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Megatrend
#6: Outsourcing and Privatization
Changes in the structure
of our organizations are impacting the need for education and
training as well as the emerging education industry itself. The
hierarchical organizational structure of a company is increasingly a
relic of the past, falling out of favor with the ascendance of
teams, and kiretsus, "business ecosystems." Rather than
manage all aspects internally within a corporation, increasingly
companies are developing a web of suppliers, customers and
outsourcing partners that can provide specific expertise at the
necessary time. Not only are the lines of authority blurred and
changing within many organizations, the exact point at which a
company starts and stops may become fuzzy, with intranets linking
groups of related people and organizations.
In such an environment, companies
are increasingly focusing on what they do best, partnering with
other companies as needed to accomplish business objectives. Outsourcing may be a bane for workers
filling these jobs in these companies, but it has created tremendous
opportunities for other companies (and their employees). Nearly 90% of multinational firms outsourced
some business in 1995 versus only 60% in 1992.
Total revenues in the
outsourcing market are expected to grow from $100 billion in 1996 to
nearly $300 billion in 2001. This illustrates the need for workers
to continually update their skills, think strategically about their
careers and their businesses, and in so doing, create value for
both.
Navigation and
deregulation are also creating competition where none existed
before, increasing requirements for accountability and results,
customer service and cost management. Financial services, airlines,
telephone service, gas distribution and now electric utilities, have
all undergone fundamental changes in their governing structure.
|
Major Industries Have Been Deregulated |
|
Sector |
Year of
Major Deregulation |
|
Airlines |
1978 |
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Financial Services |
1980 |
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Telecommunications |
1982,1996 |
|
Natural Gas
Distribution |
1992 |
|
Cable TV |
1996 |
|
In most cases, the
result has been more innovation, better service and lower costs.
There are many, many cases in our economy of how the discipline of
the market has increased the dynamism of and improved the products
of an industry. Our K-12 schools may be one of the few
remaining institutions that have not undergone this change. While
it can be wrenching, we believe that a reasoned introduction of
market forces into the education of our children will result in
very positive change.
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Outsourcing/Privatization’s
Impact on Education & Training Industry |
|
Sector |
Impact |
|
Early Education |
As the knowledge
worker is increasingly freed from the corporate organization,
companies seeking to attract and retain the mobile knowledge
worker by providing family-friendly benefits such as corporate
child care. |
|
K-12 Education |
Schools will increasingly
look to outsource a portion of services as quality providers
begin to offer measurable educational results at the same
cost. Private management of public schools and charter schools
should prompt a rethinking of what schools must do. |
|
Post-secondary |
These institutions
will need to become more nimble and customer-responsive, perhaps
increasing the degree of specialization and Education
partnering with other universities as well as corporations to
develop needed curricula. Students will increasingly demand
relevant work-related skills. |
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Corporate Training |
As corporations focus
on core competencies, we expect training will be increasingly
outsourced to one or a few high-quality solutions providers. |
|
Consumer |
Busy working parents
are outsourcing a portion of children's education to private
providers. |
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Source:
Merrill Lynch |
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