Roles and Effects of Outsourcing

Outsourcing means gathering, getting or reinventing new or extra sources of goods and services within the internal organization of a company, hotel, restaurant etc. Outsourcing always seeks provision of sources and services from those experts, specialists, or companies with reputable names, brands and services in order to facilitate continuation and survival of the businesses. According to Fair and Shaw (1997) abstract, outsourcing can be defined as the process of acquiring an item that the company cannot produce internally. It involves subcontracting or substituting an internal service or function with an external service which is provided by experts who are proficient in the provision of that service accordingly. A business would thrive when a company, restaurant, or hotel is able to respond to changes that arise within the central organization.

In another word, outsourcing is a kind of decentralizing business management and operations in order to enhance minimum cost of operation and to maximize profit while bearing in mind the risk involved. Outsourcing not only include getting external sources of goods and services, it also encourage sharing of ideas and this leads to coexistence of various chains of businesses and this facilitate spread of risk among the chain and spreading the cost of operation among the businesses.

Various methods can be incorporated in getting external sources from suppliers, clients who are your competitors .It is notably possible that getting sources from competitive field would aid proper analysis of services that would enhance proper competition among your competitors. It is always recommendable to investigate your competitor’s day to day’s performance. This would assist in coming up with an idea that would make a certain company to adapt to those services that would enable it to sail easily and to venture into competitive restaurant businesses. Outsourcing may involve alienating ones idea in order to perform better than your competitors. In the process you may outdo, eliminate, or sapless your competitors operation and emerge as reputable performer.

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Roles and Effects of Outsourcing

From the different meaning of outsourcing, it can be deduced that there are different types, which may be grouped according to various criteria depending on the degree of decision making among the associated managers, analysis of various outsourcing methods in order to measure their effect, the range of outsourcing and what to incorporate in the process, the degree of integration of services from the sources, the property relationship, the level of administrative control, the chain link and ownership. The main outsourcing types include strategic and tactical operations.

In strategic outsourcing, more detailed operations are incorporated. This involves all managers that are supposed to be there and this process follows a certain rational process of decision taking. In this type of outsourcing, it is possible to outsource various activities that are essential to the company day to day’s operations and maintenance that leads to medium or long-term corporation with the suppliers who are not main competitors. Strategic outsourcing is all inclusive, since it involves achieving improved quality for the goods and services provided. It also involves stiff operation methods that would enhance proper competition, availability of resources, abilities to develop activities or to access capabilities and knowledge to operate efficiently. Strategic operation is broader, and involves more competitive concept of process.

When it comes to tactical outsourcing, it is less detailed as compared to strategic outsourcing. It involves operation whose motive is to lower the cost of operation as opposed to strategic which incorporates stated methods there above.

There are various aspects that are associated with the benefits of outsourcing. Each type of outsourcing process has its role and effects. To start with, the first advantageous role is the availability of wide range of goods and services at your disposal. These services as stated before include, provision of services sought from the qualified specialist, experts, and from firms with reputable brands, names, and that are believed to offer excellent services. By externalizing the service, it is effective since the restaurant is in a position to easily adopt the process of responding to changes that may arise as a result to customer’s demand, changes in market operations, eruption of new rules and regulations as it pertains to running of businesses etc.

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All these would lead to flexibility within the organization. According to Gilley and Rasheed (2000) Outsourcing in this manner would enable a company to offer different services at the same time. For example, hosting sports, entertainment, recreational and providing political arenas etc. In this case the experts are contacted to offer the best quality where possible. This really helps to provide a service that would lead to customer satisfaction.

From the abstract concerning a hotel in shanghai China; the other role of decentralization of services enables the restaurant to reduce the risk of operating at a loss. When tactical system of outsourcing is maintained, there is cost reduction within the central organization. When the cost is reduced, outsourcing would lead to running of businesses efficiently. Importation of services from other sources will enable the management team to select the services and goods that would lead to the company making or running at a profit. There is a chance of a company to call for an improvement where they have failed by outsourcing from external experts.

Being responsive; Outsourcing easies the process of adopting, improving, and eventually advancement of technology. Stiff competition causes innovation of new ideas, hence technology to allow operating in a competitive world. The managers would not relax to see their restaurant or any other business vanishing. They must do something to save the situation this involves upgrading of services, buildings, and operation strategies.

Sometimes integration of outsourcing in our businesses is not always effective. It is astonishing that while outsourcing, importation of non profitable services might ruin the internalization of a company. This happens when the central management organization is done away with and ineffective external management is applied. Lack of proper empirical working formula to analyze the effects of acquiring a certain outsourcing process gives insatiable results e.g. terms of contract. You might outsource a service that might lead to adaptation of foreign unprofitable service e.g. a Chinese cook cannot be incorporated in preparing delicacies for Africans. These would lead to mixture of culture that is not resourceful.

It is advisable, to concentrate on areas where the company can do best and outsource where it

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cannot. Otherwise outsourcing might become solely dependable leading to extinction of internal operation even where the managerial system can do better.

Due to outsourcing, there is sharing of profit together with the affiliate runners. But if there wasn’t such party, the profit would not be shared. Going on, incompetence outsourcing would drag the enterprise behide. This is because you entrust a certain economist but you come to realize later that he cannot perform. This happens in large restaurants and hotels. Outsourcing may also led to wastage of time and resources incase the company does not perform. It is known that some hotels, companies, restaurants etc have experienced success through the process of outsourcing. Supportive services such as maintenance of companies, provision of security, laundry and baking systems that assist in achieving of improved quality and services in a hotel would be more complex. This would threaten the image of a hotel brand and name hence lowering the dignity of a certain hotel or restaurant.


From the discussion about roles and effects of outsourcing, it is important to note that the key to developing an efficient operation strategy boils down to understanding how to create or add value for the customers. This would be achieved by working on and stressing different competitive priorities.

According to the journal by (krajewski and Risman, 2000.Dawis et al., 1999) these competitive advantages are the capabilities that companies must have to obtain in order to enhance competitive advantage and to succeed simultaneously. The motive for outsourcing currently involves embarking on those factors that can lead the benefits of outsourcing which include; efficiency, low cost improved quality, flexibility, being responsive and to pursue different competitive priorities.

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Subcontracting has great potential for strategic operation particularly for non cost- related objectives. This is so because future outsourcing targets cost non-related effects. These effects are the benefits of outsourcing which include efficiency, flexibility, improved quality, being responsive etc. It is of good importance that managers should understand the need to outsource. They should not concentrate only on cost reduction but they should look forward to other benefits of outsourcing e.g. intellectual access, greater visualization, being more innovative, reliability, quality oriented services and search for wider solutions that add value as indicated by (Quinn, 1999).


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