Analyzing Outsourcing Strategy for Sydney Novatel's Operations

This report examines the outsourcing strategy of Sydney Novatel, focusing on the recent decision to outsource cleaning services. It explores the advantages, such as cost reduction and access to expert knowledge, and the disadvantages, including potential lack of control and employee resistance. The report utilizes several articles to critically evaluate the effectiveness of outsourcing. It also provides recommended steps for a sustainable implementation, including assessing the necessity of outsourcing, evaluating potential vendors, and addressing employee concerns. The conclusion suggests that outsourcing cleaning services is a viable option for Sydney Novatel, provided that the strategy is implemented carefully, considering both the benefits and potential drawbacks. The report emphasizes the importance of a sustainable approach to ensure the long-term success of the outsourcing initiative.

Running head: STRATEGY OF OUTSOURCING
Strategy of outsourcing
Name of the student
Name of the university
Author note

1STRATEGY OF OUTSOURCING
Executive summary
The aim of this report is to discuss about the advantages and disadvantages of initiating
outsourcing in the business operation of Sydney Novatel. The report is being discussed on the
recent report of outsourcing of the cleaning service by Sydney Novatel. Various articles are
being used in order to critically discuss the effectiveness of the outsourcing strategy. In addition,
this report also discussed a few recommended steps, which will help in having sustainable
implementation of the outsourcing process in place.

2STRATEGY OF OUTSOURCING
Table of Contents
Introduction......................................................................................................................................3
Advantages of outsourcing..............................................................................................................3
Disadvantages of outsourcing..........................................................................................................5
Recommended steps........................................................................................................................6
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................9
Appendix........................................................................................................................................10

3STRATEGY OF OUTSOURCING
Introduction
In the current business scenario, cost cutting is being given the major concentration by
the business organization. This is due to the reason that gaining the cost leadership is important
in order to gain competitive advantages in the market. There are various strategies being initiated
by the business organizations including the outsourcing strategy. The key advantages that can be
gained by the business organizations are the access to the expert knowledge and less cost and
responsibilities (Dolgui and Proth 2013). This is leading to the increase in the popularity of the
concept of the strategy of outsourcing among the contemporary business organizations.
However, initiation of the outsourcing is also having several negative impacts for the business
organizations.
In the recent time, Sydney Novatel initiated to outsource their cleaning service following
the recommendations given by the accountants. Currently, they are having their own employees
in the cleaning services. Thus, it is important for them to determine the advantages and
disadvantages of the initiation of the outsourcing and design their outsourcing process
effectively.
This repot will discuss about the merits and demerits of outsourcing to be faced by
Sydney Novatel. It will also be discussed that what will be the correct options for them in
relation to the outsourcing. Six articles will be used from the annotated bibliography in order to
critically evaluate the factors of outsourcing.
Advantages of outsourcing
 One of the key advantages to be gained by Sydney Novatel from the initiation of the
concept of outsourcing is the less involvement of cost in the process. This is due to the

4STRATEGY OF OUTSOURCING
reason that, currently the involvement of the own employees are having more cost
incurred by Sydney Novatel. Moreover, having the own employees also involves
providing all the employee welfare benefits to them. This will involve added cost for the
organization. Thus, initiation of the outsourcing strategy will help in delegating the
cleaning job to the third party vendors, which will involve less cost. Organization should
have to take the responsibility of any added facilities for the employees (Giustiniano and
Clarioni 2013). Thus, the initiative of cost cutting will get succeeded.
 Another advantage that can be gained by the initiation of the outsourcing strategy is the
access to the expert knowledge. Though it is discussed that the cleaning service of the
Sydney Novatel will be outsourced, which is not the core service offering of them, but it
is also to be noted that cleaning service determines their service quality among the
customers. Thus, it should be done perfectly and with having the experts in place. In this
case also, initiation of the outsourcing strategy will be helpful due to the reason that this
will enable Sydney Novatel to appoint the expert firm in cleaning service. Thus, the
service quality will get enhanced along with the level of customer satisfaction.
 According to some theories, the flexibility of the business operation will also get
increased with the initiation of the outsourcing strategy. This is due to the reason that
outsourcing will delegate the key responsibilities to the third party vendor and Sydney
Novatel will only deal with the outsourced agent directly with the service (Hamed
MoosaviRad Kara and Ibbotson 2014). The communication will be more effective and
efficient due to the reason that they should not have to deal with the individual employees
in the cleaning service.

