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Provider trends by Christopher Clark assistant director PWC Corporate Finance
Any HR director seeking a company-wide training solution is faced with an array of options and, with the Government looking increasingly to the private sector for capacity, now is a good time to be a training provider.
The growth in e-learning has increased the demand for blended training and opened up the market. The conditions now exist for significant consolidation. The UK training market was worth about £22bn in 2001 and, despite the current downturn, the future is bright for the sector.
Suppliers are being attracted to the market because of its growth potential, stable long-term revenues and the reluctance of corporates to switch provider. Against this, barriers to entry are high. A new entrant would have to establish credibility, create a national network and compete keenly on price.
The most logical route is by M&A, and there have been some small deals. But there is not a single dominant brand that can provide a one-stop solution to an employer's training and development needs. Over the past two years, deals have come from a range of sources:
- December 2000 - Protocol, an education support services company, purchased Spring Skills, which runs NVQ programmes for the Government
- December 2001 - Capita, the human capital provider, bought the Industrial Society's training and development business
- April 2001 - facilities management businesses enter the fray, with Vosper Thornycroft paying £10.5m for Hospitality Plus, an NVQ provider
- May 2001 - FTC was subject to a management buyout by Royal Bank Private Equity, showing private equity firms are anticipating demand by snapping up providers
Is a greater diversity of supplier good news for HR? A qualified 'yes'. The emergence of larger suppliers will enable employers to buy a package of programmes from a single source. This will provide a more viable alternative to doing it in-house, providing all the cost benefits of outsourcing without affecting quality.
But the key to successful consolidation of the training sector lies in the hands of suppliers themselves, who must ensure they balance expansion while preserving the integrity and success of the business they are buying.
