The Company Of Thought bulletin: Brexit and its likely impactupon the elearning and learning technologies industry
This week we have a bulletin on Brexit and its impact on elearning from The Company Of Thought, a worldwide group of elearning experts.
Reading the recent article in the Guardian newspaper asking how UK Universities should prepare for a Brexit world set our thought pattern as to how Brexit may impact upon corporate training and in particular the elearning component of that.
We learn from other recent economic convulsions:
- 2008 was a seminal moment in the training industry, with many companies freezing as much training expenditure as possible in the face of an economic downturn.
- When an economy turns down, one of the first levers pulled in organisations large and small is the cancellation of training in every area beyond those that keep the company legal – notably, compliance learning.
- The Learning Light forecasting model is based on the principle that overall training expenditure is a function of economic performance.
So, when an economy turns downwards, training expenditure follows quite quickly. While different segments of an economy bring differing training profiles and patterns (including the use of technology in training) the overarching effect of a recession or slump is the reduction of expenditure on training by corporates and the public sector.
While not all training got cancelled in 2008 – 09, much of it did – and the nature of many training budgets changed from allocation to one of responding to business needs. Without doubt, training expenditure per full time equivalent fell markedly.
Since 2012 we have seen a steady if not spectacular upturn in training expenditure in the private sector and, since 2010, an attempt to streamline and achieve better value for money in the public sector’s procurement of training and development.
2010 onwards, crucially, saw a continued growth in the utilisation of elearning in the corporate training market, driven by its cost effectiveness and its ability to effectively deliver compliance-led elearning and, while sluggish, elearning took more and more market share.
Compliance has been the mainstay of elearning and represents over 60% of the elearning marketplace – and this was where the focus lay.
This growth was incremental and, for a time, large projects were on pause or cancelled in the depths of the downturn.
So while the recession lasted, overall training expenditure stagnated or declined; elearning and learning technologies continued to grow driven by the propensity to save money as well as the recognition that elearning is the most effective way to deliver compliance and, recession or no recession, the demand for compliance-led learning was not going to go away in 2010.
So what will Brexit mean for learning and development (L&D)? One of the few things universally agreed is uncertainty. So, many organisations may well pause on plans for using technology for training.
So let’s focus on the impact of Brexit on elearning and learning technologies – and draw conclusions from the last economic shock to the system.
It is likely that many companies will put new projects on pause while the mists of uncertainty clear. This may take some months, so we anticipate a marked slow-down in big strategic procurements. We saw this pattern in in the 2008 downturn.
We had already noted in 2016 a pause in elearning procurement patterns among some employers as they digested the implications of the apprenticeship levy and sought to re-evaluate their training provision in this new world.
However, we believe this will subsequently lead to a marked upswing in learning technologies procurement from large employers and private sector training providers seeking to capitalise on the apprenticeship market.
At present, we see no likelihood of the apprenticeship levy being changed (though there is a lobby pressing for a pause but, to date, Nick Boles, the skills minister, has resisted any delay) and we are therefore reasonably confident that this will drive demand for elearning and learning technologies in 2017 -18.
We believe smart assessment, remote assessment and invigilation, LMSs configured with competencies and next generation e-portfolio solutions will be poised to benefit from this stimulus as large employers and apprenticeship providers seek to use technology to drive efficiencies in apprenticeship provision.
The need for compliance learning will not go away but, if we see a downturn in employment numbers (a rise in unemployment) there will be downward pressure on the compliance-led learning market.
This may well stimulate and accelerate the move to embrace elearning further as a way of saving money.
UK minimum wage legislation is another reason for optimism as the UK addresses its productivity conundrum. Training will, without doubt, be part of the solution to improve people performance and, therefore, productivity.
Longer term, if the UK seeks to re-legislate (and de-regulate) for many of the red tape regulatory constraints presently blamed on Brussels, there could be a stimulus for new compliance-led elearning courses. How soon this may emerge remains to be seen and will depend on UK legislators.
So what does Brexit mean? Put simply, training budgets will take a hit as Brexit progresses. As surely as night follows day, uncertainty will put a pause on large procurements.
However, elearning is well used to grabbing market share in difficult times with its ability to offer solid ROI and ingenious incremental products taking advantage of open APIs which will further support the customers through difficult times.
So, however the apprenticeship levy plays out, it could offer a stimulus to some training businesses and, in particular, to learning technologies businesses – although the monies generated by the levy could be smaller than anticipated. In that case, some of the more aggressive investment positons taken in the Apprenticeship provider market may not look so good.
Will elearning grab more market share of a depressed training market – as in the previous recession – due to its cost-saving capability, particularly around compliance-led learning? Probably yes – but how big will the compliance-led elearning market be? As it has a high exposure to the financial services industry, this is an area that may be badly hit post-Brexit.
The UK elearning industry may now take overseas markets much more seriously and look to both the East and the West with some optimism, given the successes of several vendors already. Moreover, with Sterling at a low level, companies will be very competitive indeed.
The opportunity to re-engineer the UK’s regulatory environment and the compliance learning that underpins it may be a real opportunity going forward for the elearning industry in the coming years.
To add a further note of caution, the UK edtech market is extremely depressed in the K12 system, as is FE at present (despite the FELTAG stimulus), and HE is likely to be challenged specifically by Brexit.
HE may be tempted to internationalise more rapidly outside the EU and turn to technologies including MOOCs and SPOCs which may stimulate the market for learning content and innovative assessment services.
Will the positives outweigh the negatives for the corporate elearning and learning technologies industry? Our view is that equilibrium will triumph and we will see a pretty flat market for 12 to 18 months.
You can find more information on The Company of Thought here.