Learning Outsourcing: Dead or Alive?

If outsourcing the learning function was to be the overarching trend in workplace learning for the 21st century, it hasn't exactly come to pass. Research conducted by ASTD shows the percentage of dollars spent by learning organizations on outsourcing has bounced up and down for the past six years, reaching as high as 40.5 percent in 2001 and as low as 24.8 percent in 2005 (see chart).

But experts point to a variety of explanations for the wide difference in the numbers, not the least among them being old-fashioned underreporting and a lack of definitions for outsourcing. But the importance - if not the implementation of outsourcing - is still a point of contention.

"The topic of training outsourcing continues to be hotly debated for several reasons," explains Jeff Lucas, director of communications for Raytheon Professional Services. "The market is taking longer to mature beyond its current infancy than many had predicted. Some fairly high-growth expectations were set a few years ago, and based on our own experience and on our discussions with other training providers, we're not seeing or hearing of a level of activity that matches the expectations."

Lucas adds, "Second, it's argued that training is sufficiently different from HR, finance, and information technology - it's too strategic - that it shouldn't be outsourced. And finally, there's an ongoing debate whether training outsourcing will continue to emerge as its own market or whether it will be subsumed as an element within the HR outsourcing market."

"From a business perspective, a lot of corporate people don't understand what a business outsourcing engagement for learning looks like," explains Jim Hanlin, chief operating officer of Training Industry Inc., which includes the portal TrainingOutsourcing.com. "It's easy for people to understand transaction-based outsourcing. But when you outsource a learning or training process it is much more complicated, and it involves a lot more steps. In most cases it also involves technology."

"There is reluctance among many businesses to outsource something that is seen as strategic, but not always an area of competency in most corporations," Hanlin adds. "That hasn't changed in the last five years. But, it's improving. There are more companies that understand how it's done and why it's done and have an appreciation for the challenges involved. But there is still a level of uncertainty."

"At Raytheon Professional Services," says Lucas, "we typically see three approaches to training outsourcing. In the first approach, a client outsources training processes in an arrangement completely separate from HR processes. In the second, a client incorporates training into a larger HRO deal, and the client seeks one provider to deliver an 'integrated' solution that involves training, compensation, benefits, recruiting, and other services. And in the third approach, like the second, a client includes training in HRO but seeks several 'best of breed' providers to deliver the various elements of the HRO engagement. We're experiencing and hearing about opportunities primarily in the training stand-alone and integrated HRO approaches."

Is the definition of outsourcing fuzzy?

There seems to be more than a little confusion when the term "outsourcing" is applied to the learning function. Lucas explains: "We've found that analysts, journalists, learning executives, and training providers impute different meanings to the term 'training outsourcing.' When we speak about training outsourcing, we mean the transfer of management of one or more training processes from the client organization to the training provider."

Lucas says that in these engagements, which are usually several years in length, "the client tends to retain no resources associated with the process they've outsourced, so the engagement results in the re-assignment of personnel to the provider. When a client organization outsources most or all of their training processes, we call it a 'comprehensive' or 'total' engagement. When only one process is outsourced, we refer to it as a 'selective' engagement."

Confusion arises when short-term, project-based engagements, which are often referred to as "out-tasking," are thrown in with comprehensive or selective projects. "Out-tasking doesn't bring about the long-term transfer of process management and resources," Lucas says. "It provides access to additional capacity, capability or domain expertise, which temporarily complements - but doesn't permanently replace -- an organization's training resources. Until recently, out-tasking has been the primary form of 'training outsourcing.' The emergence of large-scale, long-term outsourcing engagements focused on training processes has altered the meaning of 'training outsourcing' for some, but not yet for everybody. As the training outsourcing market continues to mature, we expect to see increased consistency in the use of these different terms."

The changing nature of business around the world also churns the water around outsourcing. "There has been a lot of activity in the past few years involving business process outsourcing," explains Hanlin. "And the big driver is globalization. Companies that have global footprints are developing and delivering training and learning on a global basis. And that is where it gets very complicated." For those companies which aren't particularly adept in their learning function, it becomes even more complex. "For companies where learning is not a core competency in a geographic area, it becomes even less of a competency when they try to implement it globally."

And that spells opportunity for the providers of outsourcing services. "You see the supply side developing and enhancing its capabilities to serve global enterprises," adds Hanlin. "And you see more global companies looking to those supplier companies to help them with the challenges they have in learning."