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Learning & Development

Published May 2009

Learning Outsourcing

 

  Lynne Wagner

In a weakened economy, with stalled credit markets affecting industries across the board, the ripple effects of such turmoil extend deep into all organizational levels. The resulting battle for cost cuts ensues, led by unit leaders lobbying to make the case about why their budgets should be spared.

Once departmental jockeying subsides, a number of strategic and financial imperatives rise to the surface, including reducing redundancies, operational costs, capital expenditures and labor expenses, and improving financial management, productivity and customer relationships.

Historically, an organization's training budget is first in line for cuts. Delivering on learning objectives can be arduous during the best of times. When times get tough, even strong believers of learning's intrinsic value to their organization may find their beliefs put to the test.

Luxury or necessity, whatever side of the training debate a company falls on, most talent managers with learning responsibilities are struggling to figure out how to prove the value of learning amidst significant budget cuts.

But consider this: When profits are squeezed, attracting and retaining customers and increasing their spending become paramount to an organization's survival. Factor in the employees' role, and their professional development ought not to be regarded as a perk, but as a mandated business directive. When talent managers neglect to develop the people who produce, refine, deliver, sell, promote, service and manage products and services every day, they run a much larger risk for lost business, causing further erosion of the bottom line.

According to the White House Office of Consumer Affairs, on average, it costs a company five times as much to win a new customer as it takes to retain an existing one. Some 91 percent of unhappy customers will never purchase products or services again, and organizations don't want "wronged" customers telling between eight and 16 people about their negative experiences.

In this economy, few organizations can afford to take those kinds of risks.

Why Outsource Learning?

To build stability and future growth, organizations need to make a commitment to keep learning as a vital part of their overall core business models. This includes an increased focus on organizational culture, development, design, information and knowledge sharing. In doing so, costs and administrative burdens may increase. Consequently, employing streamlined, cost-effective business strategies to accomplish these tasks becomes mission critical.

Control capital costs by reducing labor spending. This is one of the primary reasons for outsourcing. Many large organizations retain an in-house training department with a stable of staff trainers. Switching from a fixed, staff-trainer cost model to a variable, contract-trainer cost model can significantly reduce labor expenses, freeing up capital for investment in other revenue-generating areas of an organization.