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 …
- 2011 Corporate and government spend for training activities in N.A. (North America) was approximately $130B. We believe the average spend for all corporate training activities (employee and customer) to be about .7% 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 service oriented tends to spend much less. Note: ASTD estimates the 2010 market to be $171.5B, or 1.1% of revenues.
- Spend for training services will increase by a modest 2% in 2012, taking the N.A. market to about $132B. Spend levels are still below the industry 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 2011 was about $287B. We expect the market to grow to about $292B in 2012. We believe N.A. represents about 45% of the global market ($130.5B) and Europe to be about 29%, or $82.7B of the global market. Asia comes in at $28.1B (10%), India $20.7B (7%), Australia $8.7B (3%), South America $6.3B (2%), Africa $3.5B (1%), and the rest of the world $6.3B (2%).
- Approximately 75% 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% of the global market.
- Companies spend about 43% of their training related dollars on employees, compared to 50% on customers, and 7% on suppliers and channel partners.
- Companies in North America spend approximately 58% of their training budget on insourced activities (people, facilities, etc.), and about 42% of their budget on outsourced services. This translates into a supplier market for outsourced services of $54.8B and an insourced spend market of $75.4B. Note: ASTD estimates companies spend 60% ($103B) of their training budgets on internal resources and 40% ($68.5B) with external suppliers.
- The top 5 non-BPO market segments for outsourced training are IT ($2.9B; 5.2%), Leadership ($1.7B; 3.1%), Learning Technologies ($1.2B; 2.2%), Sales Training ($1.1B; 2%), and Content Development ($.9B; 1.6%). All other segments account for about $47B. The market is so highly fragmented that the top 5 segments represents only14% of the total market spend.
- Training BPO (business process outsourcing) services in N.A. was about $2.6B, or 5% 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 95% of the sourcing market, or $52.2B. Respectively, licensing of content and training technologies was about $31.9B (58%), and contracting for training resources to be about $20.3B (37%).
As always, I welcome your comments. Or you can contact me at dharward@trainingindustry.com.
