Issue link: https://www.e-digitaleditions.com/i/227268
Outsourcing Insight Learning's Comeback Organizations are seeing the value in investing in their own workforce amid talent shortages. By Gary Bragar The global talent shortage has had at least one positive effect: It's pushing the learning business process outsourcing (LBPO) market forward. Organizations are investing in learning once again in order to boost job skills training, talent development, leadership development, and performance management. According to NelsonHall's latest LBPO market analysis, the global LBPO market, valued at $3.3 billion in 2012, is expected to finish up at $3.5 billion in 2013. It's forecast to reach $4.5 billion by 2017. This is the best growth seen since 2007, before the recession hit. North America is still the largest LBPO market, followed by the U.K. The Asia Pacific region is expected to have the highest growth. The global LBPO vendor league table is led by full LBPO vendors Raytheon Professional Services (RPS), Accenture, IBM, GP Strategies, and Xerox, which combine for a 37 percent market share. The government public sectors are the main investors in learning BPO, followed by manufacturing and high technology. The highest growth sectors are energy and healthcare, followed by financial services, both of which have had strong growth since 2010. The top drivers of LBPO all tie to efficiency and internal improvement: • Cost effectiveness. About 70 percent of clients cited cost as their leading driver. • Talent development. Increased workforce capability and performance was the third top driver in 2012, moving up in 2013 to the second slot. • Lack of inhouse resources. Clients want to reinvest in learning but no longer have the capability internally and don't want to allocate spend to resources or technology, including hosting. The principal benefits achieved through LBPO are in turn connected to its drivers: • [68] Cost savings. Organizations experienced an average cost savings of 30 percent, which is up 5 percent from 2010 - 2012 levels. This is largely attributed to increased investments in content development, which resulted in a cost savings of about 35 percent. HRO TODAY MAGAZINE | NOVEMBER 2013 According to NelsonHall's latest LBPO market analysis, the global LBPO market, valued at $3.3 billion in 2012, is expected to finish up at $3.5 billion in 2013. It's forecast to reach $4.5 billion by 2017. This is the best growth seen since 2007, before the recession hit. • Standardization, consistency, and improved processes. By outsourcing learning, organizations gain business efficiencies through consolidation and centralization of learning processes. • Improved employee performance and productivity. This report finds that employee competencies increased up to 30 percent, leading to improved business results. Major inhibitors to LBPO adoption include resistance to change, lack of buy-in from the business, a corporate culture of wanting to maintain control, and fragmentation of learning across the business so that no decision maker is responsible for the overall budget. Standalone LBPO contracts average 3.5 years in length, consistent with 2012, but down 12 percent from 2010. Decreased contract length can be attributed to client uncertainty and a preference to pay a more variable rate that is based on consumption. Content is King As clients reinvest in learning, they are seeking content development for new curricula that supports job skill training and leadership development. In fact, content development now represents about one-third of the total