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Dec

The View is Worth the Climb – Part 6 (b)

Outsourcing

Well, I have talked about transformation and the need for transformation of training, primarily driven by the fact that from my perspective, we have this broken investment value equation and there’s a huge need to fix the value side of this thing so that companies get more business impact from this very large investment they’re making.

The second thing I’ve talked about is how “Running Training like a Business” can be a methodology, if you will, that enables transformation if you can apply the key principles of effectiveness and efficiency and everything that falls underneath them. Companies will benefit from that sort of focus and that sort of management process around the elements of training and training delivery.

So, now I’m going to talk about outsourcing as one of the tools available to organizations to do part, if not all, of the transformation. Those of you who know me are probably saying, “Wow, it’s about time you got to this.” And that’s right…it is about time.

You know, I think that outsourcing is a true enabler and the right kind of tool an organization should use to help in its transformation. I’ve been in this space for so long, going on for almost 15 years now, on both the buy side and the provider side, that I think I understand the elements of outsourcing, the implications of outsourcing, and the potential value it can deliver.

What I find interesting though that there’re few topics that elicit such emotion in the training space as the word “outsourcing.” And a lot of it, I think, has to do with the fact that people are fearful that if they outsource, their jobs will be lost and things won’t happen because they’ll lose control. There are normally three arguments for not doing outsourcing beyond the fact that senior training folks believe it doesn’t work. The three arguments are:

• It doesn’t work.
• It doesn’t take cost out as promised.
• Outsourcers can’t know my business like I do.

Here’s what I would contend. I would content that if you haven’t looked at outsourcing as an option available to you to either reduce your cost and/or improve the value, then I would say you are not serving your company well. You’ve got to look at it as an option—whether you choose it or not is another question.

Choosing it depends on:

• the business case,
• the capabilities you’re looking for,
• the current state of training,
• whether you have lots of waste redundancy,
• whether you’re not organized appropriately to create value, and other such things.

I believe it’s critically important that all organizations take a hard look at outsourcing, at various levels, in order to determine whether they should take advantage of the tool and of the service in order to drive value for their business.

Let me address the emotional side of this thing.

• First off, it doesn’t take cost out. Well, there’s lots of evidence that outsourcing does take cost out—maybe not as much in training outsourcing as in areas like IT, HR, and finance. You would assume that if you could carry that forth, training would play the same way. Knowing that we have this huge investment in training—a thousand dollars on average or seven hundred dollars; whatever the number is, it’s big per employee per year spend on training. In the makeup of that number, some 30% is infrastructure, some 30% staff, and some 30% is vendors. There’s lots of opportunity to do things a bit differently and take cost out.

But I would submit that if you’re only looking for cost reduction, you’re probably missing the opportunity because cost is not the end game. Cost is probably the entry ticket for outsourcing, but if outsourcing doesn’t help you deliver more value, then it is underperforming; and if you’re not delivering more value, then you’re underperforming. So, there are opportunities to take cost out in areas like training administration, learning technology and technology management, delivery and delivery management, and vendor management. All those things are highly leverage services. Many organizations do them in decentralized ways and don’t take advantage of the high leverage that they can get on their own and then, furthermore, that they can get from an outsourcing provider who does this work for multiple companies and, therefore, is able to leverage their resources and cost across a larger base than an individual company can on its own.

• The second issue or myth of outsourcing is there’s no company that can know my business like I do. I submit that that’s a smoke screen put forth by lots of training leaders and training people who are, quite frankly, threatened by the outsourcing notion. I would say that outsourcing doesn’t mean that you totally separate from the key subject matter, subject matter experts, culture, and business know-how of the company. I have seen it work. I have seen an outsourcer come in and become employee-like in the eyes of the business and the functions and know the business as well as, if not better, than the training organizations that previously existed for the business. So I don’t think it’s a valid argument. I think it’s a smoke screen and I think it’s easily overcome if organizations would give it a chance.

• The third argument that I often hear is that outsourcing doesn’t create value (the value that I’m talking about is business impact). I would say that it depends on the processes that are in scope for an outsourcing deal and whether or not you’re giving your outsourcing partner the opportunity to do some of the things they do best in order to create value.
So, let’s say you’re outsourcing a lot of content development through third-party providers, and you’re doing it through an outsourcing provider who’s managing third-party providers. If all you’re doing is throwing the need over the fence and saying to the outsourcing provider, “Go find me a vendor that does this,” then the ability to make an impact other than a cost impact—by getting lower vendor prices and taking away the vendor administration job from the training organization—and the opportunity to create an impact is minimal. However, if you engage your partner in the process of understanding needs, determining solutions, and determining options for those solutions, then you can insure that your partner goes in search of best-in-class capabilities and brings forth the right kinds of responses that can make a difference for the business.

Click on the link below for the podcast version of this blog post.
http://img.en25.com/Web/NIIT/ed_trolley_blog6.mp3

Thanks
Edward Trolley