Training Outsourcing

Staff training and development has been regarded as human capital investment for most companies.  The return on training investment is positive as an organization with skillful workforce can achieve their quality objectives and policies and drive profitability at a faster pace.

 

However, the process of training management which include training needs analysis, training administration, training providers selections, training effectiveness evaluations, post-training follow-ups, and many more are often time and labor consuming, and most of the time need experienced and knowledgeable staff to manage it.  Today’s human resources and training professionals are challenged with increased expectations and reduced resources.  Many factors contribute to the decision to choose a training outsourcing solution as a business strategy.  Whether the goal is to increase flexibility, improve quality, or to reduce costs, knowing that the services are being expertly managed by a trustworthy partner is critical for success.

 

Many large organizations are offloading their training administration function to outside specialists with the worsening economic situation.  More and more companies opt to outsource tasks like payroll, IT functions, warehousing and logistics and administrative, among many others.  Some have even outsourced their entire training function.  They’ve done their calculations and determined that business functions that don’t contribute to their bottom line should be offloaded completely.  For these companies, it’s simply a matter of holding down costs by outsourcing high-volume drudgery – thus, freeing their company to focus on core competencies and business units.  This is also inline with the lean manufacturing and lean operations strategies – cutting down the wastes.   According to a recent survey, almost two-thirds of Fortune 1000 companies are currently outsourcing some of their HR function.

Training outsourcing will soon be another hot topic in the corporate circle. However, there is still a lot of uncertainties around the major advantages and also the overall outsourcing business. Parts of the outsourced training services include:

 

Solution Sourcing
Just like in any outsourcing business, the first step to training outsourcing is to look for a strategic partner.  A good supplier sourcing management must be in place to identify the right potential business partner.  The recent upgraded ISO9001:2008 has put an emphasis in the business outsourcing management.   The first step to the training outsourcing is to define the Outsourcing Strategy, which include few processes:

 

1) Defining Objectives and Scope – understand what to outsource and the scope of the training outsourcing.  Ask yourself if you want to outsource the entire training process, or just a portion of the training, such as Training Needs Analysis (TNA) or Training evaluation and reporting.  Determine the critical success factors for the training outsourcing.
2) Collecting and Analyze data – Benchmark against few companies, the services they offer and strengths in the outsourcing business.  Evaluate market trends (what will be the common and upcoming programs, skills needed for th e similar industry).  Conduct market survey or hire research companies to benchmark in different industries or other countries.
3) Identify internal requirements and supply market – Know the supply (external) and demand (internal) of the training requirements within your company and the industry.  Identify standardization opportunities, operational requirements, and terms and conditions.
4) Develop strategy and quote process – Work out a win-win partnership with the outsourcing partner to create a path to achieve your objective and at the same time, giving the highest return on investment from training.   Develop strategies based on total cost model, risk assessment, and supplier relationship strategy.

 

To avoid running into problems in term of services, Service Level Agreements (SLA) must be in place.  SLA is a formal document that defines the ‘Rules of Engagement’ between the company and

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the supplier for proper management of mutual quality and quality regulatory needs in a training outsourcing arrangement.   This is performance-based technique where a written agreement is established to define the key service objectives, metrics, and acceptable quality levels.  A typical SLA normally consists of:

 

* Definition of services
* Performance, tracking and reporting measurement
* Problem management
* Legal compliance and resolution of disputes
* Customer duties and responsibilities
* Security and confidential information / protection of intellectual properties
* Warranties
* Termination of agreement

 

Training Assessment and Planning
The second phase of the training outsourcing is to work with the selected solution partners to get an overview of the current learning and development landscape of your company, through a thorough gap assessment.  A skill versus training matrix should be established to determine the skills and knowledge levels of employee in their respective job areas.  A comprehensive interview session with the head of departments is to be done to ensure the right skills needed for the employees.  The output of the assessment will be channeled to the planning process, where the solution partners will map out the right training programs and define the critical success points for measurement.

