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Hotel industry steps up outsourcing of IT services
New Delhi, May 02: Faced with declining revenues from various IT services, a majority of hotels in India have begun to outsource these activities while concentrating on core services like hotel maintenance.
New Delhi, May 02: Faced with declining revenues from various IT services, a majority of hotels in India have begun to outsource these activities while concentrating on core services like hotel maintenance.
According to the latest survey by Federation of Hotel & Restaurant Associations of India, a whopping 70 per cent of hotels outsource LCD projectors and over 40 per cent outsource high-speed internet and mobile phone renting service. These figures hold true for both five-star, five-star deluxe, four-star and three-star hotels surveyed by FHRAI.
"Earlier the margins from such IT services used to be as high as 700 per cent, but revenues for these services accounted up to five per cent of the total turnover," FHRAI assistant secretary general (research) Pooran Chandra Pandey said.
Outsourcing of IT facilities and services became a necessity for the Indian hotel industry due to the rapid fall in telecom tariffs, growth of mobile phones and the rising popularity of internet cafes. That shrunk the margins from such service and return on investments started falling. "The investment for a proper IT set in an upmarket hotel would be between 5-10 per cent of the total project cost. So, the hotels find it wiser to give these services to sub-contractor. By that, they can make good margins on the rentals without putting up any investment on the purchases," Pandey pointed out.
This trend of outsourcing of IT-related services is in line with trends in the West, where the hotels stick just to the core services and give sub-contracts almost everything including IT services, laundry, food and beverages.
"Earlier the margins from such IT services used to be as high as 700 per cent, but revenues for these services accounted up to five per cent of the total turnover," FHRAI assistant secretary general (research) Pooran Chandra Pandey said.
Outsourcing of IT facilities and services became a necessity for the Indian hotel industry due to the rapid fall in telecom tariffs, growth of mobile phones and the rising popularity of internet cafes. That shrunk the margins from such service and return on investments started falling. "The investment for a proper IT set in an upmarket hotel would be between 5-10 per cent of the total project cost. So, the hotels find it wiser to give these services to sub-contractor. By that, they can make good margins on the rentals without putting up any investment on the purchases," Pandey pointed out.
This trend of outsourcing of IT-related services is in line with trends in the West, where the hotels stick just to the core services and give sub-contracts almost everything including IT services, laundry, food and beverages.
The study shows that hotels usually outsource those equipment which require frequent maintenance, have low frequency of usage or require periodic upgradation.
However, this increasing trend of outsourcing is mainly seen in the business hotels, which are largely located in the city centres. On the other hand, resort hotels still continue to invest in setting up their own IT facilities.
Another reason that prompted the hotels to outsource IT services was resistance from the guests on the charges levied by the hotels. Over 90 per cent of the guests interviewed during the survey said that the charges for internet access and other services were high and unreasonable.
Bureau Report