The UK elearning market 2009 report published in December by Learning Light,Sheffield-based centre of excellence in the use of elearning and learning technologies in the workplace, paints an optimistic picture, stating that the sector is ‘flowering’ despite the recession.

The principal finding is that the UK elearning industry remains ‘robustly positive’ in its view of the market and the prospect for continuing growth. Using financial modeling and third party research, the report suggests that the annual size of the UK elearning industry is currently between £300m and £450m; with growth rates forecast of between 6.7% and 8% for 2010.

“Our premise that this industry is ‘flowering’ is based not just on organic growth as more companies use e-learning and learning technologies but also on such factors as marketing departments commissioning learning materials to support customers,” says David Patterson one of the report’s three authors. “Another key factor is the adeptness with which the UK elearning industry is adopting and exploiting new media for delivering learning, such as gaming and immersive learning scenarios, leading to the eventual contextualisation and personalisation of learning being promoted by companies such as the LCMS producer, Giunti Labs.”

The report acknowledges that the current recession has resulted in downward price pressure on developers and vendors; while cuts in training budgets and public sector projects have also had an adverse effect. Nonetheless, Patterson and his co-authors – Glyn Jung and Gillian Broadhead – remain optimistic that the UK’s elearning industry, concentrated in its two principal hubs around Sheffield and Brighton, is set fair to weather the economic downturn.

“There is no doubt that companies will come and go – just as they did in the easier times,” explains Gillian Broadhead. “We can only reflect the optimism and confidence, the innovation and enthusiasm that characterised our research findings.”

It has always been difficult to estimate the overall size of the UK elearning market – principally because companies such as Accenture and IBM do not separate elearning revenues from other revenue in their financial reporting and, in some cases, outsource elements of their elearning to boutique providers, thus providing a risk of double-counting. Furthermore, a large number of UK elearning companies are privately owned; registered in the UK but owned overseas, and their revenues fall below the Companies House threshold.

Learning Light’s ‘best guess’ is that the value of UK elearning market was between £160m and £250m in 2007 and that the market was growing at over 25% a year. Other figures for the same period suggested that the range was between £500m and £700m – nearly 4% of the UK private sector’s spend on training. With hindsight – and a forecasting model – Learning Light now estimates that the UK elearning market in 2006 was worth nearly £229m, growing some 12% from £203m in 2005.

Learning Light believes that the uptake of elearning has grown from 30% of companies in 2004 to over 57% in 2008 – a figure confirmed by the 2008 CIPD Annual Survey. This figure comprises 82% of public sector organisations and 42% of private sector organisations.

Furthermore, Learning Light’s model shows 45% of organisations using elearning in 2008 and predicts that this will have grown to 47.5% in 2009. Furthermore, it suggests that the amount of training budgets devoted to elearning in the UK was 12% in 2008 and 13% in 2009 – compared with Towards Maturity’s figure of 13% in 2008.

“Based on our assumptions, we believe that the market continued to grow in 2007 and 2008, with growth rates of 13% to 13.5% - so that puts the value of the total elearning market in the UK at £294m,” adds Patterson. As a result of the recession, Learning Light forecasts a 3.5% contraction of GDP and a consequent reduction in training budgets as companies cut both costs and headcount.

“According to a Training Industry report, the recession in the USA saw an 11% reduction in overall training budgets there,” Patterson continues. “Our model sees overall annual training expenditure in the UK decline by £200m in line with the GDP to just over £5bn. This figure is principally the amount spent on training by organisations. However, according to the Leitch Report of 2006, the UK Government spends £12bn a year on adult skills: £4.5bn on further education and adult skills and £7.4bn on higher education.

“However, we foresee the continued adoption of elearning,” he adds. “Our forecast shows that the rate of growth in the UK elearning market will slow by over 50% but will still grow by 6.7% - allowing the industry to break the £300m a year barrier to achieve total revenues of £313m in 2009.”

An alternative view – based on the CIPD’s figures that elearning is now used by 57% of companies – would put the value of the UK ‘non-education’ e-learning market at over £370m; while Learning Light’s report acknowledges other research which claims the figure to be £450m and alleges annual growth of over eight per cent.

In passing, the Learning Light report mentions that the UK e-learning market, along with the e-learning market in Scandinavia, is one of the most mature e-learning markets in Europe. Patterson said: “We believe the Scandinavian market to be worth some €1bn – compared with the UK’s €650m to €700m. The Scandinavian market is forecast to grow at eight per cent over the next year – a figure which could also be attributed to the UK market. The next largest market in Europe is that of France – but this is predicted to grow in the next year by some 15% to between €300m to €350m. An aggregate of the UK, Scandinavian and French elearning markets accounts for some 80% of the total European market.”

This Learning Light report updates the report (available from Learning Light’s e-Learning Centre website, www.e-learningcentre.co.uk) written by John Helmer, on behalf of Learning Light, in 2007. The 2009 Report does this by interviewing 24 leading players (vendors) in the industry via semi-structured interviews was conducted over two months in 2009. The edited narrative of the interviews is included in an appendix with the full version of the report and a synopsis in the short version.

‘The UK e-learning market 2009’ report is available, as a free download, from http://www.creativesheffield.co.uk/