Impact sourcing is a promising means to enhance employment and training opportunities for the poor and underprivileged.
Enhancing employment and training opportunities for the poor and underprivileged is a major objective of inclusive development. One promising means towards this objective is a new trend called Impact Sourcing. It refers to the creation of outsourcing jobs for people from poor and vulnerable communities, such as slums and rural areas. Impact Sourcing (IS) has been promoted since 2011 in particular by the Rockefeller Foundation as part of the ‘Poverty Reduction through Information and Digital Employment (PRIDE)’ programme as an innovative way to reduce poverty and foster more inclusive development. How does Impact Sourcing work and under what conditions can it really create more inclusive employment opportunities?
Global business process outsourcing (BPO) has been a rapidly growing trend in recent years. Facilitated by advanced information and communication technologies, Western firms increasingly outsource services, such as tech support, call centres and administrative work, to developing countries in Asia, Latin America and Africa. They do so to benefit from a growing pool of qualified, yet typically lower-cost personnel and specialized service providers in these countries. In face of growing global demand, governments in the developing world have realized that business process outsourcing can be leveraged for economic development. For example, Kenya’s government lists it as an important building block for their 2030 vision. Yet, many observers have criticized business process outsourcing, saying that it mainly benefits the young and educated urban elite, whereas the vast majority, including people in slums and rural areas, have been denied access to this growing labour market.
Impact Sourcing is designed to change that. Several firms, in particular in Africa, have adopted IS models – driven by their social mission, strong community ties and new funding opportunities. These so-called Impact Sourcing Service Providers (ISSPs) specialize in hiring and training physically or socially-disadvantaged people for outsourcing jobs. These include youth from slums, hearing-impaired, and women or ethnic minorities. Hired staff, who typically lack advanced skills, are often given so-called ‘microwork’ – small and standardized tasks, such as data entry and conversion, content management and transcription, as part of larger work packages. The microwork model was pioneered by Samasource, a San