Tough Times are Good Times for E-learning

This report discusses the factors that explain why e-learning investments outperform the market during troughs in the business cycle.

When the economy is hit by rising prices, job declines and wage pressures, the demand for e-learning will rise to address a growing array of personal and business needs.

INTRODUCTION

The information age has spawned a new learning society. The entire planet is now experiencing a "2nd Renaissance" where knowledge is the new currency. E-learning is growing by leaps and bounds, and is touching nearly every social circle and demographic.

An emerging "wisdom culture", driven by Internet communications, is focused on healthy lifestyles, alternative medicine, personal growth, a sustainable world, social justice and spiritual fulfillment. Over 64 million Americans make up this market.Advances in technology allow people to learn new skills anytime and anywhere, delivered through a robust multi-media format. Over the next five years, e-learning will influence over a billion lives.

This article explains why e-learning companies are so resilient during economic downturns, and explains that, while other market sectors may suffer significant setbacks during a recession, e-learning companies often hold their own or grow significantly during these tough historical periods.

RESILIENCY FACTORS
Home-Based Entrepreneurs

Today, the odds of one losing his or her job during a slow economy are greater than ever before. Employees who have dedicated decades of their lives to a single employer are suddenly tossed out as high-paid liabilities under the pressure for short-term profit numbers. What’s worse, is that replacing the lost job is equally as difficult.

This phenomenon has awakened employees to the fact that they must take personal responsibility for their careers. They reject job security as a driver for commitment. They are less afraid to go into business for themselves. The Internet has made it possible to cut personal costs, work from home and turn hobbies into respectable home-based businesses.

About 430,000 people make a living with eBay, and most of them work from home. In the past eight years over 23 million Americans have earned income from home through the Internet. This group has a huge appetite for learning all kinds of new money-making skills.

Motivated Parents

The Internet has allowed parents to take much more control over their children’s education. Today, one out of every 25 students is home-schooled. While public school districts can spend tax dollars at rates as high as $25,000 per child per year, millions of parents are opting for supplemental tutoring at costs ranging from $600 to $3,000 per year. Millions more wish they could afford it. Independent private tutors are flourishing in every city and town, charging on average, $25 to $50 per hour.

An economic downturn will not prevent parents from continuing to ante up, sometimes very significant amounts of money, for private tutoring and supplemental online education.

Requisite Continuing Education Credits

Professionals such as lawyers, doctors, dentists, tax planners, insurance agents, financial advisors, etc. are most often required to take a certain number of hours of continuing education per year in order to stay current on trends, skills and legal requirements. Their employers often will pick up the tab for the annual educational expense. To earn the requisite training, many professionals opt to do it electronically, since it is not only less expensive, but more accessible and convenient. Since this incremental learning is required, expenditures will continue predictably from year to year.

E-learning Has A Low Variable Cost Of Sales

In tough economic times, when traditional businesses are laying off labor, which is usually their biggest expense, an e-learning company with the proper infrastructure in place has a near zero variable cost for delivering its products. Electronic delivery means that the same course material can be downloaded a single time or a thousand times for only the cost of additional bandwidth. Product pricing can be very flexible and arbitrary. There are no warehouses, DVDs, shipping cartons, mailing labels, FedEx & UPS bills or any of the traditional brick and mortar costs.

With an electronic distribution system, intellectual property and digital products, an e-learning company could literally book $50 million in annual revenue with a core team of only 50 employees. A traditional business might require 250-500 employees to reach that scale.

Motivated Media Partners

Traditional media sources have become very pliable in the last ten years since the Internet started dominating readers’ attention. Newspaper advertising, magazines and even network television is much, much less impactful than it used to be. These media channels have seen significant downward pressure on the value of their media for effective brand exposure. A poor economy exacerbates the downward pricing pressure.

To respond to this pressure, the media has been more willing to sign pay-for- performance media agreements with advertisers. Increasing pressure from new competition has shifted advertising risk to the media outlet and away from advertisers. This will provide an excellent cost advantage to the savvy advertiser during a recession.

Demand For Wellness Education

Wellness, a $1 trillion market for traditional and alternative medicine, fitness, exercise and diet, is gaining more attention as healthcare costs keep rising and the median age for the average American climbs.

These factors are driving an increasing number of people to seek out information and solutions online. They’ve heard about WebMD, but many are wary of health advice sponsored by drug companies. Where else do they turn? They "Google" for alternative health information, but accurate, authoritative, unbiased and complete information is still often hard to find. They purchase books and seek out trained consultants.

Comprehensive wellness education is in high demand. In a survey conducted by MiracleMind, the #1 requested category of interest for e-learning, from over 800 respondents, was wellness.

Job Retraining & Career Development

During an economic downturn, some people receive pay reductions and others lose their jobs. Personal investments decline. Often, getting back into the workforce requires retraining in order to be competitive and employable. It’s logical that people would turn to effective low-cost solutions for gaining new skills.

