As companies’ learning functions gain importance and learning management systems (LMS) are implemented and integrated with other HR systems the administrative burden and support effort increases also.
The prospect of huge savings has therefore started to attract companies to outsource the learning function as a whole, or at least parts of it. And they are right. The learning function is an ideal candidate for outsourcing – it involves mainly low value administrative work and does not add any value to a company’s bottom line. Adding to this are constantly shrinking budgets and the pressure on Chief Learning Officers to do more with less.
Many companies have already freed themselves of the administrative work and handed over learning support processes to specialist providers enabling them to free up existing resources and use them in a more value adding strategic role. The idea behind it is to be as lean and efficient as possible.
The need to reduce costs, focus on core competencies, increase strategy focus and the benefit of planning costs that are normally highly unpredictable drives companies to evaluate the outsourcing option.
Companies with an in-house learning function are typically much less efficient and effective compared to companies who have made training their core competence.
According to Bersin & Associates, the leading learning industry research and advisory services company, companies who have recently implemented a Learning Management System (LMS) and who have in-house training spend an average of US$392 per learner, compared to US$328 for companies that outsource.
Through standardisation of processes, an outsourcing supplier is able to create economies of scale enabling the client to focus on strategic HR processes and other core business and to reduce technical staff significantly. Bersin research shows that companies that outsource their technology platforms only are already able to reduce their technical staff by nearly half, compared to companies with internally managed systems.
Having outsourced the technology to an external partner ensures that the company is up to date with the newest technology and reduces disruption during software upgrades.
Some software companies upgrade their products every three to six months which always involves significant effort. Usually a team of some five technical consultants are involved for four to six weeks. It’s good to pass this responsibility on to external providers. Some providers offer their LMS as Software as a Service (SaaS) which provides the benefit of faster implementation times and seamless upgrades compared to traditional LMS providers.
Apart from the technology and support related to it typical processes that can be outsourced are:
1) Development of curricula and courses on a world wide level and sharing same content between countries
2) Handling of helpdesk phone calls from inquiring learners
3) Devising certification tests
4) System support and hosting
5) Data Administration
6) Learning Facilities Managements
7) Learning Content Management Systems
BPO vendors and HR professionals caution that this type of outsourcing is not for everyone and its success depends largely on a company’s driving force, its industry, the type of training it conducts and how the process is managed.
The recent growth in this market has encouraged several outsourcing providers to increase their service portfolio and add learning as a new product.
How do companies choose the right partner and ensure a successful outcome?
Before starting the selection process is it important to determine if your company is suitable and ready to outsource the learning function. It helps to think about the costs in the short and long term to maintain this function. How will the company’s vision and strategy affect this?
Secondly it is important for a company to understand the exact business motivations – why outsource the learning function? The first question that needs to be answered is whether it is sufficient to look for a partner who specialises in learning and therefore has deep industry knowledge and best practice or is the strategic aim to bundle learning with other HR processes such as performance management? Secondly, depending on the industry you are in it might be worth looking for specialist providers who have in-depth understanding of your particular industry as well as the learning industry.
Other questions that will need to be answered are: Where exactly will the value come from? Reduce administrative costs? Reduce FTEs? Increase quality? What is the geographical scope (local, regional, global)? Languages involved? Training Delivery Strategy: Push or Pull? Answering these questions will reduce choice and help decide on the right partner.
Once you have constructed a strong business case you will have to choose the potential partners who will be invited to submit their answers during the selection process.
Many of the suppliers’ service offerings are very similar or at least sound the same. It may be good to get advice from a specialised sourcing company who understands the often subtle differences between each provider’s offerings.
Preparing for the select phase will take some effort. Try to understand exactly what you are trying to outsource and what your service expectations are. Get learners (internal or external) to help you define the services that you want to outsource. Everyone will have a different view as to what is involved depending on how they use the current processes (i.e. member of staff, contractor, administrator). Staff with little or no computer access might require a telephony service to book training, and staff in a production plant might benefits from hot-spots with touch screens and extra large buttons to be able to access the system while wearing their gloves.
Start selecting by sending a Request for Information (RFI) to no more than five possible partners. This should include an executive summary of the services you are looking to outsource.
After having evaluated the answers and downselected the suppliers to no more than two or three partners send them a more detailed Request for Proposal (RFP). This should include the detailed description of the processes, volumetrics regarding each process, a contractual framework, a pricing template, and your service and responsibility expectations. Also explain to them your current learning landscape in more detail and how whether you’d expect them to take over existing supplier services. At this stage, make sure that you know when existing contracts run out and what exit clauses are contractually agreed.
Design a systems blueprint which you can include in the RFP identifying exactly where the interface with other HR and Finance systems would be. After all the LMS will have to receive information such as new starters and leavers and back charging to appropriate cost centres will be required. Be very open with the possible partners and provide them with the opportunity to ask questions either face-to-face or at least during a phone call. After all you want them to send you their best answer.
When it comes to contracting you should start planning for this early. Find a specialist who can advise you during this phase. This should not take longer than three to six months depending on the scope of processes involved. As HR data will most probably be handled by the supplier it is important to make sure that the contact provides for the kind of care that is required to handle such data.
During implementation it is important to think about the retained organisation. Typically they will be involved with managing the relationship with the service provider. Other activities may include facilities management, aligning learning to the overall business strategy, Information Systems interfaces and data migration, tier one help desk services, etc.
The project can be considered as successful as soon as nobody realises that the process has been outsourced. Additionally, as the catalogue can be streamlined and be aligned to the business strategy this project will also have a visible positive effect on the bottom line of the company. A successful learning outsourcing project is possibly the only situation in which the love for learning and the love for money will actually meet.
Matthias Krueger
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