According to the Panopto Workplace Knowledge and Productivity Report, a survey of more than 1,000 U.S. workers, the average large business loses 47 million dollars in productivity each year as a direct result of inefficient knowledge sharing. The term ‘knowledge sharing’ refers to institutional knowledge informally exchanged by employees and formalized training like new hire onboarding. In the study, the average enterprise company (enterprise is business-speak for ‘large’) had an average of 17,700 employees and the study excluded companies with fewer than 200 employees. In this study .
The study found that the $47 M annual loss of a large business was comprised of $42.5 M in lost productivity and another $4.5 M in inefficient onboarding. The cost of insufficient knowledge sharing ranged from $8 M (3,000 employees) to $26.5 M (10,000 employees) to a whopping $132 M for companies averaging 50,000 employees.
The high cost of lost productivity is a compelling argument in favor of providing employees with adequate training, both as new hires, and on a continuing basis. When done well, training provides employees with the knowledge needed to do the task or the know-how to find the information without having to depend on or wait for others. One frustration common to most people who’ve worked for a large business is knowing that the information is buried somewhere in the organization’s labyrinth of systems. It’s the equivalent of looking for a needle in a haystack.
Once an organization commits to making an investment in training – improved knowledge sharing is just one of the reasons why such an investment is worthwhile – the next question is whether to hire an in-house trainer, outsource it to a service provider, or utilize some combination of the two.
Perhaps at this point you’re thinking, “Wait, aren’t you guys training service providers? Obviously you’re going to say that outsourcing is always better!”
The answer to that, yes, we are service providers now, but we have also been the “in-house talent,” so we see both sides of the argument. We’re also former bench scientists and MSLs, two roles for which presenting fair, balanced, and unbiased information is critical to credibility and relationship-building. Offering the whole story – the good, the bad, and the ugly – is in our DNA.
In this article, we review the four most critical factors to consider when deciding between in-house or outsourced training and we’ll do our best to present the full picture. Hopefully, this analysis will give you the information needed to make some critical decisions when you have a new training project on the horizon.
Factors to Consider
The specific needs of your organization will determine the factors most impact your decision, but in general, the four elements below are the most important to consider when deciding between hiring in-house or outsourcing training talent.
Typically, budgets for Medical Affairs teams are tight (or “tight” respective to other groups like Sales or Marketing). If you have one task, like therapeutic training, that needs to be developed; it might not be cost efficient to repurpose an existing Medical Affairs associate (e.g. high performing MSL) or to hire a new employee. This is when outsourcing can be highly cost-effective.
Instead of paying for the total benefits package of an in-house employee, you can get help when it’s needed so that you only pay for the assistance you need and only for the duration you need it. The company can get the work done for a fraction of the price of a new employee. It saves you a valuable FTE (or more) and lowers operational costs.
Also, if an organization has recognized late in the game that it needs standardized training and has a relatively tight timeline in which to build it, hiring a service provider to either supplement a trainer or serve as the training department can be a cost-effective solution.
Medical Affairs Example
A pharmaceutical company has recently acquired a late stage product. In this example, the product is for a CNS condition, Parkinson’s Disease. The Medical Affairs team has movement disorder experience, but not in Parkinson’s Disease, specifically and no training for this disease state exists.
The PDUFA is in less than a year and the Medical Affairs trainer has ongoing responsibilities and cannot drop everything to develop a comprehensive training program for this new acquisition. In this case, hiring a service provider is going to be more cost-effective than investing in an additional FTE. One person can only accomplish so much in a work week, but their 6-figure salary and benefits remain the same regardless of what they achieve.
Thus far we’ve considered direct costs, but what about the indirect costs associated with the creation of substandard training – either created in-house or with a bad partnership? When an organization asks too much of its trainer or training group, the resulting output has the potential to cause more harm than good. Substandard training may introduce errors and misconceptions, or skip critical topics thus creating gaps in knowledge, or be so difficult and tedious to complete that it creates a resistance to learning.
