The business community's outdated views of UK universities mean that bosses are turning to private education providers to train their staff.
A series of focus groups hosted in 2008 in the East Midlands by think-tank CFE, formerly known as the Centre for Enterprise, found that there was little awareness among firms of the diversity of provision within the higher education sector.
Private-sector providers were perceived to offer more relevant provision as well as more responsive delivery and better value for money.
The research suggested that unless universities did more to penetrate training markets, the Government's "employer engagement" agenda could fail. The Leitch report on the UK's future skills needs said that four in ten adults should have some form of higher education by 2020, boosting numbers from about 10 million to 14 million.
"Many businesses were unaware that some higher education institutions could offer the sort of bespoke provision offered by private training providers; higher education institutions were commonly viewed as providers of (high-quality) 'traditional' academic qualifications," the CFE report, Beyond Known Unknowns, says.
The CFE said it was important for universities to develop a more flexible approach. James Kewin, director of skills and innovation at CFE, said: "The most important thing from our perspective is that (universities) have to have a clear understanding of what the market for higher-level skills is.
"The employers the universities are trying to engage with would never launch a product without testing it on their customer base and universities should be no different. There is an 'if you build it they will come' approach and that is fundamentally wrong," Mr Kewin said.
Pam Tatlow, chief executive of Million+, the think-tank representing post-1992 universities, said: "There is a gap to be bridged in terms of some employers' understanding of higher education, but what is clear is that (they) want flexibility in terms of mode and timing of courses, and more bite-sized and modular learning. They respect the quality of higher education qualifications. This is good news for universities that have already adjusted their offer."
STEM STUDY COULD WITHER DESPITE CASH BOOST, WARNS CIHE
Government funding of £350 million to boost demand for science and technology courses may not be enough to turn the tide, the Council for Industry and Higher Education (CIHE) has warned.
The CIHE said that firms must do more to promote the benefits of careers in science and technology if they wish to address the dearth of UK graduates in STEM subjects - science, technology, engineering and maths.
Joint research by the CIHE, the Department for Innovation, Universities and Skills and the University of Warwick confirmed that the falling number of young people choosing to study STEM subjects remains a concern, as demand for such graduates is rising.
Meanwhile, the Royal Academy of Engineering launched a campaign to attract more women into the discipline. Lord Browne, its president, said: "Diverse teams produce better results in engineering ... different ways of thinking lead to innovative outcomes."