June 18 (Bloomberg) -- Acupuncturist Courtney Wallace was struggling to pay off $60,000 in student debt. Seeking more lucrative work through tapping skills she’d learned as a kid building websites, she went to TrainSignal Inc., which provides web-based computer training for $49 a month. A month later, she was hired as a systems specialist at a consulting company in Chicago.
“It’s becoming less and less about formal education,” said Wallace, 25, who moved to Washington in the middle of last year for a higher-level tech support specialist job at The Public Health Institute. “People just want to know that you can do the job.”
While online courses have been around since the early days of the Internet, job training has remained the purview of community colleges and vocational schools, requiring students to spend thousands of dollars to learn word processing, financial spreadsheets and web development. With unemployment hovering at 7.6 percent, companies like TrainSignal and Lynda.com Inc. are pitching what they call a more efficient and affordable route for people who need retraining on their own schedule.
They’re part of a revival in web education startups. Venture capitalists poured $632.3 million into the market in 2012, up 41 percent from the previous year, and the most since the dot-com bubble’s peak in 2000, according to the National Venture Capital Association. Lynda, based in Carpinteria, California, raised $103 million in January led by Spectrum Equity and Accel Partners, the largest venture funding on record for an education company, based on NVCA data.
For job training, momentum for online education is building. Richard Gallanti, a vocational counselor at Rehabilitation Perspectives Inc. in Burke, Virginia, offers Lynda.com to every client, mostly professionals, like police officers and firefighters, who were injured on the job and need skills for office work.
Clients using Lynda can learn Microsoft Corp.’s Word, Excel and PowerPoint programs and Autodesk Inc.’s AutoCAD software for architects, and typically find jobs in about half the time that it takes for those who stick with traditional classroom training, Gallanti said.
Subscriptions start at $25 a month per person. A single course at a local community college on basic Word or Excel would be more expensive and may be available only at a particular time and place, he said. He can also follow clients’ progress to make sure they’re doing the necessary assignments.
“Cost is one thing, but it’s not the only thing -- it’s availability,” Gallanti said. “I need it now. I can’t wait for the next semester or the next class.”
Requiring Americans who are receiving unemployment insurance to enroll in classes, including online courses, would save the government money, James Sherk, a senior policy analyst at the Washington-based Heritage Foundation, wrote in a Feb. 26 report.
Improving skills would make the jobless more employable, he wrote. And because online progress can be easily tracked, it would encourage the 5 percent to 10 percent of people on assistance he estimates who are abusing the system by not seeking work to take a job. Had the program been in place this year, it would have saved $1.5 billion to $3 billion, he said.
“It’s a conservative lower-bound estimate that comes just by getting rid of fraud,” Sherk said in an interview. He derived his estimate of the number of people abusing the system and money saved based on various state studies, including in Maryland and Utah, that show more-stringent training or job-search requirements to remain on unemployment insurance reduced the number of those receiving benefits or shortened the duration of assistance. The Heritage Foundation, a nonprofit headed by former Republican Senator Jim DeMint of South Carolina, advocates for smaller government.
“We haven’t seen a lot of this implemented on a large scale,” Sherk said. “Part of the reason we put out the report was to try and encourage policy makers to think about this as an option.”
Retraining is a growing niche for Lynda, which gets most of its business selling subscriptions to universities and corporations. Lynda has more than 2 million users, and is finding increasing traction with job seekers, said co-founder Lynda Weinman.
“In a super-competitive job market like today, it’s not as simple as you go to school and get certification,” Weinman said. “The personalized aspect of online is incredibly powerful and efficient, because nobody has the time and a lot of people don’t have the money.”
Lynda and Schaumburg, Illinois-based TrainSignal have both been around for more than a decade, and have recently moved from mailing out instructional DVDs to offering on-demand services on the Web. Startups like Skillshare Inc. and Curious.com Inc. have established new marketplaces, allowing experts in subjects such as photography, basic car repair and computer programming to put low-cost courses online for anyone to take.
Online programs alone can’t solve the training needs of the jobless. At the Henry Street Settlement in New York, a 120-year-old social service center, some 5,000 job seekers from the city’s Lower East Side neighborhood come through every year. Many don’t own a computer and lack any Internet proficiency, said David Garza, the executive director. He offers the example of a building superintendent who lost his job after 20 years and needed to first learn how to launch a browser.
“People don’t necessarily have the skillset or ability to focus on the tools to navigate through some of these online courses,” Garza said. A big part of the curriculum is providing training so clients can apply for restaurant and retail jobs online, he said. Henry Street has a computer lab, sponsored by Microsoft, which provides the software for free.
Community colleges “do a tremendous amount of online training themselves,” said David Baime, senior vice president for government relations for the American Association of Community Colleges in Washington. “There is something about being in a classroom that some people like,” he said. “It really depends on the individual.”
For Ina Lee, Internet-based education proved to be the transition she needed after losing her job of 12 years as a graphic designer in 2009. While doing some freelance work, Lee heard about Lynda from a friend who persuaded her to register. She took courses on Adobe Systems Inc.’s Dreamweaver for website development and Apple Inc.’s Final Cut Pro for video editing.
That gave her the skills to get hired last year as director of creative services at the Elizabeth House Family Life Center Inc., a nonprofit in Wilmington, Delaware. “It helped me greatly,” said Lee, 49. “Dreamweaver really gave me the power to talk to Web developers with confidence,” she said.
Yet Lee isn’t convinced that classrooms are a thing of the past. While unemployed, she also took a two-week course at a community college, gaining some basic web development skills. In addition to the benefits of an in-person instructor, she made some connections that could prove beneficial in the future. “I love meeting people face to face,” she said.
On TrainSignal, novices who come to the site with no background in computers can be ready for an entry-level job in three months from the training they get in hardware, operating systems and networks, said Chief Executive Officer Scott Skinger. TrainSignal offers the classes and a third party administers the certification.
TrainSignal has chosen not to raise venture money. The company expects to almost double this year to $12 million in sales and jump to $20 million next year, according to Skinger. The growth will better enable the company to promote its services to employment agencies, Skinger said.
“It’s a matter of when, not if,” he said. “We need more time to reach out and make people aware of it. It’s a logical fit.”
As Wallace, the former acupuncturist, was looking to change careers, she chose TrainSignal because she could get basic training for computer maintenance and then learn more as she was ready to advance.
Wallace’s improved skills landed her a higher-level job, moving her to Washington from Chicago, and almost doubling her pay to $55,000 a year. Since starting at the Public Health Institute a year ago, she’s taken TrainSignal classes on VMware Inc. virtualization technology and is looking into getting certified on using Cisco Systems Inc.’s routers and switches.
“I see myself moving towards being an I.T. director, moving up through the ranks,” said Wallace. “The more skills I have the more marketable I become.”
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