Corporate Spend For Training Increasing
The economic recovery is clearly here: spending on corporate training is soaring.
Since the economic recession that occurred six years ago, many companies cut overall costs, including their expenditures for training. This went a long way to making companies leaner and more efficient. Now that the economy is trending up, corporate earnings are strong and companies are spending on training at a pace we haven’t seen since before the recession.
The global market for training expenditures in 2013 was about $306.9B, an increase from $291.7B in 2012. We believe N.A. represents about 46% of the global market ($141.7B) and Europe to be about 29%, or $89B of the global market. Asia comes in at $31B (10 percent), India $21.5B (seven percent), Australia $9.2B (3 percent), South America $6.3B (2 percent), Africa $3.6B (1 percent), and the rest of the world $4.6B (1.1 percent). Approximately 75 percent of the global spend for training is in North America and Europe. Asia and India, the two most populated regions in the world, combined make up about 17 percent of the global market. Companies spend about 44 percent of their training related dollars on employees, compared to 49 percent on customers, and seven percent on suppliers and channel partners.
Last year, we expected corporate spend for training to increase by a conservative 1 to 2 percent, but now reflecting on 2014 it appears spend is up by as much as 5 to 7 percent across most industry segments. We expect that trend to continue into 2015, with growth in spend for training services to grow in excess of 5 percent. Why the rapid growth? All our research tells us that organizations today suffer from a “skills supply chain” challenge. Not only do more than 70% of organizations cite “capability gaps” as one of their top five challenges, but many companies also tell us that it takes 3-5 years to take a seasoned professional and make them fully productive.
Some key facts about L&D spending:
Spending on leadership development remains very high. As in prior years the research shows that the number 1 areas of spending are management and leadership (35%). All our research on corporate talent shows that global leadership gaps continue to be the most pressing issues on the minds of business and HR leaders. As Millennials take on more responsibility, companies need to build leadership skills at all levels and in all geographies around the world.
High-performing companies spend more. Companies which fall into our “high-impact” categories spend significantly more on training than average. So companies who invest in a total L&D strategy spend more per employee than those who are inconsistent. This shows that L&D spending pays off.
The Learning Management Systems market is also growing rapidly. We estimate that the market for learning management systems is now over $2 billion and continues to be one of the fastest segments of HR software. Every major HR technology vendor is investing in its LMS offerings. This is exciting news. While skills gaps (we call it the “supply chain of skills”) continue to challenge companies, an increased investment in training is good for everyone: employees, businesses, and job seekers. This level of increase shows that businesses are aggressively expanding and companies need skilled workers to grow. Despite a tightening labour market for skills, this data predicts a good year ahead.
Contact us:
To ensure learning and development spend pays off for your business contact one of our SureSkills learning consultants today on 01 240 2277 or email info@sureskills.com to arrange a call/meeting.