5STRATEGY OF OUTSOURCING
 The savings in time from managing the cleaning services can be used by them in their
core activities of service offerings. Thus, it will help them to provide more updated
service to the customers, which will in turn generate the satisfaction of the customers and
will help in gaining competitive advantages in the market.
Disadvantages of outsourcing
 One of the key disadvantages to be faced by Sydney Novatel from the initiation of the
outsourcing is the lack of control in marinating the employees in the cleaning services.
This is due to the reason that in the case of the outsourced cleaning service, Novatel will
have less control on the management of them. Therefore, in case of any issues, it will not
possible for them to overcome those effectively and urgently. This may dent the customer
satisfaction in the long run.
 Another issue that can be faced by them from the initiation of the outsourcing strategy is
the over dependence on the third party vendor for the service offerings. For the hotel
industries, cleaning service is one of the key elements and can be treated as one of the
core activities of them. Thus, having the third party vendor in the core activities will
reduce their upper hand in providing service to their customers (Martinez‐Noya Garcia‐
Canal and Guillen 2013). The outsourced firm will have the upper hand in providing the
service and Sydney Novatel will have less bargaining power in the process. Their service
quality will get determined by other external firms.
 Another disadvantage that will be faced by Sydney Novatel from the initiation of the
outsourcing strategy is the resistance from the side of the employees. Though this issue is
internal in nature for them but it will have long term and serious implication for them.
This is due to the reason that currently the employees working in the cleaning service will

6STRATEGY OF OUTSOURCING
resist to make way for the outsourced firm. In addition, it will also create fear among the
other employees of Sydney Novatel. They will also be in fear of loss of job and this will
reduce their effectiveness and performance in the organization. Thus, initiation of the
outsourcing strategy in one department will have negative implications on the entire
workforce of them.
 Having some sort of mismatch and miscommunication between Sydney Novatel and the
outsourced firm will cause huge negative impact on the service delivery. This is due to
the reason that in the business operation, there may have issues with the outsource firm
and may cause negative relationship with them. This will reduce the effectiveness of the
service quality to a great extent and will cause irregularities in the entire system.
Recommended steps
The previous sections have discussed about both the negative and positive impacts of
outsourcing for Sydney Novatel. However, the benefits of outsourcing cannot be avoided and
thus it should be implemented in more sustainable form, which will be acceptable to all the
associated stakeholders. The following sections will discuss about some of the recommended
steps to be followed.
 It is recommended that Sydney Novatel should first determine the requirement of
outsourcing the cleaning services. They should first identify whether outsourcing the
cleaning activities will have any positive impact on the entire business operation or not
(Caruth et al 2013). If it is identified that initiation of the outsourcing will be less or
negligible impact, then it should not get implemented in the process.

7STRATEGY OF OUTSOURCING
 It is also recommended that prior to the outsourcing the cleaning activities, the
outsourced firm should be checked in order to gain the insights about their effectiveness.
This is important for Sydney Novatel that the core values and objectives of them and the
outsourced firm should get matched in order to prevent any issues in the future (Sardar
Lee and Memon 2016). The service quality of the outsourced firm should be checked
before assigning them the job.
 The current employees in the cleaning service should be relocated to other department
and all the employees should be clearly communicated that their jobs will not be
outsourced. This will reduce the fear among them. In addition, it is also being
recommended that the core activities of Sydney Novatel should not get outsourced due to
the reason that it will reduce their effectiveness in the market and their entire business
operation will be dependent on the third party vendors.
 It is also being recommended that the outsourcing contract should be made yearly rather
than contracting for the longer period. This will help in continuing or forfeiting the
contract at any point of time depending on the quality of the service. Thus, Sydney
Novatel will have some extent of control with them in dealing with the third party
vendors.
Conclusion
Thus, from the above discussion, it can be concluded that outsourcing the cleaning
services is a good idea for Sydney Novatel. This will help them to delegate the added services
and concentrating more on the core services. Moreover, outsourcing the smaller activities such as
cleaning services will help them to determine the effectiveness of the strategy. However, it
should be considered by Sydney Novatel that there will be various negative factors to be faced

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from the initiation of the outsourcing. In accordance to those, there are some recommended steps
are being discussed in this report. These recommended steps will help them in having an
effective implementation process of the outsourcing strategy in the organization. Moreover,
effective implementation will also help them to prevent the resistance from the side of the
employees. Thus, the decision of outsourcing the cleaning service is correct and it will be
beneficial for the organization. From the discussion in this report, it is recommended that they
should go ahead with the plan and should implement it sustainably.

