November 30 2004 10 00 am PT Outsourcing

November 30, 2004 10: 00 am PT Outsourcing the Training Function: A Growing Trend Facilitators: Brandon Hall, Ph. D. CEO/Lead Researcher (408) 736 -2335 info@brandon-hall. com A. G. “Buzz” Bainbridge Managing Director Associates and Channels The TRACOM Group buzz. bainbridge@reedbusiness. com

The INs and OUTs of Outsourcing: Questions We’ll Answer • Why outsource? • Who are the major players? • What are their value propositions? • Where do I start? • How do I manage outsourcing…and expectations? 2

Why Outsource? • Main goal: minimize fixed costs • Fixed costs vs. variable costs 3

Other Drivers • • Save money and track costs You’re swamped Desire for consistency Link learning with business strategy Lack of resources Lack of expertise Integration woes Keeping up with technology 4

Do I have any other options? • Revamp your existing learning strategy • Corporate shared services • Outsourcing must be the best solution for the problems you • face, or you shouldn’t do it. 5

Learning from Case Study: Reasons for Outsourcing • Just driving costs out? • Shift from ILT to e-learning? • Expand capabilities? 6

What Do Outsourcing Companies Do? As little or as much as you need 7

Levels of Outsourcing • Levels range from. . . the simplest and least risky, . . . to the most complex and expensive • Out-tasking • Administration and Support (back office) • End-to-end Training Outsourcing 8

Value Proposition: Why Executives are Interested • Cost savings • Vendor management • Content development • Fixed costs • Latest technology for network and elearning • Learning and business expertise • Core competency 9

The Players • Accenture Learning • Intellinex • Exult • Intrepid Learning Solutions • General Physics • Knowledge. Pla net • IBM • Raytheon Professional Services • Convergys • ACS 10

Accenture Learning - NYC • Full outsource • Business interlock • Global reach and scale • Major clients Avaya GE Consumer Finance Citrix 11

Convergys - Cincinnati, OH • HR-Outsourcing + Training • Digital. Think acquisition • Offshore content development • Major clients Circuit City State of Florida State of Texas 12

Exult – Irvine, CA • HR-Outsourcing + Training • Acquired by Hewitt • Sum. Total Systems installations • Major clients British Petroleum Mc. Kesson 13

General Physics – Elkridge, MD • Early contract with GM • Full learning outsource • ISO 9000: 2000 registered • Major clients Ford Motor Company Texas Instruments Pfizer – new contract 14

IBM Learning Services – Armonk, NY • Acquired PWC Consulting • Full learning outsource w/ global reach • Lotus Learning Management System • Align learning with strategy • Major clients e. Army. U Cingular Swedish Railroads 15

Intrepid Learning Solutions – Seattle, WA • New business launched with Lguide • Privately held • 100% focused on training outsourcing • Major client Boeing 16

Knowledge. Planet – Mechanicsburg, PA • Hosted enterprise learning suite • Training back-office operations • “Running Training like a Business” • Major clients BMW Financial Services Marsh, Inc Chevron. Texaco Corporation 17

Raytheon Professional Services – Dallas, TX • Trained US pilots in the 30’s • Auto industry trng – NA, Europe, Asia-Pac • Global scale and reach • Major clients GM Lockheed Martin Chevron. Texaco Corporation 18

ACS, Inc – Dallas, TX • IT Outsourcing roots • ILT into e-learning • HR with training outsourcing • Major clients Motorola Goodyear Tire & Rubber Company 19

Geo. Learning, Inc. – Des Moines, IA • IT Outsourcing roots • Geo. Learning platform • E-learning expertise • Major clients State of New Jersey U. S. Office of Personnel Management 20

Example: Outsourcing Training or HR? • Many companies offer bundling so both functions can be outsourced • Potential cost savings if HR is outsourced • Potential cost savings if training is outsourced 21

What vendors claim vs. what you can expect • Claimed: 50% reduction in costs • Expect: 10 -15% reduction 22

Learning from Case Study: Circuit City • First initiative: 50 courses • HR system was integrated with delivery platform • Trainees found courses fun and worthwhile • Costs were cut significantly: average training time cut from 200 hours to 68 • Accessible courses motivated employees to complete more 23

Case Study: Avaya and Accenture Learning • Delivery of learning in 90 countries • LMS and portal – up in 4 months • 200 Avaya staff joined Accenture Learning • Portion of training that is e-learning: 23% before vs. 81% now • Time for learners to become proficient: 60% less time now 24

Costs Involved with Outsourcing • Basic formula: – The outsourcing vendor often may base the cost on anticipated savings 25

Typical Timeframe • Needs assessment: several months • Implementation: typically 2 -6 months 26

Where do I start? • Do your homework: • • Calculate current costs Identify your learning strategy What are corporate objectives? How will you measure the objectives? • Hint: Let the vendor help you do the assessment. 27

Learning from Case Study: Outsourcing Led to Strategy Change • Major shift: commissioned sales force vs. hourly • Better customer service • Savings estimated at $130 million 28

Will People Lose Their Jobs? • Staff reduction is common with comprehensive outsourcing • While layoffs are often perceived as bad for people, it’s good for the company • It’s common for some staff to be absorbed by the vendor to assist with multiple outsourcing projects 29

Benefits of a trial project: • Less money invested • Less time invested • Opportunity to reevaluate goals 30

Managing the Vendor: Things to Know • What you want (cost savings or improvement to performance? ) • That the deal is negotiable after the analysis phase (both client and vendor) • Don’t underestimate the importance of the relationship 31

Managing Your Organization: Things to Do • • Get buy-in from executive level Assign a gatekeeper Keep control of your strategy Hold on to your intellectual property 32

Learning from Case Study: Benefits of Buyin • CEO was among the first to take the new courses • Other departments are eager for elearning 33

Conclusion Outsourcing – Fad or here to stay? 34

More Info: www. brandon-hall. com 35