Introduction
Outsourcing entails the allocation of specific organization process to an external service provider who is specialized in the particular business process or service. In most cases business fails to handle all facets of business process internally, thus they opt to hire external help with specific business processes. Additionally, the duration of some business process calls the need to hire external help instead of in-house professionals (Stevenson, 2012). The appointed external firm takes the responsibility and risk of performing the specified business process while maintaining the business' assets. However, it is crucial to comprehend the advantages and shortcomings associated with outsourcing part of or an entire business process to an external firm. It is also imperative to understand the difference between having the said task performed within the organization or in a different location.
Question 1
Performing the outsourced work within the hospital
Outsourcing of products and services has its advantages as well as short comings. One critical decision when outsourcing revolves around having the operation occur place within the organization or in a different location. While in most cases it may be convenient and advantageous to have the outsourced service performed within the organization, in some instances it is more disastrous regarding convenience and other factors (Render, 2012). As a consequence, some organizations choose to have the outsourced service performed in a different location from the organization. There are several advantages and reasons as to why the hospital decided to have their outsourced cafeteria food services rendered within the hospital.
The decision to outsource or to keep work within the house highly depends on expertise, cost, and availability of resource, demand, quality and risk. The hospital made a decision to outsource its cafeteria and food services based on these factors (Render, 2012). The main reason for outsourcing the cafeteria food service was due to the financial pressure currently experienced by the hospital. It is important to note that the hospital only outsourced the management of the food service given that the same employees performed the work. Additionally, the work was completed within the organization's usual kitchen. One reason might be because the hospital did not want to lose its food service employees given that they still felt a sense of ownership of their jobs. Also, the employees still felt connected to the hospital given the sense of the family environment in the cafeteria as well as the kitchen. These factors highly affect the quality of service employees provide to the hospital. A change of employees together with their working environment could have resulted in an unwanted reduction in the quality of duty and food production at the cafeteria (Stevenson, 2012).
Besides, the cost is one important deciding factor in the process of determining the location of performing the outsourced service. Having the outsourced firm carry out its services within the hospital saved the organization a substantial amount of money in transportation. The cost of transporting food and food service from a different location to the hospital is higher than operating the service within the organization. The factor of risk sharing also played a major role in the decision process that resulted into outsourcing the food and cafeteria services. Outsourcing the food and cafeteria services to another firm meant that the hospital would share certain risks with the outsourced company. To minimize possible risks in the process, the organization decided to have the firm perform the outsourced service within the organization. Performing an outsourced service within the organization eliminates potential risks that might have been incurred in a different and unfamiliar location. Given that the outside firm hired for the food and cafeteria service is an expert in the area, it will do its best to plan the hospital’s risk mitigating factor in a more improved manner.
Apart from cost, time is a crucial factor in the hospital environment. It is imperative that the hospital staff have access to timely food services so as not to compromise the needs of their patients. As a result, the hospital deemed it necessary to have the outsourced food and cafeteria services performed within the organization. This eliminated the need to transport food from their production location to the organization. Having the outsourced food and cafeteria service performed at a different location form the hospital would have compromised on the quality of food as well. The employees exhibited a sense of ownership of their jobs even though they were hired by an external firm (Girth et al, 2012). Also, the fact that they were allowed to work in the hospital’s kitchen and the cafeteria gave them a family atmosphere and a connection to the hospital. These two factors highly influence the quality of production as well as service in employees. As a consequence, allowing the outsourced firm to operate within the organization maintained the quality of food as well as service while enjoying the cheap labor.
Question 2
Culture plays a significant role in decisions concerning outsourcing of services within the hospital. The culture ties of the housekeeping team to the hospital were quite loose, thus employee turnover. The employees did not have a feeling of connection to the hospital. Culture presents one of the most crucial non financial factors that determine decisions concerning outsourcing of services. Despite the numerous advantages of outsourcing, in some cases, it is more convenience not to outsource given the short comings associated with outsourcing some business processes. In the case of outsourcing housekeeping services, the hospital experienced difficulties associated with employee turnover (Girth et al, 2012). Before outsourcing certain business processes, it is imperative to consider factors other than cost and risk spreading for the organization. To gain from outsourcing certain services within a medical organization, it is imperative to consider such factors as employee satisfaction and work environment. For employees to maximize their output, they must have a feeling of belonging. In the case presented, the hospital experienced difficulties with employee turnover given that the employees did not have a sense of connection to the hospital (Bustinza, Arias-Aranda & Gutierrez-Gutierrez, 2010). In most cases, in-house staff is more inclined possess more experience and years of work at the hospital as compared to external employees hired by the outsourced firm. In-house employees know and understand the expectations of the hospital better than the external employees. As a consequence, it is more advantageous not to outsource some business services and process to foreign firms.
Question 3
Certain services such as laundry services do not need a lot of considerations before outsourcing to an outside firm. As opposed to housekeeping, food and cafeteria services, the decision to outsource laundry services depend on the usual factors such as the nature of demand, cost and quality considerations (Render, 2012). The demand for clean hospital garments may be higher than the hospital’s laundry service can accommodate. As such, outsourcing the service to another firm is necessary. Also, the quality of laundry services might have been a reason for the hospital to outsource this service. Hygiene is imperative in a hospital environment. As such outsourcing the laundry service to the more qualified firm is essential.
Conclusion
All in all, one of the main reasons why the hospital decided to have the outsourced food and cafeteria service performed within the organization revolve around the cost of labor as well as the quality of service and the food itself. The fact that the outsourced external firm was allowed to operate within the hospital’s kitchen using the same employees meant that the hospital would take advantage of the cheap labor while not compromising on the quality of food and cafeteria services.
References
Balakrishnan, R., Eldenburg, L., Krishnan, R., & Soderstrom, N. (2010). The influence of institutional constraints on outsourcing. Journal of Accounting Research, 48(4), 767-794.
Bustinza, O. F., Arias-Aranda, D., & Gutierrez-Gutierrez, L. (2010). Outsourcing, competitive capabilities and performance: an empirical study in service firms. International Journal of Production Economics, 126(2), 276-288.
Girth, A. M., Hefetz, A., Johnston, J. M., & Warner, M. E. (2012). Outsourcing public service delivery: Management responses in noncompetitive markets. Public Administration Review, 72(6), 887-900.
Render, B. (2012). OM in the News: Infection Rates and the Outsourcing of Hospital Cleaning. Jay and Barry's OM Blog. Retrieved 19 February 2016, from https://heizerrenderom.wordpress.com/2012/05/11/om-in-the-news-infection-rates-and-the-outsourcing-of-hospital-cleaning/
Stevenson, W. (2012). Operations management (12th ed.). New York, NY: McGraw-Hill Irwin
