Why Is Outsourcing So Popular in the Enterprise?

Enterprises also outsource because training as a function has a hard time holding itself accountable to direct business impact. “If you’re the VP of sales for Cisco and you’re announcing some massive new product, you know that your salespeople need to be trained,” said Bersin. “You go to your head of sales and say, ‘OK, I need everyone trained on this new product in the next three months,’ and that person runs around like a maniac and gets all that training done. You don’t always know if he did a great job. It’s hard to measure directly. So, the training organization is asked a lot of questions that it can’t answer: How much impact did you have on this? On that? Did you do that on time? The CFO or the line managers sometimes say, ‘Well, we can’t hold the training guys accountable. No matter how many times we ask these questions, they never seem to give us quite enough information. Maybe if we outsource it, we can hold the outsource firm accountable, and since we’re paying them, they will respond much more quickly to our needs.’”

Additionally, Bersin said that companies don’t like having fixed costs that they can’t change easily. “If you take an aerospace firm, for example, where they’re in a very cyclical industry, they might have a period when they need a massive amount of training,” he explained. “Then for a couple of years, they need very little. They don’t want to have to lay all those people off and then rehire them. If they outsource, they can just say, ‘Next quarter we need 100 more courses; the following quarter we don’t need any,’ and let that other company worry about the hiring and firing of those people. This allows that organization to take the fixed cost and turn it into a variable cost.”

While saving money is usually the biggest reason organizations outsource, faster response time is another. Training is frequently a time-sensitive problem, and many training programs change rapidly due to new product rollout and a host of other factors, which means that the challenges faced by training departments are constantly changing. “They’re constantly in the process of building content and training programs,” said Bersin. “The companies that they might outsource to are very, very sophisticated and efficient at building content. You can accelerate the process by outsourcing it to specialists. Because training is so multi-disciplinary, you can improve the cycle time a lot. Speed is a major benefit.”

He added, “What surprised me the most was how much money people are saving. I’ve been on the vendor side of the world and I know how they work. An outsourcing vendor wants to take over something for you that they can do cheaper and charge you as much as they possibly can to make a profit. They’re not really incented to save you money. So sometimes when you outsource things, they’re not cheaper—they’re just easier. What we found in the study was, people are actually saving a lot of money. There are a lot of inefficiencies in training organizations that can be saved by bringing in specialists or offloading functions to different people.”