Outsourcing

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Chapter 1: Introduction

1.1 Introduction

Outsourcing is one of the growth industries of our time (Winterton 2000). Today, the outsourcing of selected organisational activities is an integral part of corporate strategy (Lankford and Parsa 1999). Outsourcing has become a significant facet of modern hotel management (Sieburg 1992). Unfortunately there is shortage of prior research in the hospitality management literature concerning outsourcing or maintaining internally business processes in hotel sector.

This paper seeks to present critical analysis of factors, varieties, aims and results of outsourcing within hotel industry.

The first chapter will begin with stating the problem which is vital in hospitality industry. It will then continue with the presentation of background literature and the purpose of study. Thirdly, rationale will be explained. Subsequently research questions will be raised. Furthermore a definition of terms will identify the key words within the study and how the writer defines them within it. A number of limitations will indicate specific areas in which the research will not be definitive. Finally a summary of the chapter will be provided indicating the main points discussed.

1.2 Statement of the Problem

Historically as the kind of contractual relations and commercial activity outsourcing has appeared in 1962 when the successful businessman Ross Perro, whose firm EDS carried out calculations for banks, renting night time on mainframes, has brought «General Motors» annual economy in 44 % – more than 4 billion dollars (Nureev 2002). Over the last few years, the idea of outsourcing noncore business functions has gained huge popularity (Winterton 2000). Nowadays different types and forms of outsourcing are putting into practice and developing in various businesses.

Tourism in its turn is a rapidly growing phenomenon and has become one of the largest industries in the world. But also hospitality industry is very unique, and very sensitive to every internal and external changes. And such innovation as outsourcing should have affect the industry in general and the development of hotel sector in particular.

As it has been mentioned above, outsourcing within hotel industry has been the subject of minimal literature research. And a question: whether outsourcing will work in hotels and make notable profit still opened for reasoning and conclusions. And if yes or no, how it will be affected by financial crisis which came less than year ago. Just that very case of crisis can cardinally change the relation of business to outsourcing. After all in a crisis situation it is more important not tactical, but the strategic part of the business.

In general, up to now the quantity of questions more than answers. And it is very important to understand, why hotels outsource. And what form for them is most attractive and far-sighted.

1.3 Background Literature

According to Lankford and Parsa (1999), outsourcing is defined as the procurement of products or services from sources that are external to the organisation. This leads to allowing outsiders to take responsibilities for some aspects of financial management (Winterton 2000).

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