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Outsourcing in hospitality industry(Case study of outsourcing pattern among Malaysia hotels)1.0 IntroductionThe hospitality business in Malaysia is rising because of the total tourist arrivals and receipts in Malaysia increased due to the promotion of Malaysian tourism industry with the aid of local government and resident. According to Ministry of Tourism Malaysia, international tourist arrivals in Malaysia will grow at a Compounded Annual Growth Rate(CAGR) of around 8% during the forecast period (2011-2013), thereby, surpassing RM 70 Billion by 2013. In order to accommodate the anticipated rise in business, hotels have to focus more on their core operations (i.e. hospitality services) hence outsourcing could be an alternative way to manage their non-core activities such as human resources, information technology accounting, laundry and cleaning and so on. In this case study, we will discuss about the pattern of outsourcing, which is what is outsourced in hospitality industry in Malaysia and factors influencing outsourcing adoption decision among Malaysian hotels. Other than that, we will also point out some advantages and disadvantages of outsourcing in hospitality industry. Besides that, we will use Tune HotelKuala Lumpur as example in order to reflect the real situation in Malaysian hospitality industry.1.1 Definition of outsourcingOutsourcing is a subcontracting service or a third party for strategic use of firm’s resources, to generate firm’s values and grow competitive edge. Outsourcing is the process of transferring the responsibility for an exact business function from an employee group to a non-employee group. By embarking into outsourcing, firms can offer better client service, produce a better product, and do a better job efficiently. (Hamzah et al., 2010).According to Lam and Han (2005), hotel outsourcing is defined as a management strategy where the hotel management utilizes a special outsourcing supplier, forming strategic alliances with it to have the supplier operate certain hotel functions, in the attempt to reduce costs and risks and to improve efficiency.
2.0 Types of functions outsourced among the hotels in MalaysiaTable 2.0Table 2.0 is the result derived from a survey about the types of functions outsourced among the hotels in Malaysia. From the table we could identify that Cleaning/housekeeping has the highest frequency of function that is being outsourced by hotels in Malaysia, which is 25, following by Laundry, Security and Surveillance, Training, Gardening Services, Leisure activities, Information system and Technology with the frequent of 18, 17, 11, 10, 8 6, and 3 respectively. While the Facilities has the lowest frequency, which is just 2. From here we could see that there is a trend where the function that will give impact or touched the core business of the hotels will be less outsourced. This can be understand that the hotel is concerned about the control power of certain functions that they outsource will fall on external vendor’s hand and their businesssecret will leak. This explained why most of the hotels did not outsourced function such