And finally, consider the indirect costs associated with large training projects that consume the bandwidth of an in-house trainer(s). That person is subsequently unable to take on additional tasks or create other training. Additionally, the time commitment for developing new training is significantly greater if the content is virtual (e-Learning). While it’s more efficient and cost effective in the long run to build virtual training that be deployed repeatedly via LMS versus a trainer repeatedly conducting live trainings, it’s easier in the short term to conduct live trainings (webinars, workshops, meetings).
When faced with conflicting priorities and a finite bandwidth, this may be a trainer’s only option. Another hidden cost here is the valuable time given up by the trainer(s) and learners to attend live trainings. Virtual training can be conducted on-demand and completed with the least disruption to an associate’s schedule. It also significantly reduces travel costs. If those are considerations that are important to the organization, they might consider out-tasking (more on that later).
The Bottom Line on Cost
It is often more cost-effective to outsource training to a service provider if the timeline is short and/or the project is large.
Hiring the right person with the specific knowledge required can be challenging. It takes time, patience, and diligence to find and hire the right candidate for a training position. Outsourcing allows a company to avoid the hassle of in-house hiring while still getting an expert in the field for a reasonable rate.
In this context, the term ‘expert’ refers to an expert in the field of adult learning. This is often where companies make the critical mistake of assuming that because a Medical Affairs associate, an MSL for example, is an SME in the area of the training, they are also qualified to create the training. That type of expertise is not taught in graduate coursework and is why many MSL ‘training programs’ are simply slide decks filled with eye chart figures and walls of text. The training service provider has the expertise required to create high quality educational materials and will either utilize an organization’s in-house SME or an external SME to develop the specific content.
In terms of expertise, outsourcing provides access to a significant pool of talent. When hiring a service provider, you’re effectively getting someone who knows how to create effective training materials at a cost that’s much less than the cost of hiring an expert full time. Every company can benefit from expertise, but not every company needs it all the time.
In the long term, if the needs of the company change, can the in-house skill set change to meet those needs? Hiring a new service provider may easier than terminating an employee and finding a replacement who fits the new requirements. Contracting with a vendor provides the flexibility of accessing particular skill sets without committing to a long-term relationship. It’s like the excitement of dating without the commitment of marriage!
If an organization has an ongoing need for new training, it should consider building an in-house training role that acts as a point person for future training projects. In the meantime, one solution is to extend the training team by using a vendor. Also having expertise on hand for specific project requests that are outside the skill set of the in-house group may be advantageous. Medical illustrations, MOA videos, and VR are good examples of projects requiring highly specialized skill sets.
The other side of that argument is that in-house employees have institutional knowledge that a service provider does not. For example, an in-house trainer is going to have easier and more frequent access to internal systems and SOPs and thus be well-positioned to develop training and tutorials. A service provider can be granted the same access, but will have to ask more questions and conduct more interviews to produce the training.
CONSIDER COMBINING OUTSOURCING AND OUT-TASKING
What is “out-tasking” you ask? It’s the separation of individual project deliverables by dealing with some aspects internally and other externally. Out-tasking is ideal to reduce costs and applies to those companies whose in-house team does not have the expertise or the bandwidth to handle certain aspects of a project. It can also be a useful tool for relieving in-house workload and utilizing third-party skill-sets.
Real World Example
It was big news (among techies) when Google outsourced its phone and email support for AdWords to a 1000-rep sales force. AdWords is Google’s top-grossing product, so it was both a risk and an opportunity to achieve the biggest ROI possible. By using the out-tasking solution for AdWords, they succeeded in improving the customer experience and growing a blockbuster product.
The Bottom Line on Expertise
The right choice depends on the type of training needed. If it requires a high degree of institutional knowledge, an in-house trainer is advantageous. If it requires a significant amount of content or the content is broad in scope, a service provider is the better option.
According to the Panopto Report, the average employee spent 5.3 hr/wk waiting for information from coworkers. During this time, employees either recreated their colleagues’ existing expertise or delayed the work. The report found that 66% of the delays lasted up to one week, and 12% lasted a month or more. For me, that goes a long way to explaining why projects – even simple ones – always take so much longer than initially projected.
Weigh the time spent waiting or looking for institutional knowledge against the investment in effective training that provides the information or the knowledge to access the information. But I have digressed slightly; this is an argument in favor of investing in training, not about whether to use an in-house trainer or outsource training needs. Couldn’t help myself.
The choice here is going to depend on the time frame. If you’re four years out from a product launch, likely an in-house trainer can build a comprehensive curriculum for timely deployment. If the time horizon is shorter, say one to two years, when an MSL team should already be out in the field building disease state awareness, the training department could instead plan out a curriculum that will be rolled out in stages. But, if you’re currently hiring several new MSLs and need Onboarding for them next month, an in-house team would have to de-prioritize all current projects to complete the request.
One critical advantage of an in-house trainer is availability. Yes, they have priorities and bandwidth limits, but if there’s an emergency – early approval of a competitor, new FDA guidance, SOP roll-out – the in-house trainer can re-prioritize projects to quickly create mission critical training. The quality and project timeline will depend on the size of the project.
The Bottom Line on Time
If time is short or the project is large, outsourcing (or out-tasking) to a service provider is best. By utilizing freelancers and other partners that the service provider has in place for urgent requests, it has essentially unlimited bandwidth and can work around the clock. If time is not an issue, hiring an in-house trainer is a good option.
Resources is a vague term. In this instance, it applies to several types of resources, so it’s worth defining. Here we are going to focus on multiple resources:
- Your current employees
- Institutional knowledge and existing training materials
- Your time/bandwidth
Your Current Employees
Where do you want to spend your finite time? Managing more projects or engaging with your direct reports? Utilizing a service provider allows you to focus on your key initiatives and your team. The time you would have put into managing a trainer or training department can now be redirected because the service provider handles the project management.
Medical Affairs Example
You’re about to double the size of your MSL team due to an upcoming product launch. (Congratulations!) You are knee deep in territory maps, KOL lists, budgets, and candidate resumes. You’re going to need training for the incoming MSLs and asking the current MSLs do it (the way you’ve usually done it) is not going to work this time. Hiring a service provider allows you to focus on the team expansion while a curriculum is being designed in parallel so that it will be ready when new employees join the team.
Institutional Knowledge and Existing Training
Who currently possesses the institutional knowledge of your training program? If it’s a single trainer and he or she leaves, most of that knowledge will go too. If it’s team members (e.g., MSLs who become trainers when the need arises), then the risk is even higher. Periods of high employee turnover can add uncertainty and inconsistency just when it’s least desirable. Outsourcing provides a level of continuity to the company while reducing the damage that a low level of operation could inflict on the organization.
Medical Affairs Example
It’s especially true that, at small companies, a few individuals wear many hats. Delegating/prioritizing work to a service provider allows those few individuals to focus on other responsibilities. Outsourcing can increase efficiency, which can translate into increased productivity.
On the flip side, when a manager can commit to being hands-on in the development of a training project while still fulfilling their other responsibilities, it’s a good decision to go in-house. Another argument on behalf of hiring in-house has to do with the false perception that a Medical Affairs department does not need a full FTE for training. In our experience, that is simply not the case and often the opposite is true. The commitment of an FTE for trainer is a worthwhile investment that will be fully utilized.
The Bottom Line on Resources
In many cases, a service provider can help you achieve training goals by (1) extending the time until you commit to hiring for a training position, (2) increasing the bandwidth of current training managers, or (3) provide specific expertise on select projects. This blog post not only represents my perspective today, but also when I was a part of an in-house team. Given the demands of our busy Medical Affairs group, we would gladly have outsourced work to training vendors to increase the number of projects we completed and decrease the time it took to achieve them.