The latest top 50 list of IT training companies shows the market was growing in 2008. However, as recession bites and business contracts this year, firms are going the extra mile to keep their customers happy and retain their patronage.

Top 50 IT Training companies


With the UK economy now set on a downward trend, it's easy to forget how much has changed in the last year. Having compiled the annual list of the top 50 companies in IT training by revenue for last year, consultancy Pardo Fox estimated the growth of the IT training market as a whole at 6.5 per cent for the calendar year ending in 2008.

'Our quarterly survey on market conditions showed that growth of the IT training market in Q3 2008 had dropped to a low level, and by Q4 it had turned slightly negative,' says David Pardo, MD of Pardo Fox. '2007's growth rate of 11 per cent was probably maintained in the early part of 2008, though it had turned (slightly) negative by Q4, so 2008 as a whole showed steady growth.'

This year is looking less bright and the market overall is set for a downturn in fortunes. 'The market this year could contract possibly by as much as 10 per cent,' says Pardo. 'I think an upturn is a long way off. That said, there is still a lot of training going on because implementation and training is carrying on for systems that were commissioned a few years previously.'

William MacPherson, CEO of QA, echoes these thoughts: 'At the end of 2008, there was a slowing down in the market, but not so significant. It fell more significantly in Q1 2009. People are buying in smaller volumes and are reluctant to commit far ahead. Training for projects is slower to get off the ground. Quite a few customers have cut travel budgets. And business from clients in the financial sector has dropped.'

Global Knowledge also reported that course bookings were being made later generally, as companies were deciding to put people through courses at times where there was no opportunity for them to generate revenue.

Several companies mentioned a trend towards more in-house bookings, as some clients' travel and expense budgets have been cut more than their training allowance.

Not all is doom and gloom though. Pearson Vue's EMEA Commercial Director Suzanna Lopes says: 'We have seen no drop-off in demand or in numbers of candidates sitting IT tests at our UK test centres, and our IT clients are in fact optimistic about the coming year.

It seems to be generally anticipated that, as the economy suffers, both IT professionals and those who use IT in their day-to-day work are placing increased emphasis on gaining meaningful qualifications, to gain a competitive edge in a tougher employment market.'

Mixed fortunes

Looking at the revenues of IT training companies for the year just gone, there was a mixed bag of fortunes, with the majority seeing various levels of growth in revenue, while only a dozen saw a fall. Success is attributed to a range of sometimes opposing factors.

Pearson Vue has noted a move towards diversification into blended learning offerings. 'IT training clients and channel partners are mitigating the general squeeze on trainer-led training by developing their e-learning portfolios, and they have high hopes of selling certification and training in the same package, as their clients at large corporations continue to place value on certifying their staff,' says Lopes.

Paul Stevens, MD of Assima UK, believes that wider diversification into more blended and e-learning in addition to traditional classroom training, plus some big projects and clients, has helped his company achieve increased profits and revenue in 2008.

'We launched new versions of our three e-learning tools in 2008, and therefore have more to offer clients,' he says. 'Rapid e-learning is the biggest seller - it's in vogue. Clients are often trying it out.'

Global Knowledge is also embracing blended offerings, having just launched what it calls 'collaborative learning solutions'. It says these differ from traditional e-learning solutions because of their more structured and collaborative nature. The aim is to encourage peer-to-peer learning - using web 2.0, podcasts, portals, meeting sessions, virtual classrooms, and so on.

A technical course, for example, would have two instead of five days in the classroom, with the rest made up of pre-course learning, e-learning, white papers, and other material. Janet Way, Sales and Marketing Director, points out: 'You have to manage the learner. E-learning used to rely on students' own discipline. Most people need cajoling, and to have set milestones and time to talk.'

However, Melanie Franklin, CEO of Maven Training, says that its customers no longer seem keen to have conversations about e-learning and blended learning.

'Our surveys and conversations with customers are showing that customers want expertise and knowledge. They want advice from people who have done it. There's an atmosphere of fear and unease - they have got to be able to get hold of new concepts, and they need to know the practical steps to take for a project.

