Training: What European companies are outsourcing

Learning admin and strategic sourcing top the list

By Bill Hatton

Do you know how much your company spends on training? And do you know how much value your company is getting for the money?

Don’t feel bad if you don’t know the answer and aren’t sure how to find out: Few others know, either. (And if you do— terrific. You’re the exception that proves the rule.)

That’s according to Edward Trolley, senior vice president, consulting and advisory services of the learning-outsourcing firm NIIT.

“In 2015, there is still isn’t a single executive of a Fortune 1000 company who can answer those two questions,” says Trolley. “That’s a serious problem. The average company is spending $1,000 per employee per year, according to industry benchmarks. And no one sees that on any budget line item.”

How it started

Trolley discovered the problem of counting costs and determining value in 1992 when he was head of training for DuPont. The CEO said they were spending $200 million a year on training for 140,000 employees, and Trolley replied it was probably a billion. Then he proved it, and added that no one knew how to quantify the value of the investment in training. So DuPont outsourced to an organisation that was world-class at training.

To figure out how as an HR pro you can get the most value and lowest costs out of training, Trolley recommends this rule of thumb: Look for services that require scalability, that offer the opportunity for leverage, and that allow for the use of best practices. One option is outsourcing, as DuPont did in 1992, and countless others have since. In Europe, outsourcing training is becoming a trend.

“The EU is hot in the outsourcing space,” says Trolley. “In fact, over 40 per cent of our business is in Europe right now. The last five deals we’ve gotten are European global companies.” They are outsourcing two things:

  • Learning administration, which is all the back-office work of learning, and
  • Strategic sourcing, which most of competitors call vendor management.

Learning administration: Training is highly variable as far as demand, and gets scaled up and down. Companies have a fixed cost staff in an expensive part of the world. “The opportunity is offered to companies to pool this stuff together, outsource it, and do most of this stuff offshore. We do it for 40 per cent savings in that area. This is done on a variable-cost basis, and ultimately on a lower-cost basis. That includes all of the things in keeping the learning management system (LMS) up to date, catalogs, and courses. Setting up materials, hiring instructions, ordering food. All of this is learning administration.”

Strategic sourcing. Companies, particularly large companies, have realised that are using lots of vendors. It’s unmanaged. They find themselves not knowing how much is being spent. We reduce the number of vendors, consolidate training, creating more leverage, and improving the quality.”

What people should do:

  1. HR practitioners in Europe need to know that successful training outsourcing needs to targeted and really defined and understood. HR needs to get inside the business to learn why the training is happening and what benefit is expected. HR sometimes tends to think you don’t need to get inside the business, but Trolley says HR needs to have a “laser beam” like focus.
  2. If you don’t have a model where training gets applied quickly, it gets forgotten. “Adults have a really short half-life,” says Trolley. Managers need to have a plan to immediately apply training as soon as people return from it. If we learn something and don’t apply it, we’re going to lose it.
  3. Think about training in terms of business case. It has to deliver value and best cost. “It needs to be externally and internally competitive,” says Trolley. “We need the processes, technology and people who can make that happen.”
Posted October 16, 2015 in Uncategorized

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