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Business Intelligence

Published September 2008

Training Outsourcing on the Decline

  

  Cushing Anderson

Chief Learning Officer magazine’s Business Intelligence Board survey results illustrate that the number of companies using training outsourcing has declined, but those that outsource are happy with the results.

It is commonly recognized that companies need effective training programs to transfer knowledge and skills to employees, customers and partners; to retain employees; and to improve speed to proficiency. Training programs can be grown organically over time, developed in-house, outsourced to a training provider or implemented using some combination of in-house and external expertise. The decision to outsource rests mainly on whether the needed volume and quality of training can be supported by the internal staff.

Every other month, IDC surveys Chief Learning Officer magazine’s Business Intelligence Board (BIB) on a variety of topics to measure the attitudes, issues and interests of senior training executives. This month’s topic is training outsourcing, and 393 BIB members participated in the survey.

More than 56 percent of the enterprises surveyed use outside providers to fulfill some aspect of their training functions, primarily outsourcing content development, training delivery and LMS. Overall, those enterprises that outsource training are satisfied with the services they receive and plan to increase or maintain current spending levels for 2009.

Defining Training Outsourcing
IDC defines training outsourcing as the ongoing transfer of the management and execution of one or more complete training processes to an external services provider.

However, it is clear from the survey results during the past several years that this is not the current use of the term by the marketplace. The results suggest that enterprises use the term “training outsourcing provider” synonymously with the use of external training providers. For the purpose of this article, we will adopt this broader usage of training outsourcing for our analysis.

Declining Use of Training Outsourcing
During the past several years, two-thirds (66 percent) of enterprises outsourced some of their training functions. In 2007, this number dipped to 64 percent, and this percentage went down again to 56 percent for 2008. The unpredictable economy may be a factor, as internal training resources are being pushed to a higher utilization to curtail costs and spending on external providers is reduced. This is an interesting change in the survey responses, as many of the other behaviors in training outsourcing have remained remarkably consistent during the past three years.

Most companies outsource only select portions of their training functions — only about 2 percent outsource the entire training function. This percentage has remained relatively steady, even though the number of enterprises outsourcing some or all of their training function has declined.

Spend on Training Outsourcing
Spending on outsourcing as a percent of overall training budgets reveals a bell curve skewed toward the left. The majority of companies spend less than 40 percent of their training budget on training outsourcing, with about half spending between 10 percent and 40 percent of their training budget. Conversely, only 20 percent spend more than 40 percent of their budget, and the 3 percent who spend more than 80 percent are probably mostly organizations that outsource the entire training function.

Comments

Posted By Helen Whelan Friday September 19, 2008 12:37:53 PM This is why we created leadership skills training videos so that HR executives inside a company or a consultant on the outside can effectively and inexpensively bring real world experience to a company. We have videos of Jack Welch, Richard Branson and other CEOs talking about leadership and change and how you can do the same in your organizations.

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