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Outsourcing IT training takes off

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

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.