Key Note estimates that the UK IT (Information Technology) training market was worth £545m in 2003. The market has declined significantly from £772m in 2000. The global contraction in IT budgets and the cancellation of new IT projects have adversely impacted on the market. However, the final quarter of 2003 saw the first signs that a recovery in the IT industry has started and this is expected to feed through into the IT training market in the second half of 2004. In 2004, Key Note expects the market to grow by 2.8%, the first year of growth since 2000.
The IT training market consists of two broad sectors: instructor-led training (ILT) and e-learning (or technology-based training). E-Learning has been the major growth sector of the market in recent years as it has grown in maturity and sophistication. However, it is increasingly difficult to distinguish between these two sectors given the growing trend towards blended learning. That is, courses featuring both instructor-led and computer-based components.
Companies like Parity and QA which have moved strongly into e-learning generally outperformed the market in 2002/2003, while those such as Learning Tree which continue to offer only ILT courses, have lost market share. In 2003, Parity Training was the largest training provider in the market, followed by Learning Tree International and then QA and Thomson Netg. The training arms of major vendors like SAP, IBM and Oracle are also important players in the market.
Clients are looking to cut their training budgets and are demanding a wide range of delivery media for their training, including classroom-based instruction, mentoring and Web-based training. In other words, the capital investment required in training businesses is increasing, which is squeezing out the smaller operators.
While the industry is showing the first signs of recovery, the end of 2003 and beginning of 2004 witnessed some high profile company failures - e.g. Informatics Group, KnowledgePool and DACG - although some of these have been rescued by buyers and continue to trade.
Major players in the market are embarking on strategic actions to improve their ability to compete in the 2004 to 2009 period. This has resulted in companies changing their service offerings to clients and changing their own internal operations. When facing clients, training providers are offering a wider range of training services - i.e. offering business and professional skills to IT staff and offering outsourcing and managed training services and targeting more aggressively the public sector, whose IT budgets are expanding strongly. Internally, they are bearing down on costs by moving into e-learning and turning fixed costs into variable costs i.e. increasingly buying in training resources from third parties on a needs basis, renting training rooms which only need to be paid for when actually used and using more freelance trainers rather than permanent staff, which cuts their overheads.
A strong recovery in IT training spending is anticipated for the period 2004 to 2009 and the above strategic moves are designed to exploit the key growth areas in the training market over that period. These will be managed services, or outsourcing and out-tasking, professional and general business skills aimed at IT professionals, blended training, multilingual, globally delivered courses (aimed at large, international companies) and training in the public sector.
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