Gary Gabelhouse is CEO of Fairfield Research Inc., a full-service market-research company established in 1982 to conduct enterprise-research studies for clients worldwide. Reach Gary by e-mail at fairfield@navix.net or by phone at (402) 441-3370.
The enterprise-learning market is 37 percent larger than the U.S. motion picture industry, and more than twice as large as the burgeoning video-game industry. Even in the midst of the most recent economic recession, enterprise spending on learning grew 1.5 percent. As part of its ongoing analysis of the training and learning market, CLO, Chief Learning Officer Magazine and Fairfield Research Inc., a full-service market research company, surveyed learning and training professionals at U.S. enterprises. The information that follows is part of this larger study.
The Size of the Enterprise-Learning Market
According to the survey, enterprise firms ($500 million and more in sales) in the United States spend, on average, $3.7 million every year on learning and training. Of this spending, $4.3 billion goes directly to consultants and third parties for formal training and learning programs for their staff. Another $2.2 billion is paid out in tuition for formal education programs. Annual spending on technical certifications weighs in at $351 million per annum, with customer education accounting for an additional $1.5 billion in corporate spending. Every year, enterprise corporations dedicate $3.5 billion to learning programs staged with internal staffing. (See figure 1.)
Despite the recent, recessionary business environment, spending on learning by enterprise corporations increased in 2002 by a modest 1.5 percent. In addition, in the current roller-coaster bear market, companies forecast an additional 4.3 percent increase in learning spending. Enterprise companies are forecast to spend $11.9 billion on learning in 2003. (See figure 2.)
While it does appear that enterprise companies are spending large sums on learning for their staff and customers, they are investing less than one percent (0.7 percent) of their annual revenue. The average enterprise company studied posted $500 million in annual sales during the last fiscal year. With an average of $3.7 million in learning spending, one can quickly determine that learning with its 0.7 percent level of spending is far behind R&D, sales and marketing budgets of enterprise corporations.
Over the last year, enterprise companies have spent, on average, $912 per employee for their learning and training programs. The largest amount of learning spending was dedicated to the technical staff at enterprise companies. More than $3 billion ($3.3 billion), nearly one-third of corporate-learning spending, was directed to the companies’ technical staff. Of the overall spending, $2.5 billion was directed to learning programs for middle management. Nearly 20 percent ($2.1 billion) of enterprise spending was directed to learning programs for support staff, with $1.8 billion spent on programs for senior management. (See figure 3.)
Not surprisingly, enterprise companies spend more on in-person and instructor-led learning programs for their employees than on any other type of learning program. Instructor-led programs accounted for 63 percent of the corporate spending in the last fiscal year, equivalent to $7.2 billion. Video and video-conferencing programs accounted for the least (5 percent) of the corporate spending, equal to a modest $570 million per annum. Due to the dramatic growth of intranet- and Internet-based programs, e-learning accounted for a $2.2 billion outlay, nearly one-fifth of the enterprise companies’ total spending on learning programs. CD-ROM-based programs and individualized, text-based programs each accounted for $684 million in corporate spending. (See figure 4.)
Learning programs touched nearly half (47 percent) of companies’ employees last year, and those people experienced three learning programs every year. Among enterprise companies in the United States, 11.3 million employees are impacted by corporate learning programs every year. The internally staffed learning programs reached more employees than any other type of program. In the past year, internally staffed learning programs reached 11.2 million employees of enterprise companies in the United States. Basically, nearly all of those employees who went through learning programs last year went through at least one program that was internally staffed.
Last year, 6.2 million enterprise workers had at least some of their tuition paid by the company. On average, enterprise companies covered $349 of their employees’ tuition for formal education programs, including corporate co-payments and reimbursements to educational institutions.
On average, each enterprise company had 2,109 employees go through at least one learning program staged by third-party companies and consultants. Given this activity, in the past year enterprise companies have sent 6.6 billion workers to learning programs contracted through third-party firms and consultants. The average investment in these learning programs is a hefty $650 per employee.
In the past year, enterprise companies sent 7.3 million technical staff people through technical certification programs provided by certification and technology vendors. The spending per certificant is modest-less than $100 on average. In a majority of cases, the certificants themselves paid all or some of their own certification fees; the company usually providing a co-payment.
Enterprise companies obviously see customer learning and training as a priority. In the last year, these types of learning programs reached 7.3 million people employed by client and customer companies. These customer training and learning programs reached more clients’employees than did third-party learning programs targeted to the enterprise companies’ own staff. However, corporate spending per person on these customer- and client-learning programs was significantly less ($143 average) than the amount spent on learning programs for their own staff ($319 average).
One can readily see the extensive reach and breadth of learning programs across enterprise companies. In the past year, 11.3 million enterprise workers were touched by learning programs a little more than three times equivalent to 35.6 million formal learning experiences in the past year.
The Future Size of the Enterprise-Learning Market
Five years from now (in 2007), enterprise companies are projected to spend nearly $14 billion dollars for corporate learning programs. (See figure 5.)The types of programs they will be investing in will be significantly different compared to 2002. One-third of that $14 billion will be spent on e-learning; equivalent to a $4.6 billion market segment. This 73 percent growth over the next five years will result largely from the projected 29 percent drop in share of spending on instructor-led programs. Despite the drop in share of spending, instructor-led learning programs are projected to account for $6.3 billion of corporate spending. Likewise, individualized, text-based learning programs’ share of spending will shrink 17 percent, bringing it to a level of $700 million in 2007. (See figure 6.)
Enterprise Learning Fast Facts
- Enterprise companies in the United States spend $11.5 billion annually on corporate learning programs.
- The average enterprise company spends $3.7 million annually on corporate learning programs.
- On average, enterprise companies spend the equivalent of less than one percent (0.7 percent) of their annual revenue on corporate learning programs.
- Enterprise companies in the United States spend $4.3 billion annually on learning programs conducted by third parties and consultants.
- Enterprise companies in the United States spend $1.5 billion annually on learning programs for their customers and clients.
- Spending on corporate learning by enterprise companies in the United States grew 1.5 percent from 2001 to 2002.
- Spending on corporate learning by enterprise companies is forecast to increase to $11.8 billion- a projected 4.3 percent increase for 2003.
- Learning programs touched 11.3 million enterprise employees in the last year.
- Learning programs touched 7.3 million people employed at customer and client companies, making customer learning and training one of the largest of the learning programs instituted by enterprise companies.
- Nearly half (47 percent) of the workforce for enterprise companies has participated in an average of three learning programs in the past year.
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About the Study
CLO, Chief Learning Officermagazine and Fairfield Research Inc. sent e-mail to learning and training professionals at enterprise companies in the United States, directing them to a survey questionnaire that was uploaded on to one of Fairfield’s CyberSurvey.com sites. The survey was completed and submitted by n=292 respondents. The maximum error range for a study with n=292 is plus or minus 5.7 percent. However, due to the mean-score data utilized (much more stable statistic), the error of the mean is much lower than that of a percentile-response.
