ABOUT THIS STUDY
Now in its 42nd year, The Industry Report is recognized as the training industry’s most trusted source of data on budgets, staffing, and programs. This year, the study was conducted by an outside research firm April-July 2023, when members from the Training magazine database were e-mailed an invitation to participate in an online survey. Only U.S.-based corporations and educational institutions with 100 or more employees were included in the analysis.
The data represents a cross-section of industries and company sizes.
Note that the figures in this report are weighted by company size and industry according to a Dun & Bradstreet database available through Hoovers of U.S. companies. Since small companies dominate the U.S. market, in terms of sheer numbers, these organizations receive a heavier weighting, so that the data accurately reflects the U.S. market.
About Survey Respondents:
- 52% are managers or above in the organization
- 26% are developers or instructional designers
- 20% are mid- to low-level (based on title selection) associates
- 64% determine the need for purchasing products and services
- 18% set the budget
- 30% manage requests for proposals/bids
- 69% recommend the purchase
- 19% have the final purchase decision
TRAINING EXPENDITURES
U.S. training expenditures remained steady in 2022-2023, inching up just .2 percent to $101.8 billion. Payroll went down 9 percent, driven primarily by decreases in the payroll of small companies. But spending on outside products and services jumped 23 percent to $10.1 billion. Other training expenditures (i.e., travel, facilities, equipment) ticked up to $28.7 billion from $28.3 billion in 2022.
The training expenditure figures were calculated by projecting the average training budget to a weighted universe of 142,829 companies, using a Dun & Bradstreet database available through Hoovers of U.S. organizations with more than 100 employees.
Note: Although small companies have the smallest annual budgets, there are so many of them (123,869) that they account for almost one-third of the total budget for training expenditures.
DEFINITIONS
- Total training spending: All training-related expenditures for the year, including training budgets, technology spending, and staff salaries.
- Training staff payroll: The annual payroll for all staff personnel assigned to the training function.
- Outside products and services: Annual spending on external vendors and consultants, including all products, services, technologies, off-the-shelf and custom content, and consulting services.
Average training expenditures for large companies decreased from $19.2 million in 2022 to $16.1 million in 2023. The number for midsize companies remained the same at $1.5 million. Small companies rose from $368,891 to $459,177 in 2023.
Some 37 percent of organizations said they increased staff from the year before (down a bit from 38 percent), while 47 percent said the level remained the same (vs. 45 percent last year). Some 16 percent said it was lower. Large services organizations had the biggest personnel costs ($7 million-plus). This year, midsize companies spent about one-third as much as large companies, while small companies spent about one-fourth as much as midsize ones. The average payroll figure for large companies was $3.8 million; for midsize organizations, it was $1.3 million; for small companies, it was $310,406.
For those who reported an increase in their training staff, the average increase was 17 people, nearly triple the number in 2022. For those who reported a decrease in their staff, the average decrease was 45 people—a big jump from 8 last year that was primarily fueled by large companies.
Other training expenditures increased this year to $28.7 billion from $28.3 billion in 2022. Such expenditures can include travel, training facilities, in-house training development, and equipment. On average, organizations spent 16 percent of their budget or $360,164 (down a bit from $382,729 last year) on learning tools and technologies. Large manufacturers/distributors had the largest budgets for learning tools ($1.9 million). Midsize retailers/ wholesalers had the largest tool budget in their size range ($398,400).
Looking ahead, the most frequently anticipated purchases are online learning tools and systems (43 percent vs. 34 percent last year); games and simulations (nearly double last year at 41 percent); business skills (37 percent vs. 10 percent last year); courseware design (35 percent vs. 19 percent last year); and classroom tools and systems (31 percent vs. 18 percent last year). Learning management systems dropped from 39 percent to 17 percent this year, and authoring tools/systems fell from 36 percent to 12 percent. Content development decreased from 30 percent to 17 percent this year. Augmented/virtual reality tech came in at 10 percent vs. 16 percent last year. Categories receiving less than 10 percent of hits included audio and Web conferencing products/services and Web 2.0.
Overall, on average, companies spent $954 per learner this year compared with $1,207 per learner in 2022. Services organizations spent the most per learner this year ($1,172), followed by nonprofits ($1,105). Small ($1,420) and midsize ($751) companies spent more per learner than large corporations ($481).
