Over the years, providing high-quality training to employees has
been somewhat problematic to many companies. While the need for
well-trained people is obvious, many companies don't do a
consistently good job of creating training internally. Others,
however, have built very effective internal training departments.
Still, most large organizations, sooner or later, will need to
outsource the design and development of at least some training
With that in mind, we talked to people in a variety of industries
to determine what changes in outsourcing they've observed over the
past few years, what their current outsourcing practices are, and
how they view the future of outsourced training.
Our interviews were informal, conducted over the telephone. We
selected people from Midwest-based Fortune 500 companies in the
retail, chemical, manufacturing, automotive, public utility,
insurance, and banking/finance industries. What follows is a
summary of what they told us.
What trends have you seen in the past three to four
Many organizations have increased outsourcing due to internal staff
reductions. The struggling economy has also sparked a trend toward
more efficient technology-based approaches and increased use of
off-the-shelf materials. In fact, technology-based learning has fed
the outsourcing growth trend. Companies are buying more
off-the-shelf content when historically they have developed the
content (or had it developed) from scratch.
Respondents agreed that, in general, outsourcing of training design
and development has increased as corporate staff positions have
As a side note, a few respondents also mentioned that the end
customers are now funding most training projects, and that
customers in these functions sometimes recommend specific vendors
to do the work. This is in sharp contrast to the past when many
training departments had their own (often large) budgets and could
support their customers' needs from that pool. It was noted that
line function managers are looking hard at the expense of training
and its anticipated return before approving funding.
What is your organization's position relative to
Outsourcing, while often considered essential, is managed to
minimize cost and increase effectiveness through efficient project
management, accurately defining learning strategy, maintaining good
relationships with vendors, and shared responsibility.
Two respondents stated that, in spite of the general trend, their
companies have cut outsourcing to approximately 50 percent of past
levels and their goal is to cut back even more. To help facilitate
this, their internal training groups have created project-level
work templates to help develop training more efficiently.
Another major corporation that uses vendors for nearly all course
design and development still develops its high-level learning
strategy internally. They don't anticipate that will ever change.
A few respondents said that they use a model of shared
responsibility and look to internal resources to add value to an
outsourced project. In one company, all of the design and
development of e-learning content is contracted, but programming is
done internally. They emphasize that the "handoff" of projects like
these is critically important, and that it takes a good working
relationship with a vendor to make this work.
Another company takes care of project management internally and
contracts the rest of the project on the outside. Yet another
company responded that when the training involves
corporate-sensitive content, they try to use internal resources to
What drives your decision to outsource?
Vendor training is chosen for specific well thought out reasons,
such as to offer training in a timely manner or to create
specialized learning since in-house trainer are often generalists.
Respondents agreed that the urgency of the project is still the
primary driver for the decision to outsource. Even those companies
that are trying to do more inside will go to the outside when the
timing is tight. However, one major company had the opposite
response: when they need to complete a project immediately, they do
In a few cases, the need for specialized content sends companies to
the outside. Some said that they immediately think of outsourcing
if a customer needs training on a specific process or engineering
tool for which there are consultants on the outside who have
Some respondents added that they often try to buy or build training
to suit multiple audiences across the corporation. This is in
contrast to the old "not invented here" syndrome of years ago when
many large companies had 10 or more versions of project management
or FMEA training laying around on the shelves, each for a different
department within the organization. The objective today is better
stewardship of corporate training dollars.
How do you secure a vendor?
Each respondent reported having a formal process for outsourcing
training. They all go through some sort of an RFP or RFQ process,
usually monitored by the purchasing department, and most company
purchasing departments require at least three bids. Some companies
are permitted to sole-source projects, usually within certain
dollar limits and with appropriate justification to purchasing.
One company uses an online reverse auction process for buying
training design and development, programming, graphics, and
Many of the companies have created a process by which they
pre-qualify vendors from a capabilities and pricing standpoint. The
process usually requires that vendors be re-assessed every two to
three years to remain on the "preferred" list. This
prequalification simplifies and accelerates the award process once
bids are received because all of the bidding vendors have met the
standards of quality, capacity, experience, etc.
How satisfied are you with vendors?
Most respondents said that the satisfaction level was very high,
and they are finding that outside resources are generally highly
qualified. There is general satisfaction with the turnaround time,
the ease of working with vendors, and the level of project
management that vendors bring.
One company stated that, as they improve their internal project
management expertise and gain more experience, they now know what
to look for and how to work with a vendor, and that helps them
achieve better results.
What is the future for outsourcing?
Most people agreed that the near-term will bring increased
outsourcing as companies continue to focus on and hone their core
businesses. In large part, that will be budget-driven as resources
and money are closely scrutinized.
One respondent voiced concern over the growing trend of small- to
medium-sized training vendors being "rolled up" into what he called
"mega-training companies." He has noted a general degradation of
personal customer service, responsiveness, and quality as his
smaller, trusted vendors get folded into larger companies.
A few respondents observed that when the decision is made to
develop training internally, the wide array of new training
development work tools that are readily available will make it
easier for individuals or small internal groups to do a better job
of providing good training to their customers.
Because of the variety of training vendors in business today, it is
not surprising that there was mixed reaction and that the levels of
satisfaction vary somewhat. What is very clear is that outsourcing
is alive and well and will continue to play a major role in the
corporate training arena in the foreseeable future. Many
respondents emphasized that vendors need to pay close attention to
the customer, listen to the needs, work efficiently, and provide
quality deliverables in order to keep the training outsourcing
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