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KEY NOTE IT TRAINING : August 2003

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This report covers: IT Training, formal courses, tailored courses, e-learning, videos, internat/multimedia, computer-based training products, e-Based distance learning,

Companies and Associations covered include: Learning Tree International, Parity Training, QA, Thomson NETg, IBM Education Services, KnowledgePool, Azlan Group, SAP UK education, Oracle University, Spring IT Training, Computeach International, DA Consulting Group, Global Knowledge Network (UK), Informatics Group, Pitman Training Group, SkillSoft UK, Sun Educational Services, Xpertise Training, British Computer Society, British Educational Communications & Technology Agency, Chartered Institute of Personnel & Develoopment, Computer Education Group, Computing Services & Software Association, Council for European Professional Informatics Societies, eLearning Network, e-skills UK Ltd, European Computer Driving Licence Foundation, European Institute for E-Learning, the Forum IT, Institute of IT Training,

EXECUTIVE SUMMARY

Key Note estimates that the UK market for IT training was worth £602m in 2002, having fallen in value by 16 percent on 2001. In 2003, the market is expected to decline even further, with sales reaching just £542m. The market has been hit by the contraction in IT budgets and the lower demand for IT contractors and professionals, which has helped ease the UK's IT skills shortage.

The IT training market consists of two broad sectors: instructor-led training (ILT) and e-learning (or technology-based training). The e-learning sector has been the major growth area in recent years as technology-based training has grown in maturity and sophistication. However, it is becoming increasingly difficult to distinguish between these two sectors, as a result of the growing trend towards blended learning, i.e. courses that feature both instructor-led and computer-based components.

The contraction in the IT training market has led to the inevitable process of consolidation and mergers as training providers have sought to win new clients via acquisition and improve operational efficiency (and cut costs) through takeovers and mergers.

Despite the rapid decline in the market, Key Note expects a strong recovery in 2004, when IT budgets look set to improve. Moreover, the underlying need and demand for IT training remains, i.e. the number of employees in IT occupations or in occupations using IT skills continues to rise. Although it is unlikely that the IT industry will experience again the heady growth seen in the late 1990s, IT remains strategically important for most businesses, so having adequately trained IT staff is central to business strategy.

The future holds new opportunities in the IT training market, including those provided by the growing trend for companies to outsource the training function. Increasingly, client organisations are keen to shift the responsibility for training to a third party and use its suppliers to provide ongoing skills updates to meet with specific needs. This is opening up the general management training market to IT training vendors and the IT market to general management training companies.

Key Note predicts a strong recovery in the IT training market over the next 5 years, especially in 2004. e-learning will be the fastest-growing sector, although the distinction between ILT and e-learning will become more blurred as companies are supplied and, increasingly, demand integrated learning packages and services, featuring the best of both methods of training.

TABLE OF CONTENTS

Executive Summary

1. Market Definition

REPORT COVERAGE

MARKET SECTORS

Instructor-Led Training

Formal Courses

Tailored Courses

e-Learning

Videos

Internet/Multimedia

Computer-Based Training Products

e-Based Distance Learning

Problems of Calculation

MARKET TRENDS

IT Budgets Scaled Back

IT Must Prove its Value

Fewer Skills Shortages

Less Demand for IT Skills

Table 1: Employment in ICT Roles (000 and percent), First Quarter 2003

Signs of Life

Fundamental Gaps Still Exist

Table 2: Number of Hard-to-Fill Vacancies for IT Skills in England, 2001 and 2002

Table 3: Number of Employees with Insufficient IT Skills, 2002

IT Training Becomes More Diverse

ECONOMIC TRENDS

MARKET POSITION

The UK

Table 4: Share of the UK Computer Market Taken by Spending on IT Training ( percent), 1999-2003

Overseas

2. Market Size

THE TOTAL MARKET

Table 5. The Total UK IT Training Market by Sector by Value at Current Prices (£m), 1999-2003

Table 6: Number of ICT Staff Receiving Education and Training in the Past 4 Weeks (000 and percent), First Quarter 2003

MARKET SECTORS

Instructor-Led Training

Table 7: The Instructor-Led Training Sector by Value at Current Prices (£m and percent), 1999-2003

e-Learning

Table 8: The e-Learning Sector by Value at Current Prices (£m and percent), 1999-2003