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Why American Companies Are Outsourcing Their Major Training Functions?

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Why American Companies Are Outsourcing Their Major Training Functions?

According to training industry.com, North American companies spend around 58% of their training budget on insourced activities and 42% on outsourcing. As per clomedia.com, the most frequently outsourced learning function is custom content design and development and training delivery. Moreover, it says 46% of the companies have increase their outsourcing training budget in 2015.

So why are the companies looking for external vendors to support their training functions? Why are they looking to increase their training budget spent on outsourcing? Here are some of the reasons.

1. Training is not their core function

For most of the companies, training is a vital process. But it is not their core function. So managing training using their internal staff, developing online learning courses, and developing the learning technology software without external professional learning organization support is a difficult task. So these companies outsource a majority of the training activities where they feel like they need experts to handle.

2. Training at the speed of the need

Organizations belonging to Hi-tech industries launch new products in the market in a quick succession. The time required to train the sales teams or the resellers to successfully market the products will not be adequate. These organizations use the services of the external service providers for developing the training in quick time and delivering it at the speed of the need.

3. Lack of sufficient resources

Organizations whose learning requirements cannot be met with the available staff, try to outsource rather than recruit a new team because recruiting and training the employees require additional time and money. Recently, one of the major accounting firms in the United States outsourced their e-learning projects to us, as their L&D staff size is limited. The reason for outsourcing is that they have tight deadlines that cannot be met if they recruit a new team that has to be trained before making them to work on a project.

4. Mitigating risks

There are some areas in trainings which when not handled well lead to failure, for example, developing online training courses. The organization may have exceptional trainers, mangers, and SMEs, but if they lack the e-learning development expertise, then their online training initiative may not yield successful results. So to mitigate such risks, organizations tend to outsource certain areas of the training function.

5. Reducing costs

This is the #1 reason why organizations outsource their training functions. Offshoring the requirements to the vendors whose core function is training enables organizations to develop training by the experts at low lost. E-learning outsourcing enables companies to cut costs and optimize their internal resources. A research done by IBM clearly demonstrates that outsourcing clients consistently outperform their peers on key financial metrics, including Selling, General and Administrative (SG&A) expenses, Earnings Before Taxes (EBT),and Operating Income and Return on Assets (ROA; IBM, 2010).

These are the major reasons for not only American companies but also global firms to outsource their training functions. Do you have anything to say? Please do share!

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  • Sindhuja Sibi

    Outsourcing can reduce the half of the work of Medium level companies.Outsourcing Companies in India,takes the major effort and work for the better result for the benefits of their clients.