Outsourcing training can result in both direct and indirect cost savings for organisations. Here’s a breakdown of the potential cost savings in both categories:
Direct cost savings:
Economies of scale gains:
Managed learning services often serve multiple clients, allowing them to spread costs across a broader base. This results in economies of scale, making the provision of training services more cost-effective than managing similar initiatives independently.
Personnel costs:
Outsourcing training eliminates the need to hire and train in-house personnel for training administration, content development and training delivery.
Technology investments:
Managed learning service providers invest in technology to manage training administration. Organisations can avoid any upfront costs associated with purchasing and maintaining such systems.
Content development costs:
Developing high-quality training content requires specialised skills and resources. Outsourcing to training experts can be more cost-effective than building and maintaining an internal content development team.
Physical spaces, travel and accommodation expenses:
- Organisations can avoid the costs associated with building and maintaining training facilities, including physical spaces, equipment, and technology infrastructure.
- Traditional training methods may involve travel costs for instructors and participants. Virtual or online training solutions provided by outsourced services can significantly reduce or eliminate these travel-related expenses.
Scalability without proportional costs:
As the organisation grows or experiences fluctuations in training demands, outsourcing training allows for scalability without incurring proportional increases in internal staffing and infrastructure costs.
Predictable costs:
Many training outsourcing arrangements operate on a subscription or contract basis, providing organisations with predictable costs. This helps in budgeting and financial planning.
Efficiency gains:
Outsourcing training to specialists can lead to efficiency gains, reducing the time and resources required for the development and delivery of training programmes.
Indirect cost savings:
Focus on core competencies:
Outsourcing training allows organisations to focus on their core business functions, resulting in increased productivity and efficiency in areas where they have a competitive advantage.
Reduced learning curve:
Leveraging the expertise of external training professionals reduces the learning curve associated with developing and implementing new training technologies or methodologies, leading to quicker adoption.
Improved employee productivity:
Employees can spend more time on their primary job functions when training responsibilities are outsourced, leading to increased overall productivity.
Enhanced learning outcomes:
Outsourcing to training experts can result in more effective training programmes, leading to improved employee performance and reduced costs associated with errors or inefficiencies.
Employee retention and satisfaction:
High-quality training programmes contribute to employee satisfaction and retention, reducing recruitment and onboarding costs associated with turnover.
Flexibility and adaptability:
Outsourcing provides flexibility to adapt quickly to changes in technology, learning preferences, and industry demands, potentially avoiding costs associated with slower adaptation.
Risk mitigation:
Training outsourcing partners often have experience in risk management, reducing the likelihood of issues such as non-compliance, legal repercussions, or ineffective training strategies.
Global standardisation:
For organisations with a global presence, outsourcing training can lead to standardised training content and delivery methods, streamlining communication and reducing the risk of discrepancies across regions.
Continuous improvement:
Outsourced training providers often have processes in place for continuous improvement. This ensures that training programmes evolve with industry best practices without requiring internal resources for ongoing refinement.
Improved time-to-market:
Outsourcing allows for quicker development and deployment of training programmes, reducing the time it takes for employees to acquire necessary skills and contribute to organisational goals.
While the specific cost savings will vary depending on the organisation’s needs, industry, and specific outsourcing arrangement, the potential benefits listed above demonstrate the huge impact that training outsourcing can have on both direct and indirect costs.
Take a look at our client case studies. Working together we’ve helped to improve time to market, assist with risk mitigation, provide economies of scale, efficiency gains and more for our clients.