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Reference
Caruth, D.L., Haden, S.S.P. and Caruth, G.D., 2013. Critical factors in human resource
outsourcing. Journal of Management Research, 13(3), p.1.
Dolgui, A. and Proth, J.M., 2013. Outsourcing: definitions and analysis. International Journal of
Production Research, 51(23-24), pp.6769-6777.
Giustiniano, L. and Clarioni, G., 2013. The impact of outsourcing on business performance: An
empirical analysis. Journal of Modern Accounting and Auditing, 9(2), p.153.
Hamed MoosaviRad, S., Kara, S. and Ibbotson, S., 2014. Impact of international outsourcing on
the value adding of industries. The International Journal of Logistics Management, 25(3),
pp.463-486.
Martinez‐Noya, A., Garcia‐Canal, E. and Guillen, M.F., 2013. R&D outsourcing and the
effectiveness of intangible investments: Is proprietary core knowledge walking out of the
door?. Journal of Management Studies, 50(1), pp.67-91.
Sardar, S., Lee, Y.H. and Memon, M.S., 2016. A sustainable outsourcing strategy regarding cost,
capacity flexibility, and risk in a textile supply chain. Sustainability, 8(3), p.234.

10STRATEGY OF OUTSOURCING
Appendix
Annotated bibliography
Sardar, S., Lee, Y.H. and Memon, M.S., 2016. A sustainable outsourcing strategy regarding
cost, capacity flexibility, and risk in a textile supply chain. Sustainability, 8(3), p.234.
According to these authors, outsourcing is having multiple advantages for the business
organizations. This article mainly discussed about these benefits in details. Some of the
advantages being discussed in this article are the reduction in cost, more flexibility in the
business operation and less responsibilities of the organizations. This article mainly concentrates
on the importance of the sustainability of the concept of outsourcing. Thus, it can be concluded
that this article will help in not only determining the benefits of the initiation of outsourcing but
also the importance to determine its sustainability. However, one of the key limitations being
identified is the lack of having overall view of the impact of outsourcing in different industries.
This is due to the reason that this article is being concluded on the basis of the research done
only on the textile sector. Thus, the findings of this article cannot get matched with the practical
implications in the global business scenario.
Caruth, D.L., Haden, S.S.P. and Caruth, G.D., 2013. Critical factors in human resource
outsourcing. Journal of Management Research, 13(3), p.1.
This article discussed about the critical factors that should be considered by the business
organizations before opting for the outsourcing of their business activities. It is discussed in this
article that in order to have an effective process of outsourcing, it is important to first determine
the requirement of the organization. Thus, this article will be helpful in analyzing the advantages
and disadvantages of outsourcing due to the reason that, this article is concentrated more on

11STRATEGY OF OUTSOURCING
requirement of the organization for initiating the strategy of outsourcing. Relationship between
the outsourcing firm and the third party vendor should also be effective and positive as discussed
in this article. Thus, in the report writing, this article will help in determining the factors that
should be considered in enhancing the effectiveness of the outsourcing strategy. However, this
article is also having sort of limitations. One of the key limitations being identified is the lack of
primary research. The article is being concluded based on the secondary research. Thus, the
authenticity may be an issue.
Hamed MoosaviRad, S., Kara, S. and Ibbotson, S., 2014. Impact of international
outsourcing on the value adding of industries. The International Journal of Logistics
Management, 25(3), pp.463-486.
This article discussed about the impact of the strategy of outsourcing in the value creation
for the industries. There are various factors such as cost cutting and having the access to the
expert knowledge are being identified as the key value creating aspects of the international
outsourcing. This article also discussed about the determining factors such as the power of the
suppliers in enhancing the effectiveness of the outsourcing strategy for the business
organizations. Theories from this article will be helpful in determining the impacts of the
outsourcing concept in value creating the business organizations. However, this article misses
out on indentifying and discussing on the negative impact of the outsourcing. This is important
due to the reason that in there is various negative impacts also being emerged in the recent time
due to the initiation of the international outsourcing.