"Because training costs are fairly high," remarks Mark Fritsch, director of Northern States Power Co.'s Quality Academy based in Minneapolis, "companies that are only doing 3,000-hours worth of business-skills training can't afford to hire anyone in-house. So they need to outsource it. There needs to be some critical mass of training before you can afford to get your own in-house people."
Fritsch indicates that local educational institutions are playing a growing role in providing such services. "We're seeing great interest in outsourcing partnerships with a lot of the existing technical schools and community colleges that are able to reduce costs and improve effectiveness."
Companies turn to outsourcing as a way to cut costs.
Cost pressures caused Atlanta-based Equifax to develop a creative new approach to outsourcing-one which not only pares internal training costs, but also controls the cost of outsourcing. "Three years ago, we cut our training staff to a few people, developed our own courses and hired contract trainers to teach them," recalls Lynn Slavenski, vice president of education and organizational development at Equifax.
These free-lance consultants often are displaced professionals or graduate school students who want to break into consulting. "This is different than hiring consultants whom you pay perhaps $2,000 a day because they use materials they've developed. Since our contract trainers use our materials, we're able to pay them much less. We don't do that with higher-level training, however. Sometimes we need high-priced consultants and need to pay for the expertise they bring."
Slavenski's approach also saves Equifax the cost of outside materials which she feels tend to be expensive and aren't always customized to the company's needs. "Because we create our own materials or contract to create them," she explains, "I don't use a lot of packaged programs. I don't like paying $200 or $300 a package. For a high-level class I might. But it's too much for basic classes. I'd rather spend that on other things, like self-study."
Outsourcing also solves another perennial problem for trainers-the waxing and waning demand for training. Rarely is training provided to the same extent at all times throughout the year. When at times a great deal of training may be offered, little or none will be provided at other times. Hiring a full-time staff capable of meeting the organization's training needs during peak seasons, therefore, also means paying those same trainers when little or no training is planned. Outsourcing, on the other hand, provides companies with the flexibility to use and pay trainers only as needed.
While corporate downsizing has been one of the primary causes of the growth of outsourcing, not everyone is confident the downsizing trend is permanent. President Richard Silton, of Silton-Bookman Systems, in Cupertino, California, a record-keeping software producer for trainers, believes the trend may turn around. "The downsizing movement hasn't played itself out yet," he insists. "I think it will go the other way when people begin to realize they've lost critical resources that can't be acquired through outsourcing."
If Silton is right, then the implication is clear-HR departments need to make sure they don't restructure their training programs to the point at which they may find it difficult to reverse them, if necessary. It could be that the pendulum is still seeking equilibrium.
Assuming that a great deal of training will continue to be outsourced-and for the foreseeable future, that's likely for many organizations-what does that mean for in-house trainers? Most likely, they're experiencing a change of focus. Vendors need supervision and input. In-house trainers also will need to coordinate their efforts with those undertaken by vendors. And finally, in-house trainers need to learn enough about their vendors so they'll be able to make intelligent selections.
Workforce, June 1997, Vol. 76, No. 7, pp. 98-100.