Unfiltered outsourcing can cause reputational damage

Outsourcing has become a key strategy for many businesses seeking to streamline operations and cut costs. However, the pursuit of these benefits can often lead to a delicate balancing act between risk and reward in reputation management.

The company, from which I purchased my water purifier, promises a delivery standard as part of its after sales care, stating, “Delivery within 3 working days for Colombo and suburbs, 5 working days for other locations”. When it was time to replace the purifier’s germkill kit, I called them up and placed my order. The person whom I spoke with informed me that I would receive it within 3 working days since I reside just outside Colombo. 3 working days went by followed by 5 which soon turned to a week, and the delivery of the replacement kit remained a non-event – by which time I called up the company and expressed my disappointment.

An apology of some sorts was mumbled by the female operator, who hurriedly assured me that the said item would be delivered within the day and that the delay would also be reported. Later that same day, I received a call from the delivery agent informing me that my order will be sent the next day morning - further proof of the company’s promise been one again shattered by the outsourced delivery agent.

The next day, when I received the germkill kit, I asked the delivery guy what caused the delay. He informed me that they were short-staffed and that customer orders had suddenly spiked during the past week or so. It transpired that I wasn’t the only disgruntled customer. I also found out that the Company had outsourced its deliveries, island wide… to a single vendor.

This incident illustrated several outcomes, such as:- 

• How a globally reputed company failed to stick to its promise of delivery (within 3 days), thus having a direct impact on its reputation.
• Lack of any ongoing oversight with regards effectively managing outsourcing risks (in this case, non-compliance by the outsourced vender of its delivery promise).
• The total absence of any communication with the customer vis-à-vis informing the customer of the delay in delivery, nor any follow up call with the customer to verify delivery, particularly after the prolonged delay was reported.
• The dependence and the risks that come with it by having a single vendor for critical operations (including covering a large geographical space), that can create power imbalances, such making it difficult to swiftly switch providers who violate service agreements.

In recent years, a number of hotels have increasingly outsourced certain departments. Laundry, security and valet parking, landscaping, payroll, IT services and some or all aspects of food service are frequently selected as functions to be transitioned. There are certain advantages to outsourcing: you can eliminate hiring and recruiting expenses, achieve cost savings associated with salaries and benefit levels, and enjoy greater staffing flexibility during seasonal periods.

Outsourcing however, involves handing over direct control over a business function or process to a third party. As such, it comes with certain risks including service delivery breakdowns as narrated above. Other potential downsides to consider include the difficulty of maintaining customer service standards, timelines, and efficiency as well as jeopardising the organization’s culture.

Furthermore keep in mind that you’re not the only customer. Providers of outsourced services and products likely service many other customers, whether in the hotel business or not. That means you – and your guests…may not always be their top priority.

Remember – whether you decide to outsource one hotel function or many of them, your hotel operations will invariably filter down to your guests and their hotel experience. How good or bad that experience is will invariably impact the hotels’ online reputation and long-term success.

Shafeek Wahab – Editor, Hospitality Sri Lanka, Consultant, Customer Service Trainer and Ex-Hotelier

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