Is Training-As-A-Service The Kind of Disruption We Need?

Corporate hierarchies are structured from the top down. They’re based on a core set of beliefs which start at the highest levels of management and eventually affect every employee. Along the way, various interpretations set the tone and play a big role in corporate culture. More importantly, it affects performance and profitability. So, can an outside company help create and sustain a culture which is conducive to profits and employee retention? Proponents of Training-as-a-Service, one of IT’s newest trends, would definitely argue that it can.

At age 26, Max Yoder runs Lesson.ly, a company started by Kristian Andersen + Associates and two business partners. According to their website, they make it “easy to build, share, and track training materials”. It offers subscription-based training software for small and midsize businesses.

Lesson.ly subscriptions are quite affordable for SMBs, starting at around $100.00 per month. Others have more elaborate services which target larger corporations and cost thousands of dollars.

Human resources information systems (HRIS), human capital management, and related cloud-based services have long approached recruitment as a scientific endeavor. It’s provided services to help manage employee placement and retention, but traditionally has not provided training which went beyond a simple orientation focused on company policies.

More recently, companies are broadening their mission. SAP claims (for example) that you can “Optimize your HR operations across geographies, organizations, and employee types – and drive your workforce strategies with true insight and confidence.” It makes sense that the scope of services provided by HRIS would eventually be augmented by training as a service.

The Pros and Cons of Outsourcing Orientation

Outsourced training is clearly a balancing act for customers, and they shouldn’t automatically assume a positive outcome without some research. Critics have cited high cost as one of the disadvantages. When the customer and the service provider agree on the advantages and disadvantages, both can profit from a collaboration to get people ready for work in a timely manner.

As a business, it’s not entirely new, but recent examples have shown that there is room for diversification which can help training services provide for a broader customer base. In the case of Lesson.ly, it’s paid off with rapid growth, picking-up $1.1M after growing its revenue 850% in 2014. No doubt, Lesson.ly understands that affordability will not always lead customers to their door. The trick is in capitalizing on areas of training where it’s most effective.

For example, companies which require tight controls on training, either because of security reasons or perhaps the specialized nature of their business, will not likely outsource for their core functions. The only exception might be for training which follows the purchase of capital equipment. Within those same environments, one may find potential in training for non-core functions, like sales. Whatever it is, the companies which utilize this service will likely do so because it allows more internal resources to focus on critical tasks.

In examples relaTing to non-core functions, we see a pretty mature market for more generalized training with familiar names like Sandler, who has provided sales training for over four decades. Other potential areas of growth include safety, customer service, and accounting.

Exploring some of the industries that benefit from outsourced training we find that some are heavily dependant on training companies. One industry in particular is IT, where outsourced training is especially pervasive.

There are a number of reasons why a training service provider would be acquired by companies which benefit from those services. There are two that stand out:

1. A profitable and highly skilled training provider would be more available at a reduced cost and with a strong likelihood of becoming another revenue stream.
2. A profitable and highly skilled training provider may be less available to direct competitors.

Where Else is This Happening?

In November, Xerox announced the acquisition of Intrepid Learning Solutions, claiming to expand its “learning portfolio”. Intrepid Learning Solutions describes itself as a business that helps “businesses apply learning and technology to enhance performance and accelerate productivity across the enterprise, from your employees and sales teams to channel partners and even customers.”

Government agencies have benefitted from outsourced training from the private sector. One example with a long history of outsourced training is the Department of Defense, having contracted training personnel in numerous areas.

Business potential is also influenced by seasonal fluctuations. Surges in consumer markets during the Christmas holiday season results in a surge in hiring. There is a need for a seasonal workforce to be trained and ready for action on short notice. This is most evident in retail sales, supply chain, and shipping logistics. It represents an area we usually associate with the internal training, primarily of temporary employees. However, there has been a need for outsourced training of call center employees, for example. And let’s not forget the people who do the training; or who trains the trainer. Specifically, who will help to develop employee management skills necessary for internal training.
The view from thirty thousand feet suggests a growing trend in outsourced training. The emergence of e-learning, knowledge management, and learning management systems indicates a trend which overlaps other combined software and service providers. It’s very reasonable to think that it will further develop into cloud-based services, something which has proven to be a game changer for so many other industries.

Looking at examples from other parts of the world, we see similarities and strong growth in places like India where IT is a big deal. In almost every region, corporate training environments are becoming more sophisticated. We’re beginning to see increasing popularity in words like “virtual classroom training” (VCT), which allude to collaborations over a cloud infrastructure. It makes one wonder if the training models we’re seeing now will eventually augment or even replace traditional classroom environments found in universities. Will we see industry standards which resemble college accreditation? Will we see these environments driven by dedicated companies but integrated into client sites?

Clearly the idea of training as a service is here to stay, and is likely to have a significant impact on corporate culture. Since it can pivot to address a number of needs, it’s difficult to say if it will remain acutely focused on short-term corporate training needs, or develop into a hierarchy of higher learning which overlaps traditional institutions.

About the Author: Megan Ritter is an online business writer based in Los Angeles, California. As a guest author, her writing covers social media, business communications, finance management, and technology.

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