Over the last three months, I've seen a huge increase in the activity of large scale training outsourcing engagements. These deals are multi-million dollar engagements for 3 to 5 year terms. Not surprising, this increased activity is the result of the changing economy. It is forcing companies to focus on cost reduction and/or revenue generation. And training is highly instrumental in both. The language we heard a few years ago about transforming training into a value creator is not as prevalent as before - although I expect it to return when the economy stabilizes. Now it’s all about the dollar.
Also not surprising is that the growth in training outsourcing initiatives is mostly being driven by corporate executives, not leaders of the training function. They are scrutinizing spend for training and looking for ways to get more for their training dollar. We are hearing a lot about improved scalability and variability in spend. This means utilizing resources that are readily available on a contract and project basis and reducing the amount of fixed costs for real estate and human resources.
The potential winners in this market are those training outsourcing service providers who are positioned for inclusion in the RFI and RFP process. Not being included are those service providers who have not demonstrated to the market for the last few years that they are capable of managing deals of this complexity. Demand side companies are actively researching service providers and seeking advice on who is capable of their business. This is not an emotional buy, nor is it one that is done quickly and without due diligence. This is an intelligent, well thought out strategy and process.
If you are interested in learning more about the training outsourcing market, you can visit our training outsourcing community at /training-outsourcing.aspx. You can also find out who the Top 20 companies in training outsourcing are.
Please feel free to send me a note to let me know your thoughts about how the training outsourcing market is evolving at dharward@trainingindustry.com.
