Outsourcing key business functions is a common strategy for information technology and human resources departments. Having other companies do the administrative work or host the technology allows these departments to free up their resources to devote more
by Site Staff
July 14, 2004
Outsourcing key business functions is a common strategy for information technology and human resources departments. Having other companies do the administrative work or host the technology allows these departments to free up their resources to devote more time to mission-critical functions and special projects. In fact, a recent survey from the Society for Human Resource Management (SHRM) revealed that 75 percent of HR professionals believe that they can focus on core business functions when some HR responsibilities are outsourced, and more than half said outsourcing helps than save money. The same strategy can help learning executives get a better return on their investments in education and save thousands of dollars, according to Tom Flynn, vice president of Training at Greenbrier & Russel, a business and technology services firm located in Chicago.
Flynn said that research shows companies spend around $5,000 per person a year in costs related to training. He added that many organizations throw away as much as a third of their budgeted training dollars by not taking an outsourced approach. “Studies show a third of organization’s training budgets go to indirect costs—things that aren’t having an impact on the organization,” Flynn said.
But which parts of the learning function are most appropriate for outsourcing?
The best functions to outsource are those that have little to do with the actual process of learning, including administrative functions, managing vendors, hiring trainers and buying equipment. Flynn said that Greenbrier & Russel breaks it up into three areas: procurement, delivery and back-office administration. “For one long-time customer in Wisconsin we outsource a lot of the procurement stuff,” he said. “Someone else was trying to get away from doing classroom setups, so they outsourced the setups to us. We explain to customers that they can categorize in these three areas, and then we try to focus on an area that’s problematic for them.”
In addition, an outsource partner can provide a single invoice for all learning investments, Flynn said. “The idea of having one invoice that they help design that summarizes everything for the month is popular,” he explained.
When organizations grow, the learning function can become unwieldy, and budgets and staff numbers don’t always keep up with the increased requirements. Outsourcing can help in this instance. For one client, Flynn said a lot of business units were affected by business intelligence training. “It was becoming time-intensive to deal with registrations and confirmations,” he said. “We were able to set up an intranet site that helped them to address that. If you’ve got one person handling everything that deals with confirming classes and enrolling students, you can take that off that person’s plate.”
Outsource partners can also help learning executives research and short-list vendors, Flynn said. “You can’t usually take all of it off someone’s plate, but you can take a percentage off—there’s no need to start at square one,” he explained. “We might be able to come to you with a short list and reduce the amount of time you need to spend researching vendors. A lot of the time, the person saddled with this is a mid-level manager, and it’s not like they don’t have anything else on their plate that’s more important and more strategic.”
Whether it’s IT, HR or learning and development, outsourcing brings up specific challenges that must be addressed to ensure success. Gaining buy-in at the appropriate levels is key. “A lot of times, someone maybe at the training coordinator level may not have the authority,” Flynn said. “Getting buy-in at the highest level is important.”
For learning initiatives, internal marketing can help drive interest in the program and ensure workforce awareness. “We have a customer that goes back to putting up posters by the elevator to promote training,” Flynn said. “How do you get the word out within the organization?”
Outsourcing training and the processes involved with it can help organizations improve their ROI by 15 percent to 20 percent right off the bat, Flynn said, with continued gains in value as the relationship progresses. This can be attributed to reduced internal staffing, increased scalability and flexibility, lower risk for investments, increased accountability and reduced overall costs.
But the greatest benefit, which is often overlooked according to Flynn, is the ability to make learning more strategic. “Everyone thinks cost savings are the biggest benefit, but becoming more strategic is bigger,” Flynn said. “Training departments’ budgets have already been slashed. Almost everybody’s got lost of support functions on their plates. Outsourcing is a way to get the functions that aren’t strategic handled by someone else.”
Many technical, less-strategic functions are handled by mid-level managers who could devote their time to more mission-critical projects, Flynn said. “The cost savings is a no-brainer, but the biggest benefit is strategic value—helping your organization become more strategic by getting these necessary but more technical issues off someone’s back,” he explained.
He added, “Most organizations will readily admit that training is not one of their core competencies. Most companies are at a point where the person working on training is someone who has other things they’d rather be doing. By helping them become more strategic, you can better align your training with your strategic business goals.”
For more information on how outsourcing can drive ROI and help focus learning on strategic business results, visit http://www.gr.com.