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Dec 2013

Market update December 2013 - US market

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Shaping the future of learning

This month I was in New York at our Konnect event and took the opportunity to look at the latest market research for the US and talk to clients and industry analysts about current trends. I have set out below a summary of my findings on the US corporate training market.

The US corporate training market has recovered strongly from the economic downturn in 2008 and 2009. Growth in spending on corporate training returned to growth in 2010 and continues apace, increasing year on year as follows:

  • 2010/09 +2%
  • 2011/10 +10%
  • 2012/11 +12%

To put this into context it is estimated that spending on corporate training in the UK actually fell 12% in 2011, partly as Europe as emerged later from the economic crisis.

The US corporate training market in 2012 is estimated to be $67bn by Bersin and $47bn by ASTD. OK, so $20bn is a bit of a gap – but in either case the market is bigger than forecasts for the rest of the English speaking market in the world combined. This dominance by size is even more apparent when you look at online learning and the LMS market in particular, where over 50% of spending takes place in the US.

A pie chart illustrating LMS market percentage by geography. North America making up the most of the chart, and Latin America/Carribean the least.

Big market, lots of players

The corporate training market is very fragmented, far more than many other markets of a similar size. For example there are more than 500 LMS providers, none with more than 9% market share, and only four with more than 5% according to Bersin. The custom elearning development market is even more fragmented with very few larger companies and many smaller, regional companies.

The nature of corporate learning continues to change. For many years we have seen a consistent shift towards online learning and away from instructor led classroom training. This is similar in Europe where IBIS say research consistently confirms an increasing demand for elearning. 

However, the nature of online training is also changing with growth in virtual classrooms and webinars, and a significant increase in the use of social learning tools. There is also an increase in spending on off-the-shelf content amongst smaller companies.

The US is the most mature market in terms of online learning and has also adopted mobile learning solutions faster than other markets. As we highlighted in our recent Insights Report on Learning at the Speed of Need, the nature of learning technology is changing rapidly and much of the drive is currently coming from the business and learners themselves.

In terms of key areas of training spend the dominant areas remain fairly consistent with the major categories in the UK and elsewhere, being:

  • Management and supervisory training
  • Sales and customer service
  • Industry specific skills
  • Product knowledge
  • Procedures and processes

Apprenticeships in the US – they’re back…

There has also been a renewed interest in apprenticeships or formal structured internal training courses that lead to a certification. There have been a number of articles in the New York Times and the Wall Street Journal. President Obama also cited the German model of apprenticeships in his last State of the Union address. 

This interest has been prompted a projected shortage of 5 million workers with technical certificates and credentials. This partly reflects changing job requirements. In 1973 just 28 per cent of jobs required post secondary education, which is predicted to reach 65 per cent in 2020. According to the American Center for Progress “industry surveys show that a lack of qualified workers is a top concern for many employers”.

This concern has been highlighted by Deloitte who found this year that there were 600,000 unfilled manufacturing jobs in the U.S. “simply because employers cannot find people with the skills they need.” 

In 2013 a ManpowerGroup survey found that 48 per cent of U.S. employers have a hard time filling jobs because candidates lacked the right technical competencies. Even if these figures overstate the skills shortage with the average age of a high skill manufacturing worker in the U.S. being 56 years old, skills shortages are likely to increase as they retire.

These challenges are forcing employers to look again at Apprenticeships. In the US the existence of Registered Apprenticeships in construction has created misconceptions about apprenticeships. 

At a simple level an Apprenticeship is a job in which the individual is paid to learn a set of skills through on-the-job training and achieve a standard of competency. Apprenticeships are applicable much wider than the traditional unionised workforce with significant growth in white collar apprenticeships in other countries.

In summary, learning and development departments in the US are responding innovatively to the challenges they face including skill shortages, fast changing business requirements and an increasingly regulated world. Should be an interesting 2014 – we’ll keep you posted on what we find.

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Shaping the future of learning

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