Affiliated Computer Services: The Long-term Value of LPO - Richard Klingshirn

Richard Klingshirn of Affiliated Computer Services (ACS) tells CEO that, in a recession, core considerations such as learning process outsourcing (LPO) offer an opportunity for systematic transformation as well as cost reduction.

Companies are becoming leaner and meaner to survive the economic downturn. Budgets are tight and in many cases staff numbers have been trimmed. Yet these organisations are still focused on the future and know they need to manage their talent effectively to deliver on their long-term goals.

Cost reduction is a key driver in any part of an organisation, and outsourcing is a popular option for many business processes, but with something as vital to strategy as learning and employee development it may prove expensive in the long run if cost-cutting is the sole driver.

It seems that many organisations understand this and are starting to look for more from their LPO providers. ‘We are seeing significant interest from current and prospective clients in our LPO service offering. Along with that, we are seeing an evolution in the thinking of clients. Of course they want efficiency, meaning lower costs and greater productivity, but they are also focusing more on how they improve their approach to learning,’ observes Richard Klingshirn, executive managing director at ACS.

ACS is a global leader in human resource, business process and information technology services, and a key part of its human resources capability lies in its standalone LPO solutions. ACS offers services along the entire learning value chain, from assessment and curriculum design to content development, learning administration and learner care services and a hosted learning management system.

Having brought about major transformation in the learning processes of many large organisations, Klingshirn has seen first-hand the change in their understanding of what LPO can offer. ‘Companies won’t typically outsource learning solely for the sake of cost savings. Learning is seen as a core part of what they do, part of the fabric of the organisation, unlike transactional processes that might be outsourced. Learning is a key component in any company’s intellectual capital, so they are looking for LPO partners that offer much more than just cost reduction,’ he says. ‘They require a provider who is capable of bringing about profound transformation in their learning business processes as well as a provider who brings the expertise in all elements of the learning value chain.’

Take the initiative

"We are seeing significant interest from current and prospective clients in our LPO service offering. Along with that, we are seeing an evolution in the thinking of clients."

The drive to look beyond short-term savings is a sign that large organisations recognise the strategic importance of learning initiatives when developing a sustainable business, and to increase revenue at a difficult time for the global economy.

‘Companies are looking at how to transform their approach to learning, and that has been a trend for the last ten years, but now there is more interest in outsourcing because they want to improve how learning is done as well as save on cost,’ notes Klingshirn.

With this in mind, ACS has developed a broad range of services to help companies achieve transformation in their learning processes at all levels, from new product training for sales to leadership initiatives for developing the next top executives.

Learning, Klingshirn believes, is the lifeblood of a successful business. ‘Learning at every level will affect the performance of the workforce and, therefore, the overall performance of the company. The versatility and flexibility of our services allow an organisation to leverage our capability for any kind of learning initiative. As a full service HR provider, ACS brings not only the learning and development expertise, but also the HR consulting expertise, addressing such topics as communication and change management which differentiate ACS from its competitors,’ he stresses.

There are key factors that define how important learning transformation is for an organisation, among them the size of the workforce. A larger, more scattered workforce may well benefit the most as delivering information to sales teams or agents is of vital significance in maximising revenue flows. Klingshirn also points out, however, any regulated industry will need to provide extensive learning programmes to meet its compliance obligations.

Among the many household names that ACS has helped there are many companies that have managed to make a major change in their approach to learning and, as a result, have improved the overall performance of their business. For example, ACS provided a major component of Cisco’s Partner e-Learning Connection through a ten-year project that ran through 2009.

‘Cisco derives 80% of its revenue from its channel partners, who need learning around Cisco products. It saw exponential revenue growth from some channel partners because of the information we helped to provide,’ comments Klingshirn.

Ernst & Young is the longest-running learning outsourcing client of ACS, which provides and manages the operations of its learning and development technology infrastructure globally to over 14,000 personnel. ACS also plays a major role in its centralised US learning function, developing learning content and providing the learning administrative operations for Ernst & Young’s 40,000-plus personnel in the Americas. During the course of the relationship there have been instances when those learning initiatives have had to incorporate rapid expansion and bring vast numbers of new employees quickly into the Ernst & Young corporate culture.

‘Following the demise of Arthur Andersen, Ernst & Young acquired several offices, clients and personnel around the world and needed to train a lot of people quickly. We participated in the development of learning to swiftly bring people on board. Because Ernst & Young hires thousands of new university graduates each year, and faces other challenges, we also need to be innovative, so we have developed learning in Second Life and virtual worlds,’ explains Klingshirn. ACS is in the early stages of bringing about transformation in the learning processes of car rental giant Hertz. One year into the relationship the process of learning assessment is complete and ACS is developing learning initiatives and processes that are intended to bring improved performance from a large workforce spread around the world.

The work for Hertz includes a significant element of web-based and mobile learning processes for employees at all levels from executives to agents and the people who clean and service the cars. Some elements are self-contained learning programmes, while others form part of a preparation process to improve the value of classroom learning.

‘The focus is on Hertz’s customer satisfaction with an expectation that topline revenue will increase,’ notes Klingshirn. Its work with Cisco, Ernst & Young and Hertz is indicative of the kind of success ACS has had in helping many large companies across a range of industries achieve profound transformation in their approach to learning and development. It also shows how successful companies are looking beyond the short-term impact of the downturn to put in place long-term strategies for learning.

Learning curve

Given the poor state of the world’s economy it might seem that cost concerns would outweigh the desire to transform learning processes for strategic gain, but Klingshirn is finding that many companies have avoided falling into this trap. As a result, they are ready to reassess how they engage with their LPO partners. ‘The economic situation has accelerated the pace at which companies look to outsource learning processes. Many companies were caught out by how fast and far the economy fell, so now they are looking at what they can do to protect themselves in the future. One way is to shift fixed cost to variable cost, which can be done through outsourcing,’ he says.

He also notes that there are other HR concerns, not least the demographic shifts taking place in the working population, that force companies to think strategically about learning and development. ‘We all know that the pace of retirements is increasing as the Baby Boom generation moves out of the workforce. This presents many HR challenges, including the need for organisations to ensure they have captured and codified the collective intellectual capital of their retirees in such a way that it can be passed on to younger workers entering the workforce. Our learning and development methods and processes assist our outsourcing clients with this challenge,’ he remarks.

Outsourcing can play a part in addressing many such challenges. LPO can reduce costs, improve productivity and help to address long-term HR issues, but only if the service provider is given the chance to work closely with its clients. ‘Although there is an arms-length commercial relationship between ACS and its clients we are viewed as a trusted business partner, which allows us to work in collaboration with our clients to help them with their business issues. If all you have is a vendor/client relationship you won’t achieve the kind of satisfaction you are looking for. Both sides needs to invest in the relationship for it to deliver on its promises,’ stresses Klingshirn.

‘Our clients view us as the experts in our field. They want our input often when they are building the business case for a new learning initiative. We strive to earn a seat at the table with the senior learning, operating and finance people,’ he adds.

Despite the state of the global economy, now could be the time for many organisations to achieve major changes in their learning processes and, ultimately, their business performance, but they must ensure that their LPO provider can take a broad yet incisive view on the many challenges currently facing HR.

Richard Klingshirn, executive managing director at Affiliated Computer Services.