With increasing pressures to provide more return on investment for their training initiatives, many organizations are taking a more strategic view of vendor relationships and outsourcing. Synonymous primarily with software services and back-office process
by Site Staff
June 2, 2004
An obvious, primary benefit of outsourcing is the significant cost saving and improvement to the bottom line. Depending upon the work processes outsourced, some organizations save up to 60 percent in content development costs alone. Cost savings may also be realized by outsourcing development and maintenance of e-learning technologies, such as learning management systems (LMSs), content management systems (CMSs) and authoring platforms.
Saving costs is not the only reason to consider outsourcing, however. Significant quality improvements, such as consistent instructional design and ongoing content maintenance, can also be cost-effectively derived through outsourcing. Many organizations haven’t built the competencies or processes in-house for developing and delivering e-learning, and this provides a way to provide expertly designed e-learning at a reduced cost. Also, outsourcing is often used to overcome resource shortages. For example, countries such as Ireland and India have significant English-speaking resources that can be engaged in the design and development of learning content. A robust educational system in developing countries, such as India, China and the Eastern European nations, provides access to highly skilled individuals in the areas of linguistics, IT and engineering, etc. All these factors add up to allow corporations access to any content expert with proficient English language skills, at less than half the cost of similar resources elsewhere.
While organizations are primarily driven to outsource training content development because of cost savings, the trend to outsource this work to specialist vendors is heightened by two other reasons—increasing need for content and increased pressure to improve the quality and consistency of training produced to meet these expanding requirements. It’s the classic “more for less” story heard everywhere in organizations today.
Fuel for Learning
In the first wave of e-learning, many organizations bought and invested heavily in e-learning and training infrastructure. Millions of dollars were invested in the delivery systems, such as LMS, LCMS and CMS, and in the authoring tools. Just as the infrastructure was being deployed and the users could be trained, the economy turned sour. The organizations faced with slashed training budgets were left in a peculiar situation—they had the vehicle to deliver training, but not enough fuel since they were left without enough budget to develop significant content. Still other organizations were slower to adopt e-learning, and when the inevitable budget cutting came, they were left without the infrastructure or the content, but with customers who were increasingly demanding e-learning. This situation was exacerbated by increased need for employee training as stretched employees struggled to perform even more job duties and customer training and companies tried to reduce customer support costs. To meet these challenges, they outsourced content development. Since then, organizations have been using their own or hosted training infrastructures to build content libraries effectively and to reach wider audiences within the constraints of budget and time.
In recent months, some training organizations have seen a shift toward centralized functions. Centralization has put the onus on training management to ensure that training is not only the best of breed but is also standardized and consistent in quality. Therefore, training executives are now working closely with the specialist vendors–the outsourcing partners–to control and maintain quality and consistency of training material, be it e-learning content or classroom courseware. In addition to improving training effectiveness, education organizations are also under tremendous pressure to reduce time-to-train or time-to-market.
When to Outsource?
Despite the obvious benefits of outsourcing, does it make sense for every organization to outsource? The answer is no.
Just as in software development services, e-learning outsourcing also needs to be implemented as a strategic initiative. The organization needs to be as prepared to outsource as the vendor is prepared to manage the outsourced operation.
Size Does Matter
Outsourcing can lead to tremendous cost savings. However, organizations must remember that cost savings actually build up over time. The potential for cost saving in the early part of the outsourcing initiative is offset by one-time relationship establishment costs, initial time lags in development and the possibility of rework until the relationship between the organization and the vendor matures. Short-term engagements that are less than six months in duration or less than $150,000 annually may fail to achieve any major cost benefits.
Obviously, the benefit lies in outsourcing medium-to-large contracts. Size matters because it’s mutually beneficial for the organization and the vendor. The organization wields a higher buyer bargain, and the vendor gains production efficiencies by reusing resources, passing the efficiency on to the customer.
Maturity Makes It Easy
Organizations with a clear definition of finished deliverables (the output), well-aligned resource responsibilities (the process) and requirement acquisition (the input) have been shown to outsource more effectively than those without a reliable and consistent work plan that includes elements of all three—the output, the input and the processes.
