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Learning Outsourcing Driven by Need to Focus on Business Priorities and Develop Talent

Learning outsourcing contracts continue to be driven by client needs to reduce their administrative burden and focus on their corporation’s strategic objectives. And talent development is high amongst client business priorities where HR can make a significant impact, being a leading driver for clients outsourcing their learning services.

NelsonHall’s most recent learning BPO (LBPO) market analysis reveals the following are top drivers for LBPO:

  • Cost effectiveness and efficiency. It may not always be the number one reason why clients outsource learning, but it is one of the top drivers for ~70% of buyers. Clients are looking to provide learning services that are better and less expensive than they can provide internally and are also looking for the flexibility of having a variable cost structure
  • Talent development to improve workforce capability and performance. Clients are looking to improve employee skill sets, including management and leadership skills. As companies increase their hiring and baby boomers are retiring (~10k people per day in the U.S.) clients are looking to  develop skill sets internally and ensure knowledge transfer of those leaving the workforce
  • Client realization that while they need to invest in learning again, they no longer have the capability and are unwilling to reinvest internally
  • Improved business results and ROI. Through investments in learning, clients are looking for improved productivity and faster speed to market
  • Clients are seeking increased levels of innovation, including in technology, delivery of services and process improvements. A number of clients have changed vendors for reasons including the need for more innovation
  • Need to focus on more strategic objectives. The learning organization is not a core competency of most companies and clients are looking to reduce their administrative burden to focus on top business priorities including talent management
  • Consolidation and centralization of multiple learning organizations within the same company
  • Development of a social and more collaborative learning strategy.

An example of a learning outsourcing contract that reflects several of these key drivers is KnowledgePool’s £3m, three-year learning services contract award by a U.K. insurance company this month. KnowledgePool will provide Managed Service Provider (MSP) services and manage all external learning for the client's 13,900 employees in the U.K. MSP services will include:

  • Sourcing
  • Evaluating
  • Administering
  • Managing

Further services provided by KnowledgePool include:

  • Independent training procurement, including consistent terms and preferential rates
  • Learning administration
  • Technology, including people and processes for data reporting
  • Advice and guidance to utilize informal and blended learning
  • Learning analytics.

In addition to cost savings, maximizing its ROI, and improved learning to improve employee performance, a key objective for the insurance company is to free up its in-house learning and development team to focus on its' more value-added and strategic objectives.

What will be the leading driver for learning outsourcing going forward? In 2010, talent development was ranked number eight amongst the reasons for outsourcing learning, in 2012 it moved to number three, and in 2014 it reached the number two spot. Talent development shows every sign of becoming the No. 1 reason for outsourcing learning in 2015 and beyond.

NelsonHall has recently begun its sixth global LBPO market analysis, targeted for completion by summer 2015, and will include the very latest analysis of drivers for LBPO.

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