 

Solution Implementation and Training Measurement
Training effectiveness must be emphasized to ensure the transfer of knowledge and skills during the training sessions.  In training outsourcing management, most companies use the Kirkpatrick’s 4 Level of Evaluation as a benchmark to assess the effectiveness.

 

Level 1 Evaluation, which is also known as ‘Reactions’ is to measure how participants in a training program react to it.  It attempts to answer questions regarding the participants’ behavior and perceptions – whether they like and enjoy it?  This basic level of evaluation is mainly targeted as a feedback process for improvement of a training program. 

 

The second level of the evaluation is emphasizing on the actual Learning process itself.  This evaluation is beyond satisfaction, and attempts to assess the extent of participants have advanced in skills, knowledge or attitude.

 

Next level of evaluation involves the measure of transfer that has occurred in learners’ behaviors due to the training program.  This measurement gauges how the participants utilize the knowledge, skills and new attitude in their day-to-day function and if they implement it correctly.

 

The last stage of evaluation is ‘Results’ where the bottom line of the training – return on training investment (ROTI) will be evaluated.
Most training outsourcing companies have special software to assist in the evaluation, and often is part of their Learning Management System (LMS).

 

Administrative Support
Administrative support from an outsourced training solutions provider can include reporting, logistics, tracking and administrative so that participants can focus on learning while internal resources focus on adding value.  All these administrative supports are commonly found in an e-LMS system.   Some of these jobs can be ‘offshored’ meaning, the training outsourcing is done by a solution provider in another country.  With the advancement of technology, most companies are making use of this opportunity to further cut down their operational costs by outsourcing portion of the training and learning to providers in certain countries. 

 

Advantages and disadvantages of training outsourcing
This type of partnership is characterized by a very open sharing of proprietary information, cooperative responsibility for planning and dedicated resources from the supplier partner.  A strong level of understanding and trust, with a good SLA is essential to protect the interests and intellectual properties of the company and the solutions provider.

 

The main advantage of having a portion or the entire training to be outsourced is cost-saving. Studies showed most companies spent a substantial amount of budget in maintaining non-core operations, such as payroll, IT, HR, recruitment, logistics and others.  In an economy

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downtrend, these are normally the first few departments to be targeted for cost-cutting measures.  Some companies realized that there are hidden costs, apart from the normal benefits and remunerations, if they have their own staff to run these support operations, as opposed to being outsourced.  Some companies believe they can leverage on the experts help in training outsourcing, where new fresh ideas can be injected to drive the creativity and innovation in the whole learning and development environment.   Training solution providers can share and benchmark the whole training landscape of different industries.

Another advantage is having the subject matter experts (from the training solutions provider) to develop the entire training module, customized to the internal requirements.  In most situations, the companies will engage these subject matter experts to transfer their knowledge and skills to a group of selected internal trainers.

 

Standardization can also be achieved through training outsourcing as certain critical training modules can be standardized to be taught in other countries with the similar operations, or to selected suppliers.

 

However, as pointed out earlier, the disadvantages of training outsourcing can be the danger of leaking sensitive information through a third party, and also loss of intellectual properties (proprietary training materials, internal company information and others).  There may be also a risk of having a training solution provider who may have a limited knowledge about your industry and also operation processes.  They tend to give overall generic information which may not be effective in driving your training development.

 

Conclusion
In an economic slowdown, most companies are looking for solutions to cut operations costs. Thus, training outsourcing may be atop the ‘strategy list’ now.  Major companies, such as General Motors, Fords, and DuPont had engaged training providers to be their long term training partners to conduct training internally and externally for their suppliers across the globe.

 

With the emergence of technologies, a more responsive Learning Management System can be developed to assist in the training and development of the most important assets in an organization – the employees.

 

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About the Author
YK Tang is the managing consultant for TACH Solution, a leading training provider in Malaysia focusing in driving Quality and Productivity improvement issues for Supply Chain Optimization. Email him at yktang@tachsolution.com or visit www.tachsolution.com.

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