Any company planning to create internal training programs typically starts with fairly standard calculations: estimating the time of the training department specialists, the costs of tools used and LMS platform licenses. After evaluating the most important aspects, we arrive at quite a rational figure – a few thousand euros for the development of a training program.
However, this is where the problem usually lies. According to data from the Association for Talent Development (ATD), in 2023, companies allocated on average about 1,100 EUR per employee for training. At first glance, this appears to be a fairly clear and tangible figure, but in reality, it is only part of all the expenses and often – not the largest part. So why is the true cost of training development often significantly higher?
This happens because the majority of expenses fall outside these calculations. The planned budget lines do not always include the time of subject matter experts (SME), which can account for dozens of hours for the development of a single training program. We also often fail to account for productivity losses: a McKinsey analysis shows that during intensive training periods, team productivity can drop by as much as 20%, because part of the work time is devoted to training or its preparation. It is also worth considering management involvement, content reviews, technical solutions, and ongoing maintenance. All of this significantly increases the initial budget.
But that's not all. Not only does the price differ, but so does the result. According to ATD data, training created by external partners can lead to up to 24% improvement in performance, while internal training leads to only about 17%. At first glance, the difference may not seem significant, but in companies, even a few additional percentage points often indicate that employees absorb new information faster and make fewer mistakes in their daily work. Brandon Hall Group research also revealed that interactive training ensures up to 30% better knowledge retention than traditional methods. This means that when evaluating training, it's important to consider not only its cost but also the value it creates.
So, considering all aspects, the question arises: is creating training within the company really always the most economical solution? In this article, we will examine in detail what the true cost of internal training consists of, where the often-underestimated expenses are hidden, and how to determine when it's worth creating training internally and when to involve external partners.
When evaluating the cost of developing internal training, organizations typically rely on what is easiest to measure: employee salaries, tool costs, and platform pricing. This is a logical and necessary step that allows you to plan an initial budget. However, the true costs usually only become apparent during the project, when it turns out that some of the costs – for example, employee time, involvement, and diversion from main tasks – were not included in the initial budget at all. It is precisely these, less tangible expenses that make up the largest difference between planned and actual training costs.
When planning to develop training in-house, organizations typically include clear expenses in the budget. These include the salaries of training department specialists, which in Lithuania typically range between 25,000 and 40,000 EUR per year, as well as LMS platform costs, which can range from 5,000 to 20,000 EUR per year, and training development tools, whose licenses typically cost between 2,000 and 8,000 EUR per year. This is supplemented by various additional subscriptions or technical solutions, such as analytics tools or integrations with HR systems.
These expenses make up the vast majority of the technical and organizational side of training development: content preparation, its placement, administration, and accessibility to employees. This is the foundation without which it is simply impossible to create training. Moreover, these expenses are easy to justify and clearly visible in the budget, so it's natural that they become the basis for making decisions. However, this is only the visible part of all expenses. Since only these expenses are evaluated, there is often a misconception that creating internal training is a relatively inexpensive solution.
The largest share of internal training development costs usually comes not from tools or platforms, but from people's time, which is not directly included in the budget. A large portion of this time goes to subject matter experts, or SMEs (Subject Matter Experts). These are managers, senior specialists or technical experts who help the training department team create training content: explain processes, check factual accuracy, provide feedback, participate in reviews and approve the final version. In practice, this is often where the greatest discrepancy between planned and actual costs lies. In a typical training development process, SME involvement can account for 40–80 hours, and the hourly rate of managers or high-qualification experts often ranges between 50 and 100 EUR. Even counting minimally, this line item quickly becomes several thousand euros. The more complex the content, the more the expert's knowledge is needed, and the more additional time is required for repeated reviews, corrections and adjustments.
The second significant, but often undervalued expense category is productivity loss. McKinsey's analysis shows that during intensive training periods, especially during development, team productivity can drop by up to 20%, because part of work time is devoted to training or its creation. This means that employees are paying less attention to their direct responsibilities. Management supervision and quality assurance also contribute to internal training development costs. During the project, managers often dedicate 10–15 hours per week to intermediate reviews. And to ensure training quality, it is often necessary to go through 2–3 review and correction cycles, which can account for another 50–100 hours. These hours are usually not included in the initial budget, although they are inevitable in a real project. This is exactly why the final training cost often exceeds the initial plan.
However, the expenses do not end once training is created. OneSignal research shows that maintenance of training systems or content can account for 5 to 20% of the initial development costs annually. In practice, this means not just occasional fixes, but ongoing work: content updates as processes or policies change, technology updates, and error corrections. It's important to note that these expenses accumulate over time, and the more training is created, the more resources are needed to maintain it. Therefore, in the long run, maintenance becomes a significant cost item that must be included in the planned budget from the start.