Skills and experience used to be much more durable and valuable. Today, the talents a computer programmer or engineer learns in school are obsolete within five years.

Global Expansion of Education & Training

According to figures provided by LearnFrame, global education and training has a potential market of $2 trillion (with a "T"), out of which the U.S. share is $740 billion. The growth rate for the different education and training market segments is projected at 10-15%. E-learning is the convergence of the web and learning on all levels, whether it is elementary school, college or business. Knowledge is now considered to be a company’s most important asset since it provides a real competitive advantage.

Dipping High Tech Wages

InformationWeek Magazine’s 11th Annual IT Salary Survey reveals that IT salaries are being held down again, for the second time this decade. Wages stagnated in 2002 due to a recession and a wave of IT outsourcing, and these pressures are happening anew in 2008. Other factors contributing to the sinking median pay are retiring baby boomers being replaced by less-expensive younger workers, and from the industry-wide mismatch of skills with job requirements.

IT professionals are increasingly finding themselves in a battle to keep their skills up to stay relevant and competitive. This is a daunting task, since technology is changing so rapidly today, and will not relent from its steep rate of continuous innovation.

The Future of Telecommuting

For the past 25 years forward-looking books predicted the rise of small virtual "non- core" working groups that would essentially exist outside the steel and concrete world of city high rises. Factors that have hastened this prophecy are the rise of the Internet, which allows instantaneous worldwide connectivity via text, voice and video; the rising cost of commuting to work; the increasing number of small businesses that have been the result of decreased employer loyalty and yo-yo business cycle layoffs; and corporate cost cutting measures to try to maintain competitiveness with overseas competition for labor.

The following benefits illustrate why telecommuting is picking up steam, and why training courses in this category are growing in popularity:

For the employer: The potential savings in utilities; reduction in the cost of office and parking space; reduced absenteeism; lower employee turnover rate; work can continue even in an emergency & inclement weather conditions when travel to the office is impossible.

For the employees: Telecommuting encourages flexible working hours; savings in time and money (causing employees to work more by physically commuting less if at all anymore); an increase in performance and productivity; increased job satisfaction; more control over their work environment; employees with special needs eliminate the burden of travel to an office.

Generating Personal Power

Consumers seeking information on renewable energy sources, and local power generation want to know how they can improve their conservation efforts, how they can purchase energy certificates to offset normal electricity use, and how to generate renewable energy on their own property. Consumers are also seeking to make investments in socially-responsible mutual funds that invest in renewable energy companies or funds. E-learning companies covering these topics can be excited to serve an eager audience.

Trend Toward Voluntary Simplicity

Voluntary simplicity is a lifestyle chosen by many individuals that rejects the notion that "more is better". With planetary stresses having become more urgent than ever, such as natural resource depletion, pollution, overbuilding, animal and plant extinction, we see increasing numbers of Americans who are making changes in their everyday lives in response to the complex dilemmas of our time. People are seeking coaching and e-learning on topics such as: using their time more wisely; relationships; finding meaning, joy and satisfaction in their lives; and on doing more with less.

Community Supported Agriculture (CSA)

Community supported agriculture is connecting food producers directly with local consumers. Consumers are now more than ever, increasingly seeking to grow their own food. They have been introduced to CSA through friends or family, who have shown them dark leafy greens and other nutrient-packed produce with exotic tastes that can be had from local farmers market. As they experience this rich food, they realize what they are not getting at the supermarket. As the price of food continues its sustained climb, consumers increasingly seek more information on growing some of their own produce at home, and setting up local distribution networks.

Small Business Training

Much of today’s online business training caters to larger corporations. There are over 26 million small businesses in the U.S. with fewer than 500 employees (not including home-based business). These small business employees are often called upon to multi-task across several disciplines. While they all need to know basic computer skills, they also have a need for new skills such as Project Management, Online Marketing, I.P. Telephony, Legal Compliance, Human Resources, Communication & Sales Skills, etc. Small business owners have very tight budgets and even tighter labor demands. Their people need quick low-cost, on-site training. They need to become familiar with new disciplines within a matter of hours. The quickest and most economical way for them to get this training is through e-learning via Internet.

University Economics

Today’s PhDs can spend ten years or more earning their doctorate, then another few years job searching, only to find that (1) there are simply no jobs available for their specialty, (2) there are jobs, but they are not on a tenure track, which means little or no job security, or (3) they cannot pay their bills with what the job pays.

Fortunately, many have recognized that this is a serious flaw in the system and are raising awareness of the issue.

In the meantime, teachers who must work are seeking out other means to use their educational credentials online, and there is no shortage of highly qualified PhDs. E- learning companies that recognize this idle and underpaid talent can secure credentialed labor at very competitive wages.

CONCLUSION

This article explored many of the factors that explain why e-learning companies do very well in slow economic periods. Strong marketplace trends support the position that e-learning will continue to expand, and will likely pick up pace and market adoption in the years to come.