Eric R. Parks, Ph.D., President, ASK International and COO, TeraLearn.com, Inc.

Motivated by a desire to reduce the cost of operations and rapidly respond to changing market conditions, many organizations are looking to automate and outsource select business processes. Traditional outsourced business processes such as payroll, advertising and information technology services are now making way for a new kid on the block: training. Spurred by ultra-competitive markets, legal compliance requirements, product shelf lives, knowledge atrophy and downsizing, training demands have dramatically grown in most organizations. Here are some Training Business Process Outsourcing (TBPO) facts:

• Training is the number one business function outsourced (source IDC)
• The market for outsourcing training reached $2 billion in 2003 – a 150% increase from 2002 (source IDC)
• IDC forecasts a $10 billion TBPO market by 2008 with a 40% compound growth
• 56% of Fortune 1000 CEOs report that TBPO is at the top of their lists for outsourcing

So where does this leave us as trainers, training developers, and training managers? Is our job at risk to be outsourced? Will we be working for large consulting firms specializing in TBPO in the future? Let’s delve into these issues.

What is TBPO?

A TBPO relationship is more comprehensive and holistic than hiring a trainer to conduct a team-building workshop for your organization, for example, or having an independent instructional designer write some training materials. The chart below compares the characteristics of TBPO with project outsourcing and off-shoring:

Criteria	Specific Project	Off-Shoring	TBPO
Length of Project	Short	Short	Long
Exclusivity	None	None	Master Contractor
Project Management	Provided By Client	Provided By Client	Provided By Vendor
Strategic Direction	Provided By Client	Provided By Client	Provided By Client
Scope	Single Service	Single Service	Multiple Services
Example Engagements	Conduct training Session Write ILT training module Storyboard WBT module Conduct audience analysis Participate as a member of a larger project team	Program in Flash from a client-prepared WBT storyboard Provide graphic arts support	Conduct organizational needs analysis and based on results design, develop and deploy e-Learning Provide learning support for new software rollout including ILT, WBT and performance support tools Manage all training vendors

In all cases, the client company retains the role of defining the business goals and objectives, regardless of the outsourcing options described above. The major factors that differentiate TBPO from other training outsourcing are project management, scope and exclusivity. TBPO engagements typically are multi-year, large, complex efforts with a highly defined, exclusive relationship. Most of these engagements have a master contract in which smaller efforts are defined and executed. Typically the TBPO requires a blending of services such as research, design, development and deployment.

Why Are Organizations Outsourcing?

There are many reasons organizations outsource training:

1. Reduce costs

During the steepest recession since the 1930s, many organizations have cut staff as well as training and development functions. Faced with an improving economy, organizations are rethinking their staffing models. They are asking questions such as:

• Can I outsource my trainers?
• Can I outsource e-Learning design, development and deployment?
• Can I outsource all training design – both ILT and WBT?
• Can I outsource IT training services including help desk, job aids, online help and tutorials?
• Can I outsource LMS/LCMS functions?

A rapidly growing number of companies are concluding that they can reduce costs by outsourcing.

2. Respond rapidly to market conditions

I have written extensively on the fact that e-Learning development pales in comparison to the costs of courseware maintenance and growth (see It’s Alive! The Hidden Costs of e-Learning at ). Companies must be able to keep up with the accelerating speed of market change. Rightly or wrongly, many companies view training organizations as slow to respond.

3. Free up training staff to focus on tactical and strategic issues

Over the last decade, training departments have redefined themselves from platform trainers or training designers to performance consultants. More and more training departments have taken on the role of conducting research and organizational interventions, leaving the design, development and deployment of these interventions to be outsourced.

4. Avoid the complexity of e-Learning design and deployment

Organizations do not feel competent in e-Learning and look for ways to outsource the infrastructure/hosting, design and development of courses.

What are the most common challenges?

For every benefit there is a corresponding challenge. The chart below examines each of the benefits defined above and highlights how each can also be viewed as a challenge.

Benefit	Challenge	Comment
1. Reduce costs	Appears expensive and hard to cost justify compared to internal resources	To cost justify, costs must be defined by the organization. What does it cost for an internal instructional designer? How much throughput can be expected? The organization must conduct a cost analysis to determine benefits.
2. Respond rapidly to market conditions	Learning curve for the vendor Can vendor become competent in content areas?	There is a fear that vendors will not have the prerequisite company or product knowledge to be rapidly productive.
3. Free up training staff to focus on tactical and strategic issues	Loss of control over intellectual property Internal staff may require retraining for new job responsibilities	Organizations must be extra careful with a TBPO relationship. Non-disclosures are a must. But the bottom line is that you cannot remove knowledge about your organization, products and services from the minds of your outside contributors. Ultimately, the vendor can go to your direct competitor and offer similar services.
4. Avoid the complexity of e-Learning design and deployment	No sponsor to support initiative	An executive with budget authority must take interest in the effort or it will not move forward. A business need must be identified that justifies the technology.

What are typical TPBO models?

