Outsourcing the Training Function: A Growing Trend

1. November 30, 2004 10:00 am PT Outsourcing the Training Function:A Growing Trend Facilitators: Brandon Hall, Ph.D. CEO/Lead Researcher (408) 736-2335 info@brandon-hall.com A.G. “Buzz” Bainbridge Managing Director Associates and Channels The TRACOM Group buzz.bainbridge@reedbusiness.com

2. The INs and OUTs of Outsourcing: Questions We’ll Answer • Why outsource? • Who are the major players? • What are their value propositions? • Where do I start? • How do I manage outsourcing…and expectations?

3. Main goal: minimize fixed costs Fixed costs vs. variable costs Why Outsource?

4. Other Drivers • Save money and track costs • You’re swamped • Desire for consistency • Link learning with business strategy • Lack of resources • Lack of expertise • Integration woes • Keeping up with technology

5. Do I have any other options? • Revamp your existing learning strategy • Corporate shared services • Outsourcing must be the best solution for the problems you face, or you shouldn’t do it.

6. Learning from Case Study: Reasons for Outsourcing • Just driving costs out? • Shift from ILT to e-learning? • Expand capabilities?

7. What Do Outsourcing Companies Do? As little or as much as you need

8. Levels of Outsourcing • Levels range from . . . the simplest and least risky, . . . to the most complex and expensive • Out-tasking • Administration and Support (back office) • End-to-end Training Outsourcing

9. Value Proposition: Why Executives are Interested • Cost savings • Vendor management • Content development • Fixed costs • Latest technology for network and e-learning • Learning and business expertise • Core competency

10. Accenture Learning Convergys Exult General Physics IBM ACS The Players • Intellinex • Intrepid Learning Solutions • KnowledgePlanet • Raytheon Professional Services • GeoLearning, Inc

11. Full outsource Business interlock Global reach and scale Major clients Avaya GE Consumer Finance Citrix Accenture Learning - NYC

12. HR-Outsourcing + Training DigitalThink acquisition Offshore content development Major clients Circuit City State of Florida State of Texas Convergys - Cincinnati, OH

13. HR-Outsourcing + Training Acquired by Hewitt SumTotal Systems installations Major clients British Petroleum McKesson Exult – Irvine, CA

14. Early contract with GM Full learning outsource ISO 9000:2000 registered Major clients Ford Motor Company Texas Instruments Pfizer – new contract General Physics – Elkridge, MD

15. Acquired PWC Consulting Full learning outsource w/ global reach Lotus Learning Management System Align learning with strategy Major clients eArmyU Cingular Swedish Railroads IBM Learning Services – Armonk, NY

16. New business launched with Lguide Privately held 100% focused on training outsourcing Major client Boeing Intrepid Learning Solutions – Seattle, WA

17. Hosted enterprise learning suite Training back-office operations “Running Training like a Business” Major clients BMW Financial Services Marsh, Inc ChevronTexaco Corporation KnowledgePlanet – Mechanicsburg, PA

18. Trained US pilots in the 30’s Auto industry trng – NA, Europe, Asia-Pac Global scale and reach Major clients GM Lockheed Martin ChevronTexaco Corporation Raytheon Professional Services – Dallas, TX

19. IT Outsourcing roots ILT into e-learning HR with training outsourcing Major clients Motorola Goodyear Tire & Rubber Company ACS, Inc – Dallas, TX

20. IT Outsourcing roots GeoLearning platform E-learning expertise Major clients State of New Jersey U.S. Office of Personnel Management GeoLearning, Inc. – Des Moines, IA

21. Example: Outsourcing Training or HR? • Many companies offer bundling so both functions can be outsourced • Potential cost savings if HR is outsourced • Potential cost savings if training is outsourced

22. What vendors claim vs. what you can expect • Claimed: 50% reduction in costs • Expect: 10-15% reduction

23. Learning from Case Study: Circuit City • First initiative: 50 courses • HR system was integrated with delivery platform • Trainees found courses fun and worthwhile • Costs were cut significantly: average training time cut from 200 hours to 68 • Accessible courses motivated employees to complete more training

24. Case Study: Avaya and Accenture Learning • Delivery of learning in 90 countries • LMS and portal – up in 4 months • 200 Avaya staff joined Accenture Learning • Portion of training that is e-learning: 23% before vs. 81% now • Time for learners to become proficient: 60% less time now

25. Costs Involved with Outsourcing • Basic formula: • The outsourcing vendor often may base the cost on anticipated savings

26. Typical Timeframe • Needs assessment: several months • Implementation: typically 2-6 months

27. Where do I start? • Do your homework: • Calculate current costs • Identify your learning strategy • What are corporate objectives? • How will you measure the objectives? • Hint: Let the vendor help you do the assessment.

28. Learning from Case Study: Outsourcing Led to Strategy Change • Major shift: commissioned sales force vs. hourly • Better customer service • Savings estimated at $130 million

29. Will People Lose Their Jobs? • Staff reduction is common with comprehensive outsourcing • While layoffs are often perceived as bad for people, it’s good for the company • It’s common for some staff to be absorbed by the vendor to assist with multiple outsourcing projects

30. Benefits of a trial project: • Less money invested • Less time invested • Opportunity to reevaluate goals

31. Managing the Vendor: Things to Know • What you want (cost savings or improvement to performance?) • That the deal is negotiable after the analysis phase (both client and vendor) • Don’t underestimate the importance of the relationship

32. Managing Your Organization: Things to Do • Get buy-in from executive level • Assign a gatekeeper • Keep control of your strategy • Hold on to your intellectual property

33. Learning from Case Study: Benefits of Buy-in • CEO was among the first to take the new courses • Other departments are eager for e-learning

34. Conclusion Outsourcing – Fad or here to stay?

35. More Info: www.brandon-hall.com