When to Outsource Online Learning, and When Not To

Like a lot of professors whose field of study is higher education, Jeffrey C. Sun frequently gets asked by administrators at his institution to weigh in on thorny issues they’re debating. When his bosses at the University of Louisville were considering how best to expand their online learning offerings, they asked Sun, a Distinguished University Scholar, for his thoughts on whether the university should hire an online program management (OPM) company or build the in-house expertise itself.

“I realized there was not a guide for the field about what to consider, and rather than moving blindly into this world of outsourcing, particularly for a core academic function, I wanted to make sure they had something to work with,” said Sun. So he set about to create just such a guide.

The result, “In-House or Outsource?,” was published this month by Louisville and UPCEA, an association that focuses on professional, online and continuing education. Sun and his co-author, Heather A. Turner, an adjunct assistant professor and Sun’s colleague at Louisville’s SKILLS Collaborative, worked with UPCEA to survey chief online learning officers, quantitatively and qualitatively, about why their institutions did (or didn’t) use outside providers to deliver virtual learning—and their experiences if they did.

The report isn’t the first to examine the role OPMs—or online enablement firms, as some call them—play in the postsecondary ecosystem, but most of the others are either summaries of the industry’s growth (Holon IQ) or critical analyses of their role (the Century Foundation and New America). Others, like this one from the Arnold Foundation and the recent report from the U.S. Government Accountability Office, look mostly through a policy prism.

The report from UPCEA and Louisville, in contrast, is designed to be a playbook of sorts for college and university leaders at a time when many of them expect online education and other forms of technology-enabled learning to play a more central, fundamental role in their strategies going forward. Half of the respondents to Inside Higher Ed’s Survey of College and University Presidents in March said they believed students would increasingly seek to enroll in virtual courses in the years to come, and most (83 percent) reported that their institutions would sustain the increased online learning options they embraced during the COVID-19 pandemic.

The report doesn’t explore the question of whether institutions should expand their online offerings, or the all-important question of how to go about going online in a way that furthers their educational mission. It picks up at the point where a college or university leadership might decide how to do so—utilizing its own money, people and capacity, or with outside help.

Chief online learning officers and their institutions were most likely to consider working with outside companies because of three factors: speed, money and marketing.

Peer pressure played a key role, the report suggests, which describes the online leaders “observing their competitors (or institutional peers) and hearing constant news about mega-universities” and “feeling pressured to emulate the successes of these institutions, many of which had an elevated presence in online learning, offered several program options, and provided direct and responsive student supports in a short timeframe.”

“The [chief online learning officers] reported that they did not want to be left behind in the competitive arena of online learning,” the report adds.

Working with an online program manager isn’t the only way to move meaningfully into online education, but many choose to do so because the outside companies typically provide the up-front money needed to launch the programs, funds that a lot of financially strained institutions don’t have lying around.

“This is a way that we could bring on a partner who essentially takes a lot of the financial risk—and financial investment—and helps to drive the enrollment,” as one university’s online officer described it.

That last piece—building the enrollments, typically through (sometimes) sophisticated digital marketing efforts—tends to be the skill set that most institutions believe they lack in house, after assessing their own internal capabilities, a key first step in the evaluation process. The OPMs were believed to have “greater expertise and a centralized model where they could pool the universities’ funds for marketing and lead generation,” the report stated.

When asked elsewhere in the report to rate the OPM services that their institutions most needed from the outside providers, more than two-thirds of online learning leaders cited marketing and promotion as a high need, and more than half cited recruiting—with all other potential services trailing significantly. Sun, of the University of Louisville, said some online learning leaders cited the OPMs’ speed and agility as traits their own institutions lacked.

“OPMs could respond to admissions inquiries within 24 hours,” he cited one leader as saying. “We can’t do that. Our admissions office wasn’t that agile.”

The report’s authors also took steps to gauge the value and performance of the relationships. They asked respondents to rate whether the outside providers had met their expectations for providing various services, then compared those ratings to the institutions’ perceived need for those services. Marketing showed the biggest gap between the perceived need and the extent to which expectations were met, indicating that many chief online learning officers “are not having their marketing expectations met” by the OPMs, the authors write.

Trace Urdan, a managing director at Tyton Partners who works with both universities and online program providers, said the online learning leaders’ dissatisfaction with the firms’ marketing and recruitment is unsurprising—but more a “function of broader cyclical trends” than a structural problem with these relationships as the report suggests.

“Attracting working adult students to graduate programs and degree-completion programs is extremely difficult at the current moment for everyone given competition from a still-hot labor market,” Urdan said. “No one is happy with leads or conversions, and no one anticipated how challenging the current moment would be. This is a problem for everyone, not just OPMs.”

The report notes one of the primary concerns critics have raised about how OPMs operate: contractual agreements that give the outside company a significant share of the tuition revenue the programs generate over the (often long) terms of the contract. But it only obliquely acknowledges the trade-off inherent in these arrangements: the willingness of the firms to front the money to build the programs (which the online learning leaders view as a great benefit), and the reality that the companies don’t recoup it (and earn profit) until the programs get to a certain scale down the road.

The report from Louisville and UPCEA underscores (but doesn’t resolve) one other issue that is among the most intriguing in the debate over outsourcing of online program management: whether the capacity to create and run online programs ought to be a core capacity of educational institutions in today’s world.

“Nearly half the universities set out this exploration or relationship intending to learn from the OPMs, with the expressed interest of figuring out what it needed to do so it could scale up or operate independently from an OPM,” the report states.

Examples exist of institutions that used an OPM to start and slowly weaned themselves entirely of the need for the outside providers. More typical, though, is the ambition for institutions to slowly reduce rather than end their dependence on outside expertise. As one online learning officer said, “I could see our institution, frankly, using OPMs only in a very strategic manner, not in [the] blanket manner” that many do now.

That would presumably also result in a shift away from the much-criticized full-service revenue-sharing agreements to arrangements in which colleges pay companies for specific services—also, presumably, without the sizable up-front investments.