| Designed for Corporate Executives interested in learning more about training outsourcing services, these short information items provide important data on marketing, sales, profits, trends, and other updates in a condensed format. Members may click on "see slide," where available, to access specific Facts and Figures. |
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According to the 2005 ASTD State of the Industry Report, an August 2004 study done by ASTD and IBM of 174 learning executives found that interest in training outsourcing increased significantly in 2004. The study found that decisions to outsource learning function activities were driven primarily by operating cost reduction, lack of internal capability, and the desire to gain access to best practices and talent. The weakest driving force was transformation of the learning function. |
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The 2005 ASTD State of the Industry Report stated from an ASTD/IBM Study on training outsourcing of 174 learning executives, the top 7 "Driving Forces for Outsourcing Decisions" were (1) Operating Cost Reduction - 67%; (2) Lack of Internal Capability - 46%; (3) Access to Best Practices and Talent - 43%; (4) Avoidance of Capital Costs - 25%; (5) Improvement of Quality and Consistency of Content - 22%; (6) Measurement and Accountability - 21%; and (7) Transformation of the Learning Function - 17%. |
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According to research conducted by TrainingOutsourcing.com, 79% of the suppliers surveyed believed the development of standards for the training outsourcing industry would help increase adoption rates of outsourcing by corporations. |
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Lifelong Learning Market Report, published by Simba Information, estimates spending on training outsourcing grew 12% in 2004 to $500 million. For 2005, LLMR projects that growth rate will nearly double to 20%, with about two dozen major outsourcing deals now in the pipeline expected to close in the next 12 to 15 months. |
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In a 2004 survey conducted by TrainingOutsourcing.com, 61% of the buyers surveyed believed it was likely or very likely their organization would increase the percentage of training outsourced to external training companies in the near future (one to three years). |
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According to a 2004 report by Accenture, high-performance organizations, representing approximately 10 percent of the organizations surveyed, exceeded their peers in productivity (as measured by sales per employee) by 27% more than their competitors', revenue growth by 40%, and net income growth by 50%. |
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According to research done by The Exceleration Group in 2003, of the total dollars corporations spend on training activities, 52% goes to customer education activities, 42% goes towards employee learning activities, and 6% goes to training supply chain interests (channel partners and suppliers). (see slide) |
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In a 2004 study conducted by IDC, it was found that the three project based activities which training professionals depended on outside vendors the most were content development (60% of respondents), instructional delivery (54%), and access to subject matter experts (37%). The same study found that the single activity which training professionals depended on vendors for most on a long term basis was ‘hosting learning technologies or e-learning content’ (37%). (see slide) |
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IDC reports that in the years 2005 through 2006, the areas where training investment will grow the most will be in learning technologies (59% of respondents) and payments to outsourced service providers (38%). 17% of the respondents said they saw no significant growth expected in the next two years. (see slide) |
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It has been estimated that most Fortune 500 companies utilize a decentralized business model when it comes to organizational structures for training functions. In a 2004 study by IDC, training professionals were asked “Over the next 2 years do you believe your organization will become more or less centralized in the way it manages training and development processes?”. 58% of the respondents said they believe it will become more centralized, 31% said it will remain the same, and 11% said it will be less centralized. (see slide) |
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IDC reports in the July 2004 issue of CLO Magazine that “27 percent of CLO’s report that they intend to significantly increase spending on the development of their own staff. This spending is being driven by greater availability of cash and the need to prepare training personnel for the intense changes they will continue to face in delivering value to the organization. Development efforts will likely be concentrated on improving performance consulting skills, leveraging technology when developing and delivering training, applying management accounting principles and perhaps, better managing vendor relationships.” |
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The Exceleration Group estimates that the expenditures (market size) for training and development services in North America for 2005 will exceed $119B. Expenditures include internal salaries, facilities, supplies, outsourced services, etc. This includes an estimated $54B targeted for Employee Training expenditures and approximately $65B for Customer Training. |
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According to the 2005 State of the Industry Report by the American Society for Training and Development, US corporations internal costs for training have decreased steadily since 1999, when internal costs accounted for 68% of learning expenditure. In 2004, internal costs decreaed below 60%. |
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It is estimated that corporate America spends approximately 2.34% of payroll on training. It is also estimated that companies who are “training investment leaders” spend as much as 3.2% of payroll on training programs (ASTD 2005 State of the Industry Report). It is believed that there is a direct correlation between the levels of investment in training and a firms’ performance in the marketplace. |
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In a 2004 study of US corporations conducted by The Exceleration Group, the percentage of training department expenditures going towards the functional processes for learning, 28% went towards content creation, 25% for content delivery, 22% for facilities, labs, and learning dedicated real estate, 10% for marketing and communications, 8% for material fulfillment, 5% for registration services, and 2% for billing and chargebacks. |
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Spending per employee for U.S. corporations increased from 2004 to 2005 by 16.4%. Average spending for FTE's increased from $820 to $955, after two previous years of remaining steady. (ASTD 2005 State of the Industry Report) |
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Annual training hours per employee for 2004 averaged approximately 32 hours, up from 26 hours in 2003. (ASTD 2005 State of the Industry Report) |
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A 2004 study The Exceleration Group of human resource executives in US corporations concluded that the most important factor in choosing a training outsourcing partner was ‘talent level of suppliers staff’ (22%), over industry experience (20%) and cost (16%). |
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According to the ASTD 2005 State of the Industry Report, the industry sectors with the highest levels of expenditure per employee in 2004 were financial and utililties. |
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In 2004, ASTD reported the industry sectors with the highest learning hours per employee were technology, services, transportation and utilities. (ASTD 2005 State of the Industry Report) |
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Delivery via learning technologies continues to increase among US corporations, according to the American Society for Training and Development. In 2004, 28.1% of the training delivered was through a technology medium. 68.1% was delivered in the classroom, and 3.8% was delivered through other means. Delivery via learning technologies is projected to increase to approximately 32.5% of training delivered in 2005. |
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In 2004, tuition reimbursements accounted for an average of 13.4% of learning expenditures. (ASTD 2005 State of the Industry Report). It is projected that it will increase to 13.5% in 2005. |
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In 2004, the average cost per learning hour declined from $56 to $50 per hour in benchmark organizations. (ASTD 2005 State of the Industry Report) |
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In 2004, the top three content areas for enterprise training were industry specific topics, managerial and supervisory, and business practices. (ASTD 2005 State of the Industry Report) |
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The Exceleration Group estimates that the number of RFP’s issued by US corporations for the purpose of training outsourcing services during the 2004-2005 period have increased four fold over the 2001-2003 period. |
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