Outsourcing IT training takes off

news analysis

A growing number of companies are outsourcing their IT training
programs to help keep up with Internet commerce and new Web-based business
applications that have left many firms in a panic.

"We definitely are seeing more outsourcing of training," said Ellen Julian,
an analyst at International Data
Corporation (IDC) who follows IT training trends. "The pace of change in
technology is extremely hard to keep up with for internal training
departments."

The overall training market, which includes tools, content, and services,
grew to $16.5 billion in 1998 and is expected to reach $22.9 billion in
2001, according to IDC. Demand for training related to Internet development
tools and Internet security is expected to grow quickly, Julian said.

Metropolitan Life, for example, brought in IBM
Global several years ago to train their insurance agents to use hardware
and software. A need to train employees around the world led the company
to eventually outsource to IBM, the company said.

"They gave us the budget and said 'Why don't you just take over the whole
department," said Hans Schwartz, IBM Training's director of marketing and
services. "It's a trend that's starting to happen. Most [companies]
are saying: [training] is getting far more complex [than we
thought it would be.]"



IBM Global--a player in the training market alongside Sun Microsystems, Hewlett-Packard, Oracle, and Global Knowledge Network, a
former division of Digital Equipment--recently unveiled a new
program focused on electronic commerce training needs of small- to
medium-size companies that offers companies the classes via cyberspace or the
old-fashioned classrooms. The program, called IBM Skills Transformation for
e-business, specifically targets companies that want to retrain their
legacy systems programmers to work on e-business projects.


The program includes tools to gauge a staff member's training readiness and
skills, vendor-neutral computer-based training, CD-ROM training, Web-based
self-paced learning, and instructor-led classroom training. IT departments
spend nearly 10 percent of their budget on training and can curb their
costs by as much as 30 percent by using CD-ROM or Internet-based training,
Julian said.

Courses include three-week tracks in Java development, Web-based
architecture, and e-commerce applications.

Big Blue has 3,500 IT training providers, with 15 to 20 percent of their
training now done over the Web, said Rick Horton, general manager of IBM
Global's learning services. Horton said training is one of the firm's most
profitable units, with growth driven by increasing complexity of training
employees who are geographically dispersed, a lack of skilled IT staff
available, and faster hardware and software product cycles.

Employees are also often called upon to work on projects such as Year 2000
readiness, enterprise resource planning installations or customer
relationship management installations with no background with the
technology.

A services firm can take what it has already trained its own consultants to
do and carry what they've learned over to their customers, Horton said.
Often, the training department works hand-in-hand with IBM's outsourcing
division on projects--with one side providing project management and the
other training.

These sorts of partnerships are also often the first step for future, more
comprehensive outsourcing deals, Schwartz said.

"That makes a lot of sense," IDC's Julian said, noting that training often
starts a relationship with a partner that can lead to applications and data
center outsourcing.