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Global Recession is good for eLearning

Ups and downs of are part of normal economic cycles.  Just like nature, Economy tends to stay in equilibrium and both have a certain limited intrinsic potential to withstand the pressure of human action, beyond that both reacts and then rebel back.

That’s why, there is an economic recession!
And that why, there are natural calamities!!

And that’s why economy heats up and cools off (and freezes at times!) and so does the nature. Well, economist should consult ecologist in developing a case to understand how nature resurrects and whether any amount of “human-action” is desirable for the health of the economy. Or rather “human in-action” is more desirable to get over it sooner.

We have seen how best of analysts and experts join the chorus when economy drifts either side. Their projections tend to be over optimistic and over pessimistic in either case. Financial experts use term such as “irrational exuberance” too frequently during down time and blissfully ignore the same during boom run.

As per my analysis the collective action of “greed” and “fear” triggers at a very inner level of human psyche. It’s like hard-coded software which is etched over a million year of our evolution. And that’s why even the collective acumen of Ivy educated professionals fail to oppose these enormously powerful human tendencies. To avert that, you got be a spiritualist capitalist! (more on this in my future works)

Well this was a broad-view – recession is here for sure, how deep and how long will this be is any bodies’ and every bodies’ guess. So let us not waste time in predicting that. I would rather focus on specific issue of how learning and development (L&D) industry can benefit from the current economic situation.

Purpose of existence of all businesses is to create value for one another.  Unfortunately sustained boom cycle over last 5 years developed a few fundamental flaws in offering a genuine value equation to customers. The two important reasons are:-

Shortage of quality human resources and their high cost

Towards the peak of boom cycle human resources of good quality had fallen short and they were expensive beyond limits. This exerted huge pricing pressure and acted against the customer value.

Over-booked positions and complacency

There were customers for all kind of offering. Everything was in demand whether high quality or low quality – it didn’t matter much. In fact there were customers for all price brackets – from mature to experimental to only cost reducers they were all embracing eLearning in some way. In such a scenario most of the suppliers had no time or motivation to innovate the value chain. All of them concentrated on sales and parties! (I think I am right here :))

In my views, recession is an opportunity for reinventing the value chain and creating “out-of-box” competitive solutions which don’t sacrifice on learning impact. These efforts will help suppliers’ innovate in the interest of customers.

Since, it is an established fact that eLearning helps in reducing overall cost of training (cost reduction can be 20% – 60% based on overall strategy, which depends on factors like offshoring, adoptions of types and variety of content and LMS etc. ) apart from offering certain significant qualitative advantages like:-

  • “Anytime-anywhere” learning 
  • Tapping the global mentoring resources for optimum skill development 
  • Administration and control of training calendar from multiple locations

That’s why I don’t wish to harp on the benefits of eLearning over traditional methods here. Clearly what is likely to happen is that a large part of L&D needs will be served through eLearning- its share may increase to over 50% over next 2 years from current 35% and similar trend will be seen for online learning- which is likely to increase from current 25% to 40%. Refer to my Jan 2008 post on the similar topic.

Now, how and where such possibilities exists only experts can apply their minds and critically evolve solutions. I am sure they can evolve “much larger learning impact at reduced overall cost”.

Suppliers will also try to evolve competitive solutions suiting the requirements and budgets of SME’s apart from large businesses and institutions.

Since content comprises of a large part of eLearning I expect a significant value creation potential there, particularly in development of custom content.  Though all the possibilities can’t be defined, scope for excellence and innovation is everywhere be it access of delivery technology through SaaS, interactive content through auto tools/ engines, integrations and bundling of offerings etc.

I have no doubt that all the serious and significant layers will not only survive the meltdown but emerge “healthy-wealthy- and-wise” through recession.  Just to take a cue from what happened in 2003, while training budgets were in red training programs through eLearning grew @ 15%. Based on this I am confident that industry will continue to grow and embrace eLearning in a big way.

However the impact will vary for different participants based on their exposure – capital budget sensitive players are more likely to be under pressure then those who depend on operating budgets. So players who are in L&D consumables like content development and maintenance may be less affected than others.

I see significant and serious companies maintaining 20-25% growth Y-O-Y (however this may not be true for next 2 quarters). Since customers are extremely cautious now, next 2Q may look bleak with flat or negative growth.

We will be to happy to offer a significant value to customers through what we call-

Watch this space.

(Mr. Ankit Jain is Head – HR & Strategy at G-Cube)

Arunima Majumdar

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