clo_logo_smIn this month’s issue of CLO Magazine, David Vance, former President of Caterpillar University, sharply articulated the benefits of operating your training department like a business, including having a clear outsourcing strategy. Some of the benefits he notes include – extending the reach and capacity of your training group without driving up head count, control of variable versus fixed costs, and implementing level 4 or 5 evaluations. Below is David’s entire article.

Outsourcing: What Is Your Strategy?
by David Vance

Running training like a business requires an outsourcing strategy – even if the strategy is not to outsource at the present time. Outsourcing simply offers too many potential benefits not to consider. Of course, each organization will need its own strategy based on its own circumstances, needs and direction. Some will outsource systems, others development or delivery. There is no “right answer” for all organizations. That said, here are some of the main reasons you might consider outsourcing.

First, outsourcing can provide resources you otherwise might not have. Many training functions have limited staff but can accept more work if their internal (or external) clients pay for it. So, the money is there to get the work done, but not the internal staff. This is a perfect opportunity to use your limited internal staff more in the role of performance consultants and program managers who supervise partners or consultants hired to do the actual development or delivery. This greatly extends the reach and capacity of your training group without driving permanent head count up.

Second, outsourcing provides tremendous flexibility. You can scale the use of your partners and consultants up or down depending on the demand for learning. This is especially helpful when there are large swings in demand from year to year, or from month to month. The alternative, assuming you were able to hire full-time employees to do the extra work, means that you will have excess capacity when work drops off (resulting in low utilization rates) or that you will have to lay off the employees you just spent time and money hiring and on-boarding (not very efficient). In other words, outsourcing allows you to increase your variable costs rather than fixed costs (full-time employees that you do not intend to lay off).

Third, outsourcing can provide expertise you lack in house. Often there is a need to develop new content in areas where your own staff has little experience or knowledge. While your staff may be able to acquire the needed knowledge, initially at least they will not have the level of expertise of a consultant who has done similar work for years. This is especially true when it comes to systems like a learning management system (LMS) or a learning content management system (LCMS), or a process like level 4 or 5 evaluation which can be very technical.

Those are my top three reasons. You might have others. Notice that I did NOT include outsourcing of the entire learning function. Frankly, it is hard for me to conceive of a situation where this would be desirable. I believe the learning leaders within an organization are best positioned to lead learning strategically for their organization (if not, replace them!). They are best positioned to work with the CEO, governing body and other senior leaders to strategically align learning to the organization’s goals, prioritize it and manage it throughout the year. An effective outsourcing strategy, however, will allow them to design, develop and deliver the learning much more effectively and efficiently.

About The Author

David Vance is the former president of Caterpillar University, which he founded in 2001. Until his retirement in January 2007, he was responsible for ensuring that the right education, training and leadership were provided to achieve corporate goals and efficiently meet the learning needs of Caterpillar and dealer employees. Before this position, Vance was chief economist and manager of the business intelligence group at Caterpillar Inc., with responsibility for economic outlooks, sales forecasts, market research, competitive analysis and business information systems. He now consults with organizations on learning and performance issues, with a focus on launching corporate universities and designing effective strategies for managing the learning function, including alignment, governance and measurement. His firm is Manage Learning LLC. Vance was named 2006 CLO of the Year by Chief Learning Officer magazine. He also was named 2004 Corporate University Leader of the Year by the International Quality and Productivity Council in its annual Corporate University Best In Class Awards. In October 2010, Vance published The Business of Learning: How to Manage Corporate Training to Improve Your Bottom Line. He can be reached at

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