Move Fixed Costs To Variable Costs

One of the strategies of reducing overall training costs is to move fixed costs to variable costs wherever possible. To get started, you can start with a benchmarking exercise for your L&D organization where you can establish and manage to benchmark budget targets for each of your expense components and sub categories against industry.

spend per employee

Spend per employee

third party

Third party spend as a percentage of total spend

employee

Employees per L&D staff member

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Training spend as a percentage of revenue

At the end of this benchmarking exercise, you may find that you probably have armies of in-house trainers with low trainer utilization. It may also be the case that you do most of your work in house with a large L&D team and are not taking advantage of outside expertise and capabilities. All these factors could contribute to high fixed costs. This exercise can help you determine what you must keep in-house, and explore outsourcing the rest so you can lower your fixed costs and move to a variable model.

At NIIT, we have helped many customers optimize costs by moving their costs from fixed to variable so that they only pay for what they use.