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European, Multi-Country & Selective Contracts Dominate 2015 Learning BPO Market

The global learning BPO (LBPO) market was worth $2.9bn in 2014 and NelsonHall forecasts it to grow at 6.7% per annum, reaching $4bn by 2019. But what is the current pattern and nature of LBPO deals, and how are things changing?

Recent LBPO activity has been largely from Europe, a trend which began to pick up in 2014. Activity is widespread across Europe, including the U.K., Germany, Nordics, Denmark, and Benelux.  Recent wins include NIIT Ltd.’s multi-year contract to provide managed training services to Citi in EMEA, where it has a presence in 54 countries. To support growth in Europe, NIIT has opened a new delivery center in Dublin, Ireland, providing bespoke content management, training management, and delivery services. QA is also moving to a new, larger learning center in Manchester, U.K.

Europe is also the target for emerging LBPO suppliers, such as InfoPro Learning, which began expanding its focus from content development to providing end-to-end LBPO services in 2014.  Much of InfoPro Learning’s recent growth has been from contract expansions with its existing clients, but its future growth strategy includes targeting European headquartered organizations.

Elsewhere, Australia has also been a hot market, with one of the larger deals including Raytheon’s competitive win with an Australian supermarket chain. 

While the average contract length has been trending down over the last few years, primarily due to the surge in selective LBPO contracts, there has been a slight increase from an average duration of 3 years in 2014 to 3.25 years in 2015.

Multi-country LBPO contracts have also become more prevalent. In 2014, multi-country LBPO contracts accounted for ~32% of activity, which increased to ~38% in 2015. In addition to NIIT’s contract with Citi, it also signed a LBPO contract with Vestas Wind System across 25 countries, including Denmark. Other examples of multi-country LBPO contracts include Raytheon’s win with Honda Motor Europe Ltd. in the U.K., Germany, and pan-European countries, and IBM’s contract with a global aerospace company.

Selective LBPO contracts consisting of two learning processes dominate activity and vendor pipelines. In 2014, the most common bundle included learning administration and vendor management services, but in 2015 selective LBPO contracts have been more mixed, though relatively consistent across the different bundling options.

Full LBPO bundles accounted for ~15% of 2014 contract activity and ~19% of 2015 activity, including Raytheon’s competitive win with Telstra, and Xerox’s renewal with a pharmaceutical company.

While the year is not yet over, it is clear that European, multi-country and selective contracts are where the action is right now in Learning BPO.

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