Organizations can measure the reliability and consistency of their input and output by using the Outsourcing Maturity Matrix. (See Figure 1.)
Input maturity is a measure of how well the information (e.g., input content) required to develop the output (e.g., WBT) is documented and available for the vendor. Tacit requirements, such as acquiring content from the subject-matter expert on an application that is under development, are harder to capture and can result in requirement mismatch.
Output maturity is measured by the definition of repeatable units of production. The better the articulation of repeatable units, the less likely expectation mismatch is. Also, repeatable units help improve the quality of the finished deliverable and reduce cost in the long run through continual, incremental improvement to the production process.
Organizations with medium-to-large training budgets, whose input and output converge on Quadrant A are likely to derive maximum benefits through complete outsourcing to offshore vendors. Organizations in quadrant B, C and D are best advised to selectively outsource e-learning development or outsource in a combination of models. We will discuss more about selective outsourcing and the outsourcing models further in this article.
Figure 1: Outsourcing Maturity Matrix
Road Map for Successful Outsourcing
With increasing pressure on training budgets and senior management emphasis on improved ROI of training infrastructure, outsourcing proves to be the answer for many organizations. In addition to careful selection of the outsourcing partner, internal training organizations need to discipline the work plan—the input, the output and the processes—prior to outsourcing. Even then, this transition from internal development to outsourced development is fraught with road hazards. Call them teething pains.
Client organizations can take several steps to minimize, if not completely eliminate, the road hazards on the path to outsourcing. For first-time offshore outsourcing clients, reorientation of the internal training organization and selective and/or dual-shore development models are two ways to mitigate the risks.
Reorient, You Must
Success of outsourcing initiatives largely depends upon successful requirements management and standardization of output. This helps minimize conflict between the expectation and realization of benefit. Here, the internal training organization plays an important part in supporting the outsourcing operations by effectively managing client and vendor processes. In the absence of outsourcing partners, the role of the internal training organization has been one of the supplier to the businesses it supports. To ensure a successful outsourcing relationship, training organizations need to play two roles interchangeably—one of a supplier to the business users and another of a customer to the outsourcing partner.
Managing quality reviews is a good example of this reorientation. Due to lack of clarity about the final product, reviewers might approve interim deliverables, only to be dissatisfied with the final deliverable. Internal training organizations should define requirements and articulate specific quality checks and parameters to help the reviewers envision the final deliverable.
Outsource, One Step at a Time
In the selective outsourcing model, organizations may choose to outsource a part of the learning development process. For example, the content development lifecycle could be broken down into three defined phases: design, development and delivery. Depending upon the spread and competencies of internal resources, training groups may choose to outsource one or all of the phases. Selective outsourcing allows budget-stretched training organizations to meet their business commitments by doing what they do best and allowing outsourcing to do the rest.
In dual-shore development, the outsourcing partner performs part of the work process on-site and part of it offshore. This proves to be one of the most cost-effective and comfortable work models for many. This model works best for organizations that fall under Quadrants B and D in our input-output matrix. (See Figure 2.) Because of a lack of consistency in output units, Quadrant B organizations might choose to engage vendors on-site to articulate and document output requirements and conduct quality reviews on the final output in the test environment. Organizations with a clearly defined output but obscure explicit requirements will need to engage vendors on-site to capture and document requirements from tacit sources.
Organizations with a high level of input and output maturity are best positioned to offshore entire work processes. On the contrary, organizations with tacit requirements and inconsistent units—Quadrant C organizations—may want to engage vendors on-site before outsourcing work or moving into a dual-shore development model. Another alternative for Quadrant C organizations is to engage professional services firms for advice on establishing a firm input and output definition to derive the maximum benefit from outsourcing.
Figure 2: Preferred Outsourcing Models
Gaurav Chadha (email@example.com) and Nafay Kumail (firstname.lastname@example.org) together have more than 16 years of experience managing vendor-side e-learning operations. Gaurav and Nafay are authors of the book “ E-Learning—Expression of the Knowledge Economy” (McGraw-Hill).