Learning BPO Market Morphing by M&As, Partnerships and Organics to Meet Evolving Client Needs

Per the findings from NelsonHall’s recently published “Targeting Learning BPO” report, we saw only a modest growth rate of 2.5 percent in this HRO segment in 2009 – 2010, but predict a global compound average annual growth rate of 8.4 percent through our 2014 forecast period. So what’s driving this growth from the buy-side, and how are providers responding?

Buyers’ top driver for learning BPO (LBPO) remains reducing the cost of the learning function, followed by increasing the effectiveness and improving the quality of learning for employees. Other drivers include gaining a better return on the learning investment, right-time/right-level access to specialist trainers, obtaining a well-defined process from a provider with the ability to deliver higher quality, aligning learning with strategic objectives, contract flexibility and utilizing cutting-edge technologies for learning services delivery.

To meet these buyer needs, providers must step up their game in a range of areas including the ability to manage a global network of delivery suppliers, and providing access to the technologies required to effectively deliver and manage all aspects of the learning function via learning management systems, Web 2.0., virtual instructor-led training, e-learning, m-learning, virtual world technologies, gaming and learning analytics. Providers also need to have global learning capabilities across all four learning towers: Learning Administration, Content Development, Learning Delivery and Technology.

LBPO providers are taking a variety of paths to address these evolving, and in cases daunting, buyer requirements. Some, including Raytheon Professional Services, Expertus, Edvantage Group and RWD, are growing organically, with new service offerings including new technology, content and geographic delivery capabilities. Acquisitions and partnerships are also occurring.

2010 acquisitions in the LBPO space include:

  • Kenexa’s acquisition of The Centre for High Performance Development to strengthen leadership develop and management training
  • Talent2’s purchase of Origin HR and Sugar International to expand vocational training capabilities
  • General Physics’ acquisition of Marton House to strengthen e-learning content development in the U.K., and its purchase of PerformTech to strengthen learning services for the U.S. government

 And 2010 LBPO partnerships include:

  • NIIT and SENA to provide learning services in Colombia
  • Edvantage Group and Mediapharm to offer a pharma online portal

Bottom line is, for the LBPO market to grow and prosper, it is all about meeting client’s learning needs: delivering what they need, where they need it, when they need it and how they need it. Organic is great, but not always feasible, and not necessarily always the best option for the involved parties. Thus, I beleive we will continue to see more acquisitions, and even more partnerships, in the LBPO space in the next 12 months.

Gary Bragar, Lead HRO Analyst, NelsonHall

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