There is no question that 2009 was a turbulent year for many training organizations.
Reduction of workforce, rationalization of portfolio’s, reduced budgets – we can go
on and on about the trials and tribulations of how this economy affected our
profession. What I find interesting is through adversity, the changes organizations are making to improve how they manage the training function. I’ve been fortunate to work with many companies on both the demand and supply side of training services and I've seen some interesting trends emerge. The biggest of which is the growth in training outsourcing. When the economics of training services get challenged, executives look to external talent to help them with how to change for the future.
Below are the 7 trends that's now driving the training outsourcing market in 2010.
1. Training Outsourcing helps with restructuring, rationalization, and consolidation.
A general myth about outsourcing is that it costs more to use external resources for
training. The reality is that outsourcing service providers understand training
management, how to rationalize portfolio's and how to consolidate processes and
resources. Some of the biggest and most complex outsourcing engagements begin with assessments which look at new ways to manage training, and how to do it efficiently and effectly. Good training management is not about doing more.
2. Training Outsourcing is about extending the reach of learning. Service providers are being asked to help companies extend their reach into global markets. Some seek offshore content development, others are centralizing training administration meaning they need resources who know how to manage training in distant markets, and others need help in delivering training into foreign markets.
3. Training Outsourcing includes customer training. A common problem our profession has faced is the limited view that training only refers to employees. Most technology companies actually spend more money to train customers than they do employees. And they need external resources to handle the volume and quality required to do so. Using external suppliers for customer training is a mature practice in IT training. Other verticals that use external suppliers include pharma for continuing medical education and automotives for dealer training.
4. Training Outsourcing is about leveraging technologies. As learning technologies
quickly become commoditized, using a service provider allows buyers to leverage the
the costs of development, hosting, licensing, and integration across multiple installations. Internal development of technologies has become a thing of the past. This includes new services around creating and managing enterprise learning portals.
5. Training outsourcing deals are getting smaller. Multi-year training engagements have been getting smaller in scope than in the previous 5 years, primarily due to the reduction in spend and customers adversity to risk. The average size training BPO (business process outsourcing) engagement has been in the $3-5 m per year range, down from the $4-7m range in previous years. The trend to smaller deal sizes also applies to existing engagements where actual spend is down by more than 10%.
6. Administration and content development are the most common processes outsourced. The typical training outsourcing engagements have been around two process areas; training administration and content development. Training administration due to the increased focus on centralizing back office activities; content development because companies are gearing up for the expected hiring of new staff when their business improves. Demand side organizations seem to be favoring more proprietary content as opposed to off the shelf, non-proprietary
courseware.
7.Standalone training outsourcing deals are the norm, as opposed to integrated talent management engagements. Talent management is considered the integration of HR services with training services. So here is my straight talk! Some publications and consultants would have us believe that there is a trend towards more sophisticated, talent management solutions. Following the money trail will always lead us to what is true strategy in a company. If a company is investing in it, it is real. If they are not, words don't mean anything. My belief is talent management appears to be more rhetoric than application. Good intentions, but it's not manifesting into real deals.
As always, I welcome your comments. Please share any other trends that you are seeing as well as any comments you may have about these. Or you can send me a note at dharward@trainingindustry.com.
Related Article: 10 Predictions for the 2010 training market at /articles/10-predictions-for-2010.aspx.
