Strategically deciding which training to outsource has a major impact on your effectiveness. One way to decide whether to outsource or keep the training process inside is to focus on two critical elements: portability and availability.
When making outsourcing decisions, organizations often overlook the distinction between portable and non-portable skills. Gary Becker, Ph.D., is the only person to win the Nobel Prize for work in human capital theory. Much of that work focused on the role of learning in economic growth, including exploring the distinction between portable and non-portable skills.
Portable skills are skills that employees can use across different organizations and industries, such as basic communications skills. In contrast, non-portable skills are uniquely valuable to one organization. Training on how to use a machine that only your company uses is a prime example. These skills are not transferable to another organization and, as a result, do not increase the employee’s value to another organization. Thus, Becker argued, organizational L&D should target its investment on non-portable skills.
Portability is actually a continuum of skills. Some skills are very portable, such as basic math skills, and others are very non-portable, such as the ability to use a proprietary IT system. However, most skills are a mix of portable and non-portable. For example, some leadership skills can be largely portable, but if the skills are tied to an organization-specific approach or leadership model, they become less portable. Therefore, in making strategic outsourcing decisions, organizations need to ask two questions: Where on the portability scale is the skill, and is there a way to make the skill less portable?
Portability is not considered in isolation in outsourcing decisions. Organizations also need to consider the availability of training for that skill in their marketplace. If an organization has a gap in a core portable skill, but it is difficult to find providers qualified to train that skill, it will not be easily outsourced and therefore may justify more internal investment. For example, a company might have a need for some highly portable IT skills but are unable to find the right kind of training, or the training is not available in the required language. This scenario would increase the value of investing internal resources to develop or deliver that training.
Organizations should make a minimal investment in developing widely available portable skills; it is better to make these skills part of your hiring criteria. If you must train, you likely have little choice than to develop internally, so you should strive to do so in the most economical way.
Outsourcing should focus on portable skills that are widely available. There will be competition within the training market, so your goal should be to find training that is more economical than developing and delivering it yourself.
Non-portable skills that are widely available present a good opportunity to partner with a provider. These skills likely include a combination of portable and non-portable elements. Partnering will allow you to keep your internal resources focused on the most strategically important elements while tapping into the expertise of vendors that have more experience developing and delivering that type of training.
Finally, your internal resources should focus primarily on the non-portable skills for which there are few available training options. You can then ensure that strategically important skills are developed and developed correctly.
Gaining a competitive advantage with your outsourcing means being strategic in your decisions. By focusing internal resources and partnerships on less portable skills and investing more to ensure those skills are learned and used in the workplace, you will improve the overall effectiveness of your learning and development efforts.