In addition to spending a bit less per learner, companies provided fewer hours of training than last year. On average, employees received 57 hours of training per year vs. 62 hours last year. Service providers offered the greatest average number of hours overall across business types (68), while small manufacturers/distributors had the highest average number of hours by company size (94).
Companies continued to devote the bulk of their training expenditures to training non-exempt employees (38 percent in 2023 vs. 41 percent in 2022).
The average training budget for large companies was $16.1 million, while midsize companies allocated an average of $1.5 million, and small companies dedicated an average of $459,177.
TRAINING BUDGET
This year, the number of companies reporting that their budgets increased dropped 4 percent to 40 percent. Those indicating their budgets decreased fell to 11 percent from 13 percent in 2022. Some 49 percent said their budget remained the same vs. 43 percent in 2022. Manufacturers/ distributors showed the greatest tendency for budget cuts, while services and nonprofit organizations had the greatest tendency for gains. Midsize companies showed the greatest number of increased budgets (50 percent vs. 40 percent for small companies and 20 percent for large ones).
Most of the budget increases were modest—less than 16 percent. Some 44 percent saw increases in the 6 to 15 percent range (vs. 35 percent last year), while 30 percent of organizations reported increases in the 1 to 5 percent range compared with 28 percent last year. Some 26 percent reported increases in the 16-plus percent range (vs. 37 percent in 2022). Most respondents who reported an increase in their training budgets attributed it to the following reasons:
- Increased scope of training programs (64 percent vs. 70 percent last year)
- Added training staff (54 percent vs. 56 percent in 2022)
- Increased number of learners served (48 percent vs. 49 percent last year)
- Purchased new technologies/equipment (44 percent vs. 45 percent in 2022)
This year, more than half of the respondents who reported budget decreases cited a drop of more than 16 percent. Some 33 percent reported budget decreases between 6 and 15 percent (vs. 40 percent last year), and 9 percent cited 1 to 5 percent decreases vs. 35 percent in 2022. Some 91 percent cited budget cuts due to economic uncertainty for the decrease; last year, 76 percent attributed it to budget cuts due to COVID-19. Some 35 percent noted reduced training staff, the same as last year.
This was followed by:
- Attended fewer outside learning events (18 percent vs. 25 percent last year)
- Decreased outside trainer/consultant investment (15 percent vs. 10 percent last year)
- Decreased scope of training (12 percent vs. 10 percent in 2022)
- Decreased number of learners served (9 percent vs. 25 percent last year)
- Other reasons such as replacing people with automated processes and the cost of other needed services and supplies outside of learning (9 percent vs. 18 percent in 2022)
On average, organizations allocated the biggest portions of their training budget to mandatory compliance training (13 percent), management/supervisory training (12 percent), and onboarding (11 percent). Diversity, equity, and inclusion was a new category added this year—it came in at 7 percent.
Like the last 11 years, the highest percentage of organizations (32 percent) said management/supervisory training will receive more funding than the year before. This was followed by onboarding (26 percent) and interpersonal skills and diversity, equity, and inclusion (both at 23 percent).
The highest priorities for training in terms of allocating resources in 2024 are: increasing the effectiveness of training programs (26 percent vs. 32 percent last year) and increasing learner usage of training programs and measuring the impact of training programs (both at 18 percent vs. 21 percent last year).
TRAINING DELIVERY
This year’s survey included several questions to help understand how organizations are emerging from the COVID-19 pandemic. In terms of the biggest training challenges organizations are facing post-pandemic, the top choices were lack of resources/ personnel at 35 percent and learner engagement at 31 percent. These were followed by budget cuts (11 percent), implementing new technologies (10 percent), and lack of return on investment (7 percent).
Some 6 percent of respondents chose “Other” in answer to the challenge question, with replies such as:
- Employee retention
- Lack of subject matter experts
- New management
- Outdated practices
- Time for staff to learn
- Transitioning from a training focus to a performance focus
Some 56 percent of companies reported their budgets have either rebounded (21 percent) from pre-pandemic levels or increased (35 percent).
In terms of training delivery in the wake of the COVID-19 pandemic, companies have begun transitioning from remote training back to in-person training for some skills. These include management/supervisory training (41 percent), onboarding (40 percent), and interpersonal skills training (33 percent). Other training returning to some in-person facilitation included customer service training (24 percent); profession/industry-specific training (23 percent); mandatory/compliance training (21 percent); and diversity, equity, and inclusion training (20 percent).
