Written exclusively for TrainingOutsourcing.com
January 2004


In recent months, the number of research reports and magazine articles focusing on training outsourcing and training BPO (Business Process Outsourcing) have increased significantly. Many of these articles characterize the training outsourcing market as a new and emerging industry that originated in 1999 when Nortel and PricewaterhouseCoopers (PWC) engaged in a significant and comprehensive training outsourcing partnership. However, some would argue that the Nortel/PWC deal was simply a recent and sizable wave in an industry that has experienced several waves starting more than a decade before Nortel and PWC consummated their relationship.

The first major wave may well have begun with General Physics’ outsourcing relationship with General Motors in 1986. This partnership was characterized by a very open sharing of proprietary information, cooperative responsibility for planning, and dedicated resources from the supply partner. Others believe that the first true comprehensive training outsourcing engagement began in 1993 when Dupont announced that it had outsourced a major portion of its training operations to The Forum Corporation. This deal was consummated before the term “BPO” was in vogue and was simply called “outsourcing". However, it possessed many if not all of the characteristics of what we now refer to as BPO. Shortly after the deal was announced, Training Magazine, in an article titled “Can You Outsource Your Brain?” wrote, “A major training outsourcing deal at DuPont may hail a new age in company-supplier partnerships—or merely another round in staffing cycles."

For most contemplating a training outsourcing partnership, the Nortel, DuPont, and General Motors stories are lost memories. They only seem to be important to the few who care enough to explore history. But, like other historical events, we can learn from these early BPO relationships and appreciate that these partnerships helped form a new way of thinking for corporate executives and delivered enormous value to the involved companies.

Many successful training outsourcing contracts have followed the General Motors, DuPont, and Nortel deals. Most of the recent partnerships have been driven primarily by assertive training companies that view outsourcing as a way to evolve their businesses from product-oriented companies to more comprehensive, solutions-oriented service organizations. For example, after the DuPont partnership, The Forum Corporation marketed its services aggressively and closed nine major comprehensive training BPO deals through 2001 with companies including The Moore Corporation, KPMG Canada, IKON, and Vanguard. In addition, General Physics formed relationships with Ford and US Steel. Then, DDI and Provant entered the emerging training outsourcing space with several successes. Though mature before their time, these early deals shared one thing in common – they did not achieve high visibility in the marketplace, therefore, the training outsourcing industry was not acknowledged as a serious contributor to business strategy.

Then in 2001, the landmark BPO deal was consummated between Nortel and PWC. This was the first partnership that received major attention from corporate executives and training outsourcing began to draw serious consideration in business strategy planning. While the Nortel/PWC deal was really the third wave in the training BPO industry, it took place at a time when Information Technology (IT) and Human Resources (HR) BPO was hot and so it attracted a lot of attention in boardrooms and executive suites. Since 2001, numerous BPO deals have been executed, some across the entire value chain of training and some simply addressing the transaction/administrative elements of training.

As important as the increasing interest in the training outsourcing industry is the new set of suppliers who have entered the space. Traditional training companies have had to reluctantly welcome new competitors to the marketplace including major corporations like Accenture, IBM, Raytheon, Productivity Point, Knowledge Planet, Intrepid, Convergys, and Exult. All of these companies are focused on training outsourcing as a major component of their business strategy and they are aggressively pursuing business opportunities. These companies are actively marketing and closing major outsourcing deals. Their services include training administration operations for large corporate clients and, in some cases, managing all of the resources, facilities, and processes.

While training outsourcing has evolved in terms of the players, contract size, and structure of the relationships, the industry is far from new and definitely not immature. The successes have been numerous and the lessons are significant. In January 2004, a milestone event occurred in the industry - TrainingOutsourcing.com was launched, the first Internet knowledge community focused specifically on the training outsourcing industry with the objective to bring training suppliers and corporate executives together to facilitate mutually beneficial outsourcing partnerships. As the article in Training Magazine further stated, “…some suspect a fundamental change is afoot”.

Editors Note: The author of this article, Ed Trolley, was the first member selected to the prestigious TrainingOutsourcing.com’s list of Who’s Who in Training Outsourcing in December 2003. You can find Mr. Trolley’s bio on the web site, http://www.trainingoutsourcing.com/whoswho_suppliers.asp