'We've had a good growth in revenue but slight price pressure. We've responded and seen a huge number of new delegates as some other companies have not taken price action. We still have the highest quality materials and trainers. Our prices don't match the value of our courses, but delegates want lower costs.

We have cut costs where we can on the administration of courses, in training centres, and we are careful with marketing spend. We match price decreases with costs, so our bottom line is fairly stable.'

Richard Pryor-Jones, President of Global Knowledge EMEA, is one person who disagrees with Franklin on cutting prices. 'We don't think the answer is dropping prices - customers understand they need to pay for experts,' he says. 'We have to retain a profitable operation without cutting prices.'

Global Knowledge's ways of keeping a lid on its costs include lean management structure and some innovative green approaches. Neither staff nor delegates have their own bin, which it says has resulted in a 50 per cent reduction in waste and its removal costs. The company has also invested in biodryers, recyclable cups, and lighting systems that switch off when not in use.

QA has been able to cut its costs through synergies created by the merger with Xpertise, according to MacPherson, but the deal has also helped Global Knowledge, according to Pryor-Jones.

'After the QA-Xpertise merger, a huge number of customers and vendor partners were concerned about one large provider in the market and customers have approached us so they don't have all eggs in one basket,' he says. 'On 1 April we signed a new Citrix relationship - they wished to have enough routes to market after the consolidation activity.'

Training for specific IT projects has also helped bolster certain IT companies' bottom lines. One company that showed the gains to be made from landing training contracts on large projects is Verridian, which, having increased its revenue by 200 per cent last year, entered the Top 50 charts at number 27.

Rob Brine, Training and Development Director at Verridian, says: 'Up until last year we had one major client in the technology field, which was a manufacturer [Nokia]. We wanted to be less reliant on one customer.

So when he heard that CarPhone Warehouse wanted to broaden its range to offer other wireless goods with mobile broadband, Verridian bid for and won the contract to retrain CarPhone Warehouse's entire estate on laptops - 7,500 people at 64 events. Then, due to O2's close relationship with CarPhone Warehouse, Verridian landed another contract to train O2's 1,500 staff on laptops.

'That meant last year we had a good portfolio with one manufacturer, one retail seller and one operator,' says Brine. 'We also got work from Digital Marketing services, as well as our regular training contracts.'

In terms of more regular schedules, subject areas that have helped shore up training suppliers' fortunes are often around those technologies or processes that can help companies in a recession.

'There is more pressure on people to be accountable,' says Pryor-Jones. 'Training needs to match business benefits a lot more. Therefore virtualisation is a hot topic because it's driving down ownership costs. Also there's a push from vendors around data centres.'

MacPherson also says virtualisation was huge for QA last year, plus it had 'very good growth' in best practice areas, ITIL® and project management, more interest in Managing Successful Programmes (MSP), and a rise in its managed service offering.

'Programme management courses increased by 40 per cent for us last year - there is definitely significant interest in it at board level - and it stimulated new growth for project management,' says Franklin. 'Project management has been widening out from IT. The percentage of people with non-IT backgrounds on our project management courses has been growing for a period of time, and now stands at about 70 per cent.

'MOR [Management of Risk] also had suddenly huge growth, albeit from low levels. MSP will dwarf MOR, but organisations have become more interested in governance.'

Keeping afloat this year

There seems little doubt that the market is contracting this year, and training companies are lining up their strategies to keep afloat, from cost cutting to treating customers like kings.

'The downturn will last at least another 18 months or two years, so we are concentrating on the basics - trying innovative solutions, giving the best possible delegate experience, treating delegates like kings, and only spending where needed,' says Pryor-Jones.

'If I could have something it would be a silver bullet so we can move quicker than everyone else. I don't see us widening our portfolio much more in the next 12-18 months. The next 12 months will be a difficult time to speculate in. It's not the time to take risks, but we cannot be too risk-adverse.'