Three outsourcing models that are commonly deployed by organizations include:

• Total: The vendor takes 100% responsibility for all training operations, while the company provides goals, objectives and direction. One example of this model is an automobile manufacturer that recently outsourced its entire training operation to a vendor. All training operations employees were transferred from the car company to the training vendor, including trainers, designers, developers and managers. The company retained the facilities, but the badges changed.
• Partial: The vendor takes responsibility for all e-Learning design, development and deployment, but the company retains all ILT design, development and deployment. ASK recently wrapped up a three-year contract building over 75 e-Learning modules and helping the client company to hire and train a replacement staff.
• Select: This model allows a select number of activities to be outsourced. These activities might include all compliance training or all WBT design, but not the infrastructure.

What is needed to implement TPBO?

The most important step an organization must take when deciding on implementing TPBO is to define its business goals. It is through this definition that the organization can derive what it wishes to achieve from outsourcing. The organization must define the outcomes for success such as:

• Reduce costs
• Reach new audiences such as channel partners
• Generate new revenue streams through customer education
• Increase customer satisfaction
• Increase competitiveness by implementing state-of-the-art learning technology

Once the outcome measures are defined, the organization must determine the best approaches. Key questions to ask include:

• How will this be funded? Capital expense? Profit generated from services or product sales? Reductions in staffing?
• Who will be responsible for which tasks? (Define in detail the vendor’s and company’s responsibilities.)
• What is the scope of services to be provided? Is it to include both ILT and WBT design, development and deployment? Is it to include maintenance of these courses or will this be handled in-house?
• How are requirements communicated in an RFP to vendors for bidding?

How to you ensure a successful TPBO relationship?

Question: “What is the difference between a vampire and most training consulting firms?”

Answer: A vampire eventually lets go.

An unfortunate outcome of some TPBO relationships is a dependency. ASK recognizes this and has developed a series of principles over our 22 years of implementing small and large training solutions for our client companies. We believe these principles are essential to a successful TPBO relationship:

1. Treat the relationship as a marriage with open and consistent communication, respect and trust.
2. The client company should provide a clear set of objectives and goals to the vendor. These goals need to be revised and assessed quarterly to make sure the team is always on track.
3. View problems as opportunities. The vendor should take responsibility for mistakes and fix them. Beware of companies that constantly make excuses.
4. The vendor should provide support and mentoring (in-house, 1-2 days) to enable future internal development and/or maintenance. If a vendor refuses to provide mentoring and education for bringing the tasks in-house, do not work with them. Ask the vendor to provide a detailed, documented training and mentoring plan. Ask them for sample agenda and materials.
5. For all WBT projects:
• Open source code should be provided with documentation.
• Copyright and ownership should reside with the client company. If a company is using library components, the vendor should license these to the client company for use.
• Media files, including graphics, video and audio must be provided to the client company.

Is your organization ready for TPBO?

The checklist below is provided to help assess an organization’s readiness to implement a TPBO relationship. To assess your organization, count the number of yes responses and compare it to the scoring ranges at the bottom of the checklist.

Questions/Issues	Yes	No
Is your company under pressure to reduce the costs of design, development and deployment of training?
Does internal staff lack expertise in e-Learning?
Does your organization need to rapidly expand its reach to new audiences (channel partners, customers)?
Is new technology being implemented that impacts the way large numbers of employees work?
Does your organization face short product development life cycles?
Have you defined your cost of operations so you can compare these costs with the estimates provided by a vendor?

Scoring: 4-6 Good Fit for TBPO; 2-3 So-So Fit for TBPO; 1-0 Poor Fit for TBPO

Will your next training job be outsourced?

Do you remember in 1998 when many research studies predicted that e-Learning was going to replace stand-up training? It never happened. e-Learning turned out to be a lot harder to implement than anticipated and learners in general did not like it as much as ILT.

I think we are in a similar situation with outsourcing in that the reality will fall short of the hype. Training will continue to be outsourced to some degree, but I think most organizations will be very reluctant to cede control of their intellectual property to a vendor. I am betting that the TPBO total model will rarely be implemented and that we will most likely see a partial or fragmented implementation of TPBO. So, if you are a training professional in a large organization, I am betting that your job is safe.

Sources:

Survey of Current and Potential Outsourcing End-Users , The Outsourcing Institute, 1998.

Outsourced Learning: A New Market Emerges, Paul Harris, a freelance writer and frequent contributor to Learning Circuits and T+D Magazine.

Doug Harward, Founder of TrainingOutsourcing.com, CEO and Managing Partner, The Exceleration Group.

Outsourcing, Training and Education, Garry J., ASTD, 1999.

About Dr. Eric Parks

Dr. Eric Parks founded ASK International in 1983 as a premier distance learning design and development firm. His design philosophies have been featured in trade journals such as Training Magazine, Technical Training, Online Learning, Creative Training Techniques, Training Directors Forum, LineZine and The Training Manager's Quick Tip Source Guide, 2002 Jossey-Bass Inc. Publishers. Dr. Parks supports fundraising opportunities at ASTD chapters and not for profit organizations. Please contact Nicole Sigstad at (916) 536-1279 or nicole.sigstad@askintl.com for additional information.