Outsourcing and Service Standard in Hotel Industry: A Review

This paper investigates the impact of outsourcing on service standards within the hotel industry. It explores the theoretical underpinnings of outsourcing, including transaction cost economics, multi-skilling and training, human resource theory, organizational performance theory, and core competency theory. It also examines service quality theories such as SERVQUAL, assimilation theory, contrast theory, and negativity theory. The paper analyzes the relationship between outsourcing and service quality, highlighting the challenges and benefits of outsourcing in the hotel sector, particularly concerning customer satisfaction, cost-effectiveness, and the integration of technology and human resources. The review emphasizes the importance of training and ethical considerations for outsourced staff to maintain and enhance service standards in a competitive global market.

Running head: OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
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1OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
Executive Summary
The paper has shed light on the outsourcing process and its impact on the hotel to evolve the
service standard. Service standard is a limitation that hotel industry tries to maintain their
sustainable condition in the market. An eloquent approach was used to investigate and appraise
the influence of outsourcing in the hotel business. Theories of outsourcing and the inter-relation
with the theories of service standard are also important in that case. All facts and figures also
signify the importance of outsourcing in worldwide and most of the works are done by them.
The paper also states that outsourcing is not a core function of business rather it is a process to
highlight the technological and physical aspect that needed for customers. Hotel authority has to
take care of that and understand the important impact of this process in the globalized business
market.

2OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
Table of Contents
1.0 Introduction................................................................................................................................3
1.1 Identification of Problem.......................................................................................................4
2.0 Literature Review......................................................................................................................4
2.1 Critical Understanding of Outsourced staffs and its theories................................................4
2.2 Critical Understanding of Service standard quality and its theories......................................6
2.3 Relationship between the theories and their interconnected relationship..............................8
2.4 Relationship between both the variables and application in hotel environment..................10
3.0 Conclusion...............................................................................................................................12
References......................................................................................................................................14
Appendices....................................................................................................................................18

3OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
Literature Review on the Impact of Outsourcing staffs in service quality in hotel
1.0 Introduction
Outsourcing is one of the significant facets of modern hotel management process. The
term was introduced in the mid-80s and till then business is very much relying on that facts.
During the 1900s, the outsourcing is concentrating on labor-intensive production tasks. All the
business activities and labor engagement in different sectors in business have started from that
time. Hotels are the prime allocation of outsourcing employees’ and that is the reason, hotels are
outsourced most of the employees’ from different sections and they are not at all the permanent
members of the hotel (Sani, Dezdar & Ainin, 2013). The private outsource is considerably risky
enough as the people are not fully aware of the company’s aims and objectives, so there is a high
chance of violation of service quality or behavior with the customers and their managing any
complex situation. This is a direct application that involves human outsourced case and
sometimes proper training is not given so they are not liable for any of the diverse situation.
In this paper, the entire concern factors are the service standard of hotel and their impact
on outsourcing. The paper also provides some theories that support all the possible impacts
created by outsourcing cases.
This is an important aspect in the modern business arena, as all business companies’ use
outsourced staffs for their business development and enhancement, but in this process, they face
some challenges as well (Cai & Fan, 2017). This is the major theoretical framework provided in
this paper so that outsourcing will be proper and legitimate in all the cases and that has made an
additional dimension in business development.

4OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
In this business method section, variables are segmented and outsourcing is considered as
independent variable and service quality is considered as a dependent variable. All the related
theories are discussed in this paper. The paper also takes a concerned look at the relationship
between these two variables and application of these relationships in the hotel industry.
1.1 Identification of Problem
The major identified problem is the adaptation of outsourcing for hotel and improves the
performance by efficient service standard. The major argument is based on that factor only and
some of the socio-economic relations of reducing cost and the relation of employment rate are
also identified in this paper.
2.0 Literature Review
2.1 Critical Understanding of Outsourced staffs and its theories
The concept of outsourcing is the non-core business function that enables the opportunity
for business to extend their market by engaging more people in their organization. There are
many departments in the hotel and all these sections have different kinds of works so they have
to train those outsource employees’ so that they deliver their best on the floor and manage
customer handling process in an effective way. The efficiency of technology and use of
manpower in an effective way also address the importance of outsourcing in business. In case of
front office department, allocation of rooms, accommodation facilities most of the hotels are
using this outsourcing facility. As stated by Agyemang-Duah et al., (2014), this process helps in
cost-effectiveness as the hotel management need not involve an employee if any origination does
this responsibility for this particular work. The major problem is the performing the task well and
performs in an ethical way that suits hotel’s culture. In case of understanding the outsourcing,

5OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
theories of outsourcing are important and these activities manage the relationship between
customers and hotels. Their service quality, communication, technological understanding, easy
way to treat customer’ and improved facilities for customers’ are the concern factors for hotels
and if outsourced employees’ are capable enough to formulate the process then hotel industry
will enhance the country’s development.
The transaction Cost Economic theory is the first aspect that related to transactional
economics and organization decides whether they need this outsourcing or not. The reason
behind the theory is the cost maintenance in the organization. In that case, employees’ cost
curtails a bit and these amounts of money invested in another sector. As mentioned by Duah et
al., (2014), outsourcing in the hotel industry is a departmental strategy to involve more people in
this industry. If highly skilled persons are involved in the process, the customers’ retention
process will be smoother and easier for the hotel; this is another reason behind this theory. Cost
diverse management and discrete between professional levels is the key understanding that hotel
management has done with the employees’ outsourced by them (See appendix 3).
Multi-skilling and training and development theory is another theory that related to
the outsourced employees’. The case of multi-skilling is quite clear in above discussion as the
people are from a different background so they have the diverse skill, in that case, the adopting
them as an employee is significant for the improvement of the organization (Elnaga & Imran,
2013). On the other hand, the speculated work is not achievable for the same persons as they
don’t have knowledge and understanding of the work culture. The basic knowledge and
organization ethics need to train so that they feel accustomed to the company.

6OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
Human Resource theory and Organizational performance theory are two major
theories impacted on those performances of outsourced staffs. As asserted by Lu et al., (2015),
the prime role of HRM system is to make a possible selection and recruit better employees’ to
enhance the market position of the company. New employees need to take training to build up
their knowledge over the subject. On the other hand, if they take experience people as outsourced
employees then training cost and production rate are not hampered. The company focuses on the
production and the production came from those outsourced employees’ and that is the key job
role of HRM to select them in an efficient way and involve the development of the company.
Core Competency theory is based on the evolution of resources and productive skills of
organization. It is defined as combining productive skills of different methods and technologies
that maintain the relationship between management and customers. As mentioned by Leeman &
Reynolds, (2012), the theory is very much relevant in modern perspective as both the phases
improve business operation may get a threat due to improper IT services. On that other hand,
system integration of IT needs to be transplanted in an effective way so that improve in
technological aspect will be noticed (See appendix 4).
2.2 Critical Understanding of Service standard quality and its theories
The core idea of total quality management is the basic criteria of customers and provides
a total control that influences numerous academics and practitioners to control the situation for
customers. In a hospitality industry, customer satisfaction and maintain the ethics of the hotel is
the most important thing to sustain their business. According to Sukru et al., (2014), customer
retention is depending on that prospect and it requires empowered employees to formulate the
action. Inspiring leadership and commitment to serve customers in an effective way is the main

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concern for a hotel. In that case, theories are also important to understand the situation and state
the productive approach for the relevant service standard quality in outsourcing.
Servqual theory is a multi-item scale development that evaluates the service quality in
business and understands customers’ priority and perception to using any kind of service related
case. There are five constructs in this theory and all these phases have stated the level of
satisfaction and provide a cognitive approach in customer satisfaction case. As mentioned by
Johansson & Carlson, (2015), tangibles are considered as the first step where staff appearances
and their attitudes towards the customers is the concern reason. The next step is the reliability
and the phase service dependability and accuracy has been judged. The next stage is
responsiveness and it signifies the willingness to help or respond to the customers urge as their
retention and priorities them in the hotel is the concern factor for the organization. Assurance
phase influences the confidence that employees’ should own with them so that they can take
challenges and have faith to do this task in an efficient way. Trust and confidence is the concern
factor of this phase and that reflected through the outcomes. Empathy is the individualized
service that provides right direction to formulate the process and through this model satisfaction
level and importance can be understood (See appendix 5).
Assimilation theory is a post usage evaluation of satisfaction. Customers avoid adjusting
to any situation and they expect a quality accommodation, technology, and other amenities from
the hotel. The level of satisfaction has got thereat when any of the desired understanding is not
meeting customer satisfaction line. As highlighted by Jaehrling & Méhaut, (2012), service
performance is depending on the employees and their training and development process but in
case of outsourcing, most of the people are new and inexperienced in that particular field so their

8OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
inefficiency may spoil the satisfaction level. Through this theory, a controlled performance and
better customer experience can evaluate.
Contrast theory is another diverse opinion that comes from the evaluated sections and
magnifying two different attitudes of customers and employees. The surprise effect also gets
from this theory and that somehow connected with the performances and diverse opinion. In
most of the cases, customers’ experience is not so effective and that showcase in their attitudes,
in those case employees, need to settle them for any adverse situation and prepare them for any
undeserved challenges (De Vita & Tekaya, 2015). If they tackle the situation swiftly, then
customers’ will come back just because of their patience and attitudes towards them. The main
attraction of contract theory is lying here (See appendix 6).
Negativity theory is another suggested theory that determines any kind of performance
discrepancy and produces negative energy that will disrupt any individual. The theory is a
foundation of disconfirmation process and response negatively about the perceived performances
(Espino-Rodríguez & Lai, 2014). Less performance is expected in that scenario and according to
this satisfaction level customers’ decide that whether they continue their relationship with the
hotel or not.
2.3 Relationship between the theories and their interconnected relationship
Luxury hotels outsource different auxiliary services in order to upscale their range of
services for their customers. High labor intensity, volatile demand graph, complex services and
the establishment of services is the main aspect of outsourcing. Hotels need to implement that
factor for prioritizing their service standard and quality (Aubert et al., 2012). Managing all the
sections of the hotel is not an easy job so the management has to put different people in different

9OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
sectors. However, if a group of people forms another company can help that particular sector and
make an easy run for hotel management then other core activities can be done by the
management.
In case of transaction cost effective theory, the cost of an employee can be saved if the
outsourcing is implemented in a proper way. Another company can do the same job for the
parental company and due to that reason the management is quite relaxed and operates the thing
in assimilation theory of customer satisfaction. As mentioned by Thrassou, Vrontis & Bresciani,
(2014), service standard improvement depends on lots of factors like improvement of customer
care facility, online and offline accommodation process in the hotel, rooms’ specification, on-
demand foods and drinks, money transfer process and use of mobile wallet. All these processes
are under the Servqual theory of customer satisfaction as the particular thing is leveling up the
rise of business standard. In many cases controlling over the outsourced employees are not in
hand of the hotel authority as they have been appointed from different sources (Brewer, Wallin
& Ashenbaum, 2014). This is a problematic situation risen up as the status and objectivity of the
hotel may get a threat due to that reason. Negativity theory is imposed over the hotel and this a
forced work as the management is not directly liable for this behavior, but as their associated
business employees are doing the same, customers have a negative relationship with the hotel
(Chu & Wang, 2012).
From the core competency, this is quite clear that outsourcing is an application that uses
by most of the hotels for their sustainable condition in the market. To maintain the business
expand situation this is quite important to stretch the bar. However, the problem is lying on the
contrast theory and its application over customers. According to Tjader et al., (2014), in case of
core competency, the level of competition is high as the management has to think about the

10OUTSOURCING AND SERVICE STANDARD IN HOTEL INDUSTRY
services and then deliver the suitable way to their customers. Sometimes services are delivered
through the outsourced employees’. The contrast obligation has come in that mode (Handley &
Benton Jr, 2012). There are some situations where their behavior is not so soothing for customers
and they will not use the hotel service that may be the reason of contrast and concern for the
management.
2.4 Relationship between both the variables and application in hotel environment
There is a distinct relationship between both these variables and they are basically inert-
related with each other. In case of the hotel environment, their enhancement in business and
serve all kind of people is an important thing to be considered. For the extended nature, business
allocation needs to be segmented and that is the prime reason behind labor outsourcing. As
mentioned by Gerbl et al., (2015), these outsource labors are not understood the mannerism
followed by the hotel’s existing employees’ or the kind of comfort or service that delivers to the
customer are not known to them. So, there is a chance of mishap. To avoid these sorts of
situation, the major perspective that hotel delivers to these outsourced employees’ is trailing of 7
to 15 days (Bogicevic et al., 2013). Those employees’ need to be understood the entire scenario
at this time. Sometimes there are rush situations and in that situation, training is not provided to
those employees (Sharma, 2012). These are the high time of problem situation. The relationship
also underlines the fact that hotels improvement and commitment to their customers to serve the
best quality and make a market position for the hotel (See appendix 1).
The relationship also takes a perfect overview of risks related to outsourcing and healing
manner of those risks. Risk will always be there and those risks are just because of those
employees’ behavior and understanding and how they take challenges and mitigate them (Zhao
et al., 2012). Customer satisfaction and focus on the recommended activities is the concern

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matter for hotels. Some of the sectors need to be allocated for outsourcing only like room
booking, advance payment facility, extended customer service facility and complaint sectors
(Milton & Johnson, 2012). In those sectors, manpower is a concerning issue, in such cases hotel
cannot afford the amount of employee for this operation. So in those sectors hotel management
take help from other companies.
Contrast in manpower and develop their understanding to raise the productivity is the
prime concern of hotel. They have external competition as well, so the staffs are needed to be
capable enough to manage the situation and the same thing is expected from the customers as
well (Chen et al., 2012). The flexibility of hotel working condition and 24*7 service facilities can
only provide through the outsourcing. So this is not a wastage of money rather involvement of
some specified people and market specification has been studied by those outsourced staffs. As
stated by Xiang et al., (2015), The process is a cost saving too as they hotel organization has not
spared a single penny for room allocation staffs, online cash maintaining, audit staff and
customer care executives. As the associate company has taken this responsibility, they do these
tasks single-handedly and expect a minimum amount of money from the hotel. The management
is happy quite enough as lots of tasks pressure mitigate due to them. Occupation and
employment chances also increase due to that reason of outsourcing. Many people get their job
through this process having a different education quality (Saccani, Visintin & Rapaccini, 2014).
So an assimilation of diverse culture and education is there and all maintain the line of decency
for customers. As the management is the only answerable section if any mishap situation comes
from the organization, so employees’ need to attain customer’ in a suitable way and deliver
quality service to them.