For the upcoming year, 70 percent of companies plan to stay the course when it comes to the amount of in-person vs. remote training. About the same percentage (14 percent) plan to increase remote training as plan to increase in-person training. The areas expected to see the greatest increase in in-person training are management/supervisory training, interpersonal skills training, and onboarding. All other areas seem to be evenly split between the two options or remaining the same.
Some 32 percent of training hours were delivered with blended learning techniques, the same as last year.
- Virtual classroom/Webcasting accounted for 28 percent of hours delivered, down from 33 percent in 2022. Some 33 percent of hours were delivered via online or computer-based technologies, down slightly from 35 percent last year.
- Some 30 percent of training hours were delivered by a stand-and-deliver instructor in a classroom setting—up postpandemic from 24 percent last year.
- 4 percent of training hours were delivered via mobile devices, the same as in 2022. This year, 6 percent of training hours were delivered via social learning, the same as last year. Technologies such as augmented reality (.4 percent), virtual reality (1 percent), and artificial intelligence (.4 percent) were not widely used and were slightly less used than in 2022.
Blended learning was used exclusively or mostly (90 to 100 percent of the time) by 11 percent of the organizations. More companies (43 percent) used it for 10 to 29 percent of their training. Some 47 percent of organizations used virtual classrooms/Webcasts for 10 to 29 percent of their training, followed by instructor-led classrooms and online training (40 percent) for the same percentage range of their training.
Mandatory or compliance training continued to be done mostly online, with 90 percent of organizations doing at least some of it online and 46 percent entirely online (down from 56 percent last year). Online training also often was used for IT/systems training (78 percent); profession/industry-specific training (76 percent); desktop application training (70 percent); diversity, equity, and inclusion training (67 percent); onboarding (65 percent); management/supervisory training (64 percent); and customer service and sales training (both at 62 percent). Online training was least used for executive development (48 percent).
In terms of technology usage, of the 13 learning technologies presented, the most often used included:
- Learning management systems (LMSs) at 89 percent, the same as last year, followed by virtual classroom/ Webcasting/video broadcasting at 85 percent (down from 86 percent last year). Some 96 percent of large and mid-size companies currently use LMSs vs. 81 percent of small companies.
- Rapid eLearning tools (44 percent, up from 40 percent last year)
- Mobile applications at 31 percent (down from 36 percent in 2022)
- Application simulation tools (26 percent, down from 28 percent last year)
- Learning content management systems (LCMSs) at 27 percent (down a bit from 28 percent last year)
- Online performance support (EPSS) or knowledge management systems at 18 percent (down slightly from 19 percent in 2022)
- Podcasting at 17 percent (up from 16 percent last year)
The delivery methods least often used for training remained the same as last year:
- Virtual reality at 10 percent (up from 7 percent last year)
- Artificial intelligence at 9 percent (up from 8 percent last year)
- Augmented reality at 7 percent (up from 6 percent in 2022)
Large companies appear more inclined to experiment with some of the newer technologies than small or midsize organizations: Some 19 percent of large companies used both artificial intelligence and virtual reality vs. 8 and 11 percent of midsize companies and 6 and 5 percent of small ones.
TRAINING OUTSOURCING
2023 saw an uptick in the average expenditure for training outsourcing: $322,376 vs. $197,519 in 2022. Large companies on average spent $1.2 million vs. $121,213 for midsize companies and $75,933 for small ones. An average of 5 percent of the total training budget was spent on outsourcing in 2023 vs. 4 percent in 2022.
On average, 23 percent of companies mostly or completely outsourced LMS operations/hosting (down from 30 percent last year), while learner support and LMS administration largely were handled in-house (83 percent and 79 percent, respectively).
More instruction/facilitation is outsourced than handled in-house (59 percent vs. 41 percent). Across all the topic areas, small and midsize companies outsourced about the same, and large companies somewhat more. In the areas of custom content development and LMS operations/hosting, the larger the company, the greater the outsourcing.
The level of outsourcing is expected to stay relatively steady in 2024—some 85 percent of organizations said they expect to stay the same in the outsourcing area. The percentage of companies expecting to increase outsourcing (7 percent) is slightly lower than those expecting to use outsourcing less (8 percent). Just about half of respondents said they don’t plan to outsource learner support (52 percent) or LMS administration (48 percent) in the next 12 months.
With respect to company size, large companies expect a bigger decrease in outsourcing than either small or midsize companies. But midsize and small companies are more likely to report that they don’t and won’t outsource.
