Employers’ decision to freeze partially or totally the investments in training programs for their employees has taken a bite out of training companies’ business in the first three months of 2009. A recent survey found that a quarter of the local employers had decided to relinquish the training programs for their staff. Therefore, training providers concluded less deals this year, both in size and volume. Nobody knows for sure how long this crisis will last, even if training companies haven’t yet lost the optimistic tone.
Signs of decline
In the last months of 2008, the signs indicated the training market had fallen into a stand-by mode. Large training providers started to trigger warning as debtors began defaulting, and the execution of various contracts already concluded has been delayed. The first quarter continued the series of delays.
“Many of the large contracts for 2009 that were expected to be concluded in first quarter have been put off, probably until second quarter or they won’t be concluded at all”, said Viorel Panaite, partner at Human Invest training company. Human Invest booked a reduction of training days in first quarter of 2009, from prior year period.
The postponement of executing large training programs by large employers in local market has affected Corporate Dynamics International’s business, training and corporate counseling company with turnover standing at 0.7 mln euros in 2008. “The contracts signed in 2009 are slightly lower due to the delay of project execution by the regular clients”, said Decebal Leonard Marin, managing partner at Corporate Dynamics International.
Andrei Gosu, managing director at Ascendis, one of the renowned firms in local training industry, said the turnover fell 18% in first quarter, versus prior-year period.
TMI, another noted player recorded a roughly 30% reduction in turnover. “If the first quarter of 2008 was atypical, with a double increase than a year earlier, the first quarter 2009 was by a fifth more profitable than 2007 and by a third weaker than 2008”, said Octavian Pantis, managing director at TMI Training and Consulting. United Business Development (UBD) marked a significant decrease in size of contracts concluded in Q1, 2009.
If in Q1, 2008, the company completed deals worth 1 mln euros, and this year, the size of contracts stood at a mere 0.6 mln euros. Codecs reported a similar figure, as Eugen Dragomir, director of the training division, assistance and coaching commented. Codecs concluded in Q1 2008 contracts worth 22% more.
Even if the businesses of training companies nosedived in first quarter, the companies are still interested in training programs for their employees, but still hunting for bargain deals. Employers’ lack of determination has spurred the number of talks between clients and training providers, even though in the end, few actually end with a contract. “Although we are discussing twice more projects than last year, but the number of deals decreased. In the past three months, we sealed 40% less contracts than a year earlier”, said Adrian Florea, managing partner of Trend Consult (1.1 mln euro turnover reported in 2008).
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