How Big is the Training Market?
One of the most frequently asked questions of training analysts is, "how big is the training market?" The truth of the matter is no one really knows for sure, although we are able to make good rational estimates based on sound research and economic analysis. Why is the data hard to get to? Because corporations (buyers of services) are weary of reporting actual expenditures for training. And in some cases, many large companies don’t accurately know how much they spend on training as expenses get buried in non-training related line items.
As difficult as it may be, my goal is to provide you with a few data points that should help in understanding the size of the market.
Trainingindustry.com estimates that:
- 2013 Corporate and government spend for training activities in N.A. (North America) was approximately $141.7B. We believe the average spend for all corporate training activities (employee and customer) to be about .7 percent of annual revenues (or $7 for every $1000 in company revenues). Generally speaking, the larger the company the more they spend on training as a percent of revenue. Companies that are more technology oriented tends to spend more, while companies who are more services oriented tends to spend much less. Note: ASTD estimates the 2012 market to have been $164.2B, down from $171.5B which they reported for 2011, or 1.1 percent of revenues.
- Spend for training services has increased by about 5.2 percent from 2012, much better than what was originally anticipated (original expectations were the market would grow at a modest 2.5 percent. Spend levels have now exceeded the industry's high market in 2007 of about a $136B. Our best estimates find the ten year industry low mark to be in 2002 with spend at about $109B, and again dropping to $110B in 2009 (revised from earlier estimates).
- The global market for training expenditures in 2013 was about $306.9B, an increase from $291.7B in 2012. We believe N.A. represents about 46% of the global market ($141.7B) and Europe to be about 29%, or $89B of the global market. Asia comes in at $31B (10 percent), India $21.5B (seven percent), Australia $9.2B (3 percent), South America $6.3B (2 percent), Africa $3.6B (1 percent), and the rest of the world $4.6B (1.1 percent).
- Approximately 75 percent of the global spend for training is in North America and Europe. Asia and India, the two most populated regions in the world, combined make up about 17 percent of the global market.
- Companies spend about 44 percent of their training related dollars on employees, compared to 49 percent on customers, and seven percent on suppliers and channel partners.
- Companies in North America spend approximately 58 percent of their training budget on insourced activities (people, facilities, etc.), and about 42 percent of their budget on outsourced services. This translates into a supplier market for outsourced services of $59.5B and an insourced spend of $82.2B. Note: ASTD estimates companies spend 60 percent of their training budgets on internal resources and 40 percent with external suppliers.
- The top 5 non-BPO market segments for outsourced training are IT ($2.9B; 4.9 percent), Leadership ($2.6B; 4.4 percent), Learning Technologies ($4.0B; 6.7 percent), Sales Training ($2.2B; 3.8 percent), and Content Development ($3.5B; 5.9 percent). All other segments account for about $44.2B. The market is so highly fragmented that the top five segments represents only 12 percent of the total market spend.
- Training BPO (business process outsourcing) services in N.A. was about $5.76B, or 9.7 percent of the external spend for training services. This includes both comprehensive and selective outsourcing deals. We estimate the out-tasked market for training services was about 90 percent of the sourcing market, or $53.7B. Respectively, licensing of content and training technologies was about $34.1B (58 percent), and contracting for training resources to be about $19.6B (32.3 percent).
As always, I welcome your comments. Or you can contact me at firstname.lastname@example.org.
About the Author
Doug Harward is the founder and CEO of Training Industry, Inc. He is internationally recognized as one of the leading strategists for training and outsourcing business models. He is respected as one of the industry's leading authorities on competitive analysis for training services and works with international companies and new business start-ups in building training organizations.
Harward previously served as the Director of Global Learning for Nortel Networks where he led the industry's largest global training outsourcing engagement with PricewaterhouseCoopers. He received the Chairman's Global Award for Community Service for his work in developing integrated learning organization strategies within higher education, public schools and business. He has worked in the training industry for more than 25 years.
Harward received a MBA from the Fuqua School of Business at Duke University and a BSBA in Marketing from Appalachian State University.
Harward is co-author of the book “What Makes A Great Training Organization.”