To illustrate the true difference in expenses more clearly, let's look at a specific example. A medium-sized company (about 200 employees) is developing a management training program. When planning the budget, initially visible expenses are estimated: training coordinator's time (about 4,500 EUR), training development tool license (2,000 EUR), and LMS setup (1,500 EUR). Total sum – about 8,000 EUR. However, when hidden costs are included, the situation changes fundamentally. Three managers' (SME) involvement can account for about 12,000 EUR, productivity loss – another 3,000 EUR, management supervision – 2,500 EUR, quality review – 2 cycles of 3,000 EUR, IT integration – 2,000 EUR. The total sum rises to 22,500 EUR. Adding annual maintenance (about 3,050 EUR), the true cost in the first year is approximately 33,550 EUR – more than four times higher than the initial budget.
This example clearly shows that the largest difference between planned and actual training costs does not arise from calculation errors, but from underestimated expenses. Employee time, productivity loss, and maintenance become central project components. This does not mean that developing training in-house is not a meaningful solution. However, it only becomes justified when all costs are evaluated, not just the visible portion. Otherwise, the true cost will almost always exceed initial expectations.
Not all training is the same. A simple internal safety briefing with a few static slides and an interactive leadership course with decision scenarios are two different projects requiring different competencies, time, and resources. Therefore, evaluating all training using the same logic is a mistake. In this case, the question is not simply "create in-house or outsource?" It's more important to understand what types of training your team can create itself and where additional expertise would be needed. Two key criteria help with this decision: content complexity and the required level of interactivity.
It is precisely the relationship between these two criteria that is shown in the complexity matrix. On the horizontal axis (X), the level of interactivity is assessed – from simple, static content to scenarios, simulations, and decision-making. On the vertical axis (Y) – content complexity: from basic topics to those requiring subject-matter expertise. The higher a training moves up and to the right, the more time is required for its development, and different competencies are needed. It's important to emphasize that interactivity in this case does not mean animations or visual effects – we are talking about scenarios and real situations that require active engagement.
It's important to note that the matrix is not a rigid rule. It helps evaluate where the real project complexity lies – perhaps in the content, interactivity, or a combination of both. This allows for a more informed decision.
Training with simple content and low interactivity is usually most suitable for in-house development. In the complexity matrix, such training is reflected in the first quadrant. These include various internal system descriptions, policies, procedures, or new employee onboarding training. In such projects, the most important thing is to communicate information clearly, so an internal team can usually create them efficiently using available tools.
A different situation unfolds in the second quadrant of the matrix: there is still little interactivity, but the content itself becomes complex. This could be IT security, financial regulations, or in-depth product training. In such cases, the main challenge is not design but content accuracy. The internal team can create such training, but this usually requires significant SME involvement, more reviews, and a longer development time. For this reason, involving a partner often helps reduce risk and ensure quality.
Training with simple content but requiring high interactivity is often one of the most undervalued categories. This situation is reflected in the third quadrant of the matrix. At first glance, customer service, sales, or communication training topics seem simple, but here lies the main risk – complexity arises not in the training content but in its delivery. To create quality training, it's not enough to communicate information; you must create realistic situations, thoughtful choices, and their consequences. This requires both time and specific skills. If your training development team has such competencies, training can be created in-house, but often this becomes a long and correction-intensive process. If such skills are lacking, trying to "do it yourself" often takes longer and costs more than initially planned.
Training combining complex content and high interactivity is the most challenging category – this is reflected in the fourth quadrant of the matrix. Leadership training with decision scenarios, conflict management situations, or crisis simulations typically fall into this category. In such projects, different competencies are needed simultaneously: subject-matter expertise, instructional design, and more complex technical solutions. Internal teams usually don't have all these competencies, so the final result greatly depends on available experience and the ability to combine these areas.
It's important to understand that this matrix is not a rigid rule you must follow when creating training. It helps evaluate where the real project complexity lies – perhaps in the content, interactivity, or a combination of both. In practice, this allows for a more informed decision when determining whether your internal team can effectively create training itself or whether it's worth contacting partners immediately to avoid a longer development process and additional corrections.
What's next?
Stay tuned for Part II, where we will explore how organizations can evaluate training complexity, assess internal capabilities, and make informed decisions about when to develop training in-house and when to involve external partners.
About the contributor
The insights and data presented in this article were provided by WiseOn, a learning and development partner specializing in e-learning solutions and corporate training programs.
