Outsourcing cost effectiveness of the training and performance improvement function

Outsourcing parts or all of the training and performance improvement function is one approach that some organizations use to reduce cost (Phillips, 1999). Many organizations use cost versus savings calculations to make decisions regarding training and performance improvement outsourcing activities. The cost factors used in the calculations usually exclude intangible costs and therefore tend to provide inaccurate financial information that bias decisions towards outsourcing. This descriptive study identified elements that constitute intangible costs related to outsourcing the training and performance improvement functions within an organization, and then applied actual values to them. By using the actual values, the intangible costs could be used in cost versus savings calculations to better inform outsourcing decision-makers so that they can make better decisions.