform a service for an organization.
• A decision to have certain components in
the value chain manufactured out of the
organization on the grounds of economic
or other necessities.
• Wave of the future.
2. Why Outsource?
Guest Satisfaction
Dollars and (Common) Sense
Value
Effective Performance
Matching technology and machine age
with the company operations
Freeing of the company resources for
other activities
4. Some Facts…
• Contract cleaners, on average, are cheaper
than in-house operations on a per-square-
foot basis, with in-house costing $1.60 and
outsource costing $1.22, according to a 2001
IFMA (International Facility Management
Association) report.
• At the present time, the average percentage of
the annual operating budget spent on
outsourcing is 38%; two years ago, for the
same respondents, it was 32%.
5. Is Outsourcing right for you?
It can be decided on the following factors:
• Guest satisfaction
• Standards of operation
• Staff turnover
• Time of operation
6. Why is Outsourcing better ?
Outsourced In-
services House Services
Guaranteed annual cost √
Employee recruiting, hiring,
initial training √
Ongoing employee training √
Guaranteed performance √
Consistent staffing levels √
Supervision provided √
Inventory management √
One vendor, one check √
Proprietary cleaning systems √
Low administrative requirements √
Ongoing inspections √
Access to proprietary R&D facilities √
Problems solved with one call √
7. Sub - departments that can
be outsourced
• Building Projects
• Carpeting and
flooring
• Furniture
• Indoor air quality
• Lighting
• Office Equipment
• Publications
8. Sub - departments that can
be outsourced (contd…)
• Security
• Linen
• Worker Safety
• Trash and Waste management
• Hazardous Waste removal
• Major Redesigns
• Flower Arrangements
10. Reasons for Outsourcing
• Cost Saving
• Need for special skills, services and
tools/ Equipments
• In- house staff reduction (unionized
environments)
• Customer Service
• Legal Issues
• Quality Improvement
• Time Saving
11. Reasons for NOT Outsourcing
Presence of skilled In- house
workforce
12. Important Tips for Contractor
Selection
• Competitive Procurement
• Prior Experience with the Contractor
• Referrals
13. Once the Contractor is on
Board…
• Training the contractor’s employees as per
the hotel standards
• Evaluating the contractor’s performance
– direct oversight by the in-house staff
– regular meetings with the contractor
– staff surveys and/or customer complaint files,
and performance-based measures
• In-house staff hours spent managing
outsourced contracts (per week/ month)
14. Advantages of Outsourcing
• Cost Saving
• Acquirement of special skills, services
and tools/ Equipments
• In- house staff reduction
• Customer Service
• Quality Improvement
• Time Saving
15. Disadvantages of Outsourcing
• De-Motivation of the In- house staff
• High staff turnover
• Improper reception of training by the
outsourced staff
• Discomfort with checks and inspections
by the in- house supervisors
• Lack of responsibility and accountability
• Irregular payment of salaries
• Lack of communication
16. Time spent in various
Department Heads (per month)
Engineering 44 hrs.
Preventive Maintenance 43 hrs.
Design and Architecture 42 hrs.
Lease Management 31 hrs.
Custodial and Housekeeping 29 hrs.
Security 25 hrs.
Utilities Maintenance 23 hrs.
Landscape Maintenance 17 hrs.
Major Moves 13 hrs.
17. Cost Savings from
Outsourcing
Custodial and Housekeeping 52%
Landscape Maintenance 34%
Design and Architecture 27%
Preventive Maintenance 25%
Security 24%
Major Moves 18%
Utilities Maintenance 16%
Engineering 14%
