Outsourcing of Training and Development

Organizations now are using a unique approach to provide training internally by outsourcing their training departments. This they have found is a way that reduces costs improves productivity and relives them from the need of constant upgradation. Handing over the organizations training function over to “experts” in many ways also improves the quality of training. These experts have a lot of advantages; they are constantly upgrading themselves to differentiate themselves from the competition and add value to their clients, by virtue of the multiple clients they serve – they have an upfront feel of the best industry practices; training costs can be tracked more objectively and can help align your training’s with your strategic objectives in a far better manner.

Outsourcing of Training and Development

Outsourcing of training and development activities means comprehensive, end-to-end outsourcing—from the management of the training function to the design, delivery and reporting. Training BPO refers to the transfer of management and execution of one or more complete ongoing training and development processes or the entire training function to an external services provider. For many companies, outsourcing employee training and development makes financial as well as business sense.

Outsourcing of training and development functions makes a lot of sense for most organizations. The training function is often a decentralized operation. Most companies are unsure of how much they spend on training across the enterprise, and don’t really know what or how much they need. Of course the process of identification, analysis, design, development, deployment and evaluation varies from group to group, department to department and division to division, even within an organization. What is necessary within the training function is to make outsourcing a value-added component of business by taking a customized approach and building in an ability to make it repeatable within the contextual needs of the organization. In order to ensure that quality is not lost and that the unique cultural attributes of each company, division and department are considered, even a repeatable program must be reviewed and adjusted as necessary.

Take the case of Golden Harvest Seeds, Inc. The company needed to train its network of field sales employees and 2,000+ dealers. It had no full-time training personnel, and chose to implement an outsourced model providing video-based training online. It saw revenue increase nearly 22 percent the first year of training, and had the best sales year in the company’s history. The head of sales observed, “We’re getting more done with less money … training costs fell to less than $100 per person per year.”

Benefits of Outsourcing of Training and Development Activities

Today most organizations know that their people are the company’s greatest asset, and human capital management must take on new depth and scope to compete successfully in today’s markets, it’s clear that training must find better ways to deliver tangible, measurable value to the organization. So they will elect to revamp their in-house learning departments by themselves so that training reflects business strategies and productivity goals. But an increasing number of companies are exploring the alternative of outsourcing their training needs to specialists who can reconnect training to core business objectives at lower costs and with greater flexibility and efficiency. The most common benefits of outsourcing of training and development activities to external service providers are the following.

  • Produce cost savings: The potential for cost savings is the initial reason most companies investigate outsourcing. “The supplier reduces costs through consolidation of services, re-engineering of processes, automation of administration and delivery, leveraging economies of scale across multiple clients, and driving deeper vendor discounts.
  • Deliver high-quality, efficient services and products: By outsourcing training, companies can focus resources on improving their products.
  • Provide cutting-edge technology: Another benefit of this narrow focus is that the BPO provider stays on the cutting edge. With recent improvements in technology, there are a lot of different ways to provide knowledge. “It’s hard to stay abreast of all of the changes when you’re a small internal group.”
  • Focus can remain on core business activities: After all, every company has a limited number of human resources. These resources should be focused on servicing your customers and improving your product, not implementing training systems. That’s the job of a company whose core capability is implementing the respective business process. So, the responsibility of training programs is to be assigned to outsourcing company whose core business is to ‘provide training’.
  • World-class solutions and expertise are accessed: World class design teams with expertise will work on training programs. It is inevitable to get the world class solutions in a cost effective manner. It is difficult to an internal trainer to keep abreast of new training methods where the outsourcing agency is updated with the new interventions.
  • Competitiveness is enhanced: The firm’s competitiveness can be increase by the way that the organization can look into core business activities while the outsourcing agency can provide training on improving the KSA’s.
  • Cost structure becomes variable: The internal trainer provides the same training with in the same environment for years so ultimately the cost structure would be fixed irrespective of training needs. But the cost structure becomes variable with change in training needs the needs can be better identified by out side agency rather than internal trainer.
  • Unutilized funds can be made available: It is people, with their skills, relationships and values, who drive and take the company forward. It is better to invest considerable sums in the development and training of human resources within management, knowledge sharing, communication and development of personal and professional potential.
  • Operating expenses are reduced and controlled: The internal trainers who are not experts in preparing training policy, training budget and training schedule are incapable of controlling the cost exertion. Where the training agencies are specialized in the above said activities can minimize the cost which brings about the cost advantage.
  • Activity is better managed: The activity is better managed by training agency because they are experts in conducting training programs. They can create interest among the participants by using ice breakers. It is human tendency to think that external people who are totally new to us can perform well.
  • New ideas are acquired: Internal trainers after observing the training methodology followed by external agency they also try to develop the skills required for conducting programs. Also, finds new methods of training.
  • Risk is reduced: Total responsibility lies with the external agency resulting to the reduced risk for the company.

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