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Learning Outsourcing Remains Stable Across Asia Pacific

Despite technological advancements (e.g. Web 2.0) and the economic downturn, learning outsourcing trends for Asian Pacific companies appear to have remained stable in the last seven years. In Cape Group’s 2005 study on companies in this region, we observed the following trends:

  • Asian Pacific companies were showing an increased interest in outsourcing some or all of their learning function
  • The drivers for outsourcing were similar to those in other parts of the world, including: cost reduction, increased training effectiveness, improvement in internal processes, flexible staff arrangements, increased strategic orientation of learning staff, engaging skills not internally available within the organisation, increasing the value of the workforce, improved customer perception of products or services and competitive advantage
  • There was an increasing trend towards selective outsourcing with the most commonly outsourced learning functions being content development and technology infrastructures
  • There was a global trend to comprehensively outsource all learning functions, yet Asian Pacific companies were slow in this space showing reluctance to let go of certain functions
  • Companies commonly experienced a number of challenges associated with vendor relationships, skills and resourcing, culture, familiarity with learning outsourcing practices, executive engagement, change management and benchmarking.

Cape Group recently revisited these findings to determine whether any changes in trends occurred in last seven years. It was interesting to find that there has been little movement from the 2005 trends. The most common driver for outsourcing the learning function is still cost reduction, where others included the need for innovation and efficiency. Technology infrastructure, namely e-learning, Learning Management System (LMS) and Learning Content Management System (LCMS) are still the most commonly outsourced learning functions and; the amount that organisations intend to outsource in the future is expected to not change significantly.

A change in trend we have noticed is the increase in the outsourcing of delivery of learning (i.e. classroom and instructor led courses). We also observed an emerging trend for organisations to adopt of a Software as a Service (SaaS) learning solution (LMS or LCMS). Some organisations in our sample had already began using a SaaS solution, and it is expected this trend to continue given the increasing amount of software vendors quickly adapting their LMS or LCMS to offer SaaS based solutions.

On a final note, contrary to expectations, we found that the global trend towards more comprehensive outsourcing did not occur. It still appears to be a rare decision by Asian Pacific companies, as they are acting from a risk management perspective. Companies find it difficult to trust vendors to completely understand the business requirements and strategy and adjust their services accordingly. This lack of trust in vendors is also most likely a reflection of the same challenges organisations continue to experience. It is hard to lay fault at the organisation or the outsourced vendors, however the issues are focused on the need to establish a good relationship; build trust; capability of vendors and communication with vendors. There is evidence that organisations are looking at ways to overcome these challenges with the introduction of training on how to transition to and manage an outsourced function.

On a whole, our findings showed that Asian Pacific companies are still selectively outsourcing learning functions and it’s driven by the same reasons. What is concerning is the fact that companies are still experiencing the same challenges. The old business model based on cost reduction seems to still take precedence over the pitfalls associated with an outsourcing relationship. The future also remains to be seen how the SaaS learning solution will affect the outsourcing market. While it’s early days, it is anticipated that there will be more and more organisations heading down this path.