More and more companies are turning to an outsourcing strategy for functions that do not directly contribute to mission-critical strategies that drive the success of the business.
by Site Staff
February 19, 2004
More and more companies are turning to an outsourcing strategy for functions that do not directly contribute to mission-critical strategies that drive the success of the business. IT outsourcing has already become commonplace, and HR is not far behind. Learning departments also have been increasingly outsourced in recent years.
“The industry is shifting,” said Tom Starr, senior principal of learning services for Convergys Employee Care, a business process outsourcing (BPO) company. “There’s tremendous activity out there, and there are a lot of very smart and very visionary people who are eager to partner with the outsourcers.” But the outsourcing of learning is still relatively new—an emerging strategy for companies looking to get the most out of their investments in education.
Starr has been unofficially, unscientifically tracking the outsourcing of learning since 000. In 000, he saw one major learning outsourcing deal. There were two in 001, five in 00, 10 in 003 and half a dozen already awarded or on their way to being awarded in the first quarter of 004. “Even if you total all those deals up, it’s not that many. It’s really an emerging industry,” said Starr. “But it is an industry that seems to be accelerating, and as a handful of providers that are focused on providing outsourcing services get more scale from a client perspective, clients are going to demand more knowledge back.” This could include data analytics and comparisons of metrics with other clients. “I think we’re trying to do that, and as we build scale, we’ll do it even more and do it better,” Starr added.
BPOs already have a lot to offer companies that want to outsource their learning. According to Starr, they can provide content design, development and delivery, host an LMS or content, administer training and handle scheduling and logistics. “That would be a soup-to-nuts kind of outsourcing engagement,” said Starr. “We’re doing those activities for the State of Florida.”
Outsourcers can also provide what Starr calls “out-tasking”—providing smaller pieces of the overall learning solution for a company. “What they’re doing is buying sort of very discrete, very specialized services from specialized niche providers,” said Starr. Convergys operates on what Starr called a single source or sole source provider model.
No matter which route you take, you have to be prepared for the challenges associated with outsourcing. Starr said there are two kinds of challenges: those associated with the transition and management of a client’s learning organization and those that occur upfront. Because the learning BPO space is still in its earliest stages, a lot of the challenges clients face come in the initial stages of the outsourcing arrangement. Starr said the decentralized nature of training in most organizations can present its own problems. “Training is so broadly distributed and disaggregated throughout an organization, oftentimes it’s difficult for all but the most visionary and energetic client to pull all that together into a shared service, which really is the prerequisite for outsourcing,” Starr said.
Thus, choosing an actual provider is not the first step a client must take when transitioning to an outsourced strategy. The first step, Starr said, is to determine whether there is really a business case for outsourcing. Companies must look carefully at their program to determine if there is an opportunity to cut costs, to deliver more learning to more employees and to defer investments. “Is there some business case that outweighs the degree of organizational change or organizational disruption?” Starr asked. “That’s nothing profound—it’s what any client would look at when undertaking some significant improvement.”
With a background in organizational behavior, Starr is equipped to help organizations answer those questions. “If I come in and I look at the typical training organization, I say there’s incredible inefficiency, there’s incredible cost that’s seeping out of here, there’s lack of sharing, people aren’t leveraging best practices, they’re not reusing content—all these sorts of things that occur so there’s great business opportunity around cost and efficiency and synergy,” said Starr. “By the same token, it’s not a small task to then go out to the businesses and say you want to pull some of this into a shared service because you think you can do it more efficiently and effectively, because obviously some of the businesses will jealously guard those capabilities.”
Once the organization makes it through those initial steps, choosing a provider is easy, Starr said. “Frankly, you can count the number of providers on one hand,” he explained. “You’re looking for people who are scalable, reliable and have assets and are not going to be out of business tomorrow, who are good at managing relationships and partnerships, and good at integrating technology and know how to manage the transition of a client to a caring and efficient outsourced environment.”
When most clients are considering outsourcing in any area—from HR to finance to learning—cost reduction is generally the benefit they’re looking for, Starr said. But there are additional benefits, including deferral of capital investment. “Companies out there that might be looking to purchase a learning management system or invest significantly in developing e-learning content can actually purchase that from the supplier on a variable basis,” Starr said. “So for example, with an LMS, if you do business with us, you’re not going to buy 100,000 licenses up front. You’re going to buy what you need, and we’re going to distribute that cost over the life of the contract, which is going to be five to 10 years.”
In addition, Starr said a BPO has the infrastructure available to get e-learning up and running faster. “The idea with e-learning is we’ve already built out a network of partners, we’ve already built out an integrated technology infrastructure that clients can access, so oftentimes we can get them to their e-learning goals quicker,” he said.
“We believe that here’s an opportunity out there for organizations to really dramatically change the cost-value equation for training, to get more training in the hands of more people, to do it at less cost and to increase the quality and effectiveness of training through outsourcing,” Starr said.
For more information on Convergys Learning Services, see http://www.convergys.com/employeecare_learning.html.
Emily Hollis is managing editor for Chief Learning Officer magazine. She can be reached at firstname.lastname@example.org.
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