Maven Training is taking some similar approaches. Franklin says: 'You do still need to spend in certain areas, but we're not profligate - we walk, take trains and not taxis. We don't take clients to expensive restaurants, we just have coffee with them in the office. We're not spending ostentatiously.

'Off-the-shelf courses are no longer good enough. You have to go the extra mile at the moment - research clients' challenges and fully engage with their environment and how to solve their problems.

You have to do a lot of tailoring of courses.'

Other ways that companies are offering more to clients include Global Knowledge's virtual Fridays where they run something for clients for free - a webinar, a forum, a testing day, or a product overview.

Brine says that Verridian tries to add value by being involved in strategic planning with customers to help demonstrate that it is aligned to their challenges and not just out to make a quick buck.

'In a recession a reaction is to cut costs and not look at the bigger picture,' he says. 'We are using the benefits of last year - a good year - to get aligned to the customer, ready for when times are good again. We need to be flexible and supportive.

'We are investing in training for our team, growing the team, and making sure people are in place for when we recover.'

Most training companies have recognised the importance of investing in their people while times are tough.

Franklin says: 'It's important to keep staff motivated and engaged. We're still talking to customers, doing marketing, and developing new products, and therefore the staff are engaged. We are also training staff to cover more subjects and running train-the-trainer events.’

Global Knowledge is also cross-skilling its trainers, for example so they can train on Microsoft, VMWare and Cisco products, to keep up with its clients' moves to unified communications. Way says: 'People are not buying one platform, so customers are needing the breadth of trainers' skills. Cross-skilling means we can send one trainer to a customer to train on several platforms.'

Which subjects are likely to help sustain training companies' fortunes? Pardo suggests that, in a recession, buyers are looking to be more professional and are less likely to cut corners, so subjects like project management and service management retain their popularity.

Franklin says: 'The structure and certainty of effective programme management is needed right now. Organisations cannot afford to fail, run over budget etc … and you need to know what the benefits are going to be. Benefits management training is likely to be a growth area.'

Franklin says she senses an urgency to get programme training under way now - in the private sector to run programmes to make money, and in the public sector while there is still money this year. 'Next year there is a risk of changing government, and also there may be more financial pressure as public budgets may be cut,' she says.

MacPherson feels that popular subjects will be the perennials of core technical knowledge, plus virtualisation, security, managerial topics and project management.

Plus, he backs green IT qualifications, which can help make savings as well as embracing the environmental agenda.

Stevens believes that training companies need a broader-based offering than classroom-based training, and should move more into blended learning. He sees electronic performance support as a growth area.

In terms of training related to projects, there is a likelihood of a decrease in demand as projects and programmes will be slower to get off the ground.

Pryor-Jones says: 'This year, projects have been more difficult to close and projects are slipping... but not cancelled yet. Where people are spending money it is aligned to business goals. People are prepared to spend when putting in a new system, but there's not so much money available for business-as-usual and nice-to-have training.'

Similarly, Brine says: 'For next year, I know of one programme that is already being scaled down considerably. I think there will be less project-based work. Any organisation is naïve if they think that they are so good it won't affect them. Training departments are being asked to be sure they get value for money.'

Recession-busting tips for customers

One argument training departments can use as to why continue training in a recession, suggests Franklin, is for staff motivation.

'Maybe a company can't give bonuses this year, but training is tax-deductable and still a reward, and will have a tremendously positive effect,' she says. 'Individuals feel important because a company is investing in them. Plus it could be used for team-building if a company is looking at a new way of running projects or working together.

'If you cannot raise the training flag nor afford tea-bags it sends the wrong signals to staff. If training is happening it gives out a powerful message that the company is looking to the future.'

Pryor-Jones echoes her views: 'At the end of the last dotcom boom, companies couldn't pick up quickly enough. I'd urge customers to think twice about budgetary constraints before not training. They should think how they can do training differently, rather than not at all, which could have a negative impact in the medium-term.'

That said, Pettman sounds a note of caution about making sure the company is on the right course before diving into training. 'I'd say rather than companies changing methodologies, for example to Prince2, think about why you are doing it and focus on ensuring you deliver the key benfits.

Rather than sheep dip, think about the process and what success looks like for your organisation. Organisations who sheep dip are often training but not delivering - for example with project management, consider your company ability with risk and benefits management - if you are not doing things like that correctly, then a change in methodology will not see any material improvement.'

Customers should also be careful not to waste money, points out Global Knowledge, for instance by planning ahead when they have to train their people in order to retain something such as Cisco Gold Partner status, and thus avoiding paying a last minute premium for the training. Global Knowledge has introduced a portal to alert customers when their staff need to re-take certification courses.

Stevens suggests that ,if you are investing in training, try and evaluate and monitor how effective it’s been. 'Try and gauge how much you've achieved your objectives,' he says. 'It's amazing how much of a demonstrable effect it can have.'

The IT training companies urge customers to get in touch if budgets are tight, so that they can look at innovative ways of running courses, for instance an in-house course may work out cheaper than a public schedule. Steven suggests considering a train-the-trainer approach as sometimes people in an organisation can make very good trainers. Plus, he advocates looking at technology to see if it can help make cost savings.

Clients could also make savings by taking advantage of offerings such as Verridian's tiered pricing model for trainers where customers pick trainers in a certain price band, according to their experience.

To sum up, think before you act and make sure that you are getting value for that hard won budget.

The slowly changing landscape

The tale of mergers in the Top 50 continues. QA consolidated its lead at the top of the revenue league through its purchase of Xpertise last year, making it now almost four times the size of its nearest competitor.

QA-IQ's purchase of Xpertise put paid to a proposed deal by Xpertise to buy Parity Training, which was awaiting shareholder approval when QA-IQ swooped in with its counter-offer.

Parity continued to seek a buyer for its training arm and in February this year completed its sale to a Dubai-registered company, ECS.

That tale, however, is perhaps not yet ended. As we go to press, the Parity deal has a question mark over it as Thunder Bay, which was the guarantor in the UK for ECS's purchase of Parity Training, has filed to the courts for liquidation. ECS was due to pay one of its instalments to Parity at the end of April.

Thunder Bay's file for liquidation came shortly after its franchises were terminated for the operation of the New Horizons centres in England and Scotland. The seven New Horizons centres are temporarily closed, but New Horizons Worldwide has said it will re-open the London office in mid-June, which it will run itself in order to save time finding a new franchise partner.

Also shortly before we went to press, Oracle bought Sun Microsystems, which will bring two vendors with large training arms under the same umbrella.

Will consolidation continue this year? There seem to be two schools of thoughts - those who think it inevitable while others believe tight purse strings will make it more difficult.

'The degree of consolidation in the market has constantly fallen short of expectations, whether the market has been going up or down,' says Pardo. 'It's possible that there will be more acquisitions, but it's not immediately evident that there are significant opportunities.'

One opportunity that will probably present itself in the short term is to pick up some parts of Thunder Bay’s businesses.

Parity Training is one company that has expressed an interest in buying part of the former New Horizons operations if sold off by the administrator, depending on how the liquidation plays out.

Assima is always interested in acquisitions, according to Stevens, who 'definitely' expects more consolidation in the industry.

So does MacPherson: 'Consolidation will continue,' he says. 'There's still an oversupply of training. We're not actively looking to buy, but would certainly consider it if the right company was on offer.'

Franklin is more sceptical: 'I think some smaller companies will pack up. I'm not sure about buy-outs. There isn't the funding and people are going to be picky about acquisitions.'

Pryor-Jones thinks it will be larger firms that struggle: 'I wouldn't be surprised if some relatively large players go out of the market,' he says. 'There is too much supply and not enough demand.'

New entrants to top 50

Verridian
Brightwave
Quanta
Globaltech Solutions
Assist Knowledge Development

This article first appeared in the Summer 2009 issue of IT Training.

May 2009