Given the pressures facing learning organizations, it’s no surprise cost saving remains a primary driver for learning outsourcing. But a deeper look reveals a more selective approach reflecting the trade-offs inherent in today’s learning organizations.
In May, the editors of Chief Learning Officer surveyed the CLO Business Intelligence Board (BIB), a group of nearly 1,500 professionals in the learning and development industry, to assess and benchmark outsourcing practices in learning and development. The full analysis of the results was released Monday in “Focus on Outsourcing,” a Chief Learning Officer report.
Forty-eight percent of executives who said they outsource learning reported that cost is the top reason. This is a significant increase from 2009, when only 34 percent reported cost as the primary driver.
While cost remained the primary driver, learning executives also appear to be making targeted decisions about what to outsource. An overwhelming majority of organizations chose to outsource individual parts of the learning function rather than the entire function (97 percent vs. 3 percent).
Looking at the activities that are outsourced reveals the priorities within many of today’s learning organizations. Training delivery was the most frequently outsourced activity (41 percent), followed by custom content design and delivery (38 percent). Learning executives tap into external subject-matter expertise when needed to fill out their learning programs and are willing to outsource delivery and other transactional aspects of the learning function. This allows them to conserve internal resources to focus on higher-value proprietary needs such as strategy development.
Practitioners in government, financial services and manufacturing were most likely to use outsourcing (69 percent, 56 percent and 52 percent, respectively). Education and health and medical services reported the lowest usage of outsourcing (35 percent and 40 percent, respectively).
Spending on outsourcing remained steady, registering only a small drop from 2009 to 2010. On average, survey respondents spent 23.5 percent of their overall learning budget on outsourcing, compared to 26.4 percent in 2009. Looking ahead, most respondents expect some change in their spending. Thirty-seven percent expect to increase their outsourcing spend and 20 percent expect it to decrease. Forty-four percent expect it to remain the same.
While the spend remained steady this year, reported satisfaction with outsourcing providers has dropped, indicating higher expectations for the outsourcing relationship. In 2009, 5 percent of learning executives reported dissatisfaction with their providers. This spiked to 23 percent this year. Learning executives are expected to do more with less in the post-recession environment and have transfered that expectation to their outsourcing partners.
So while the primary driver for outsourcing remains cost, the numbers suggest that learning executives are taking a targeted, high-stakes approach that retains control of key internal activities while outsourcing non-proprietary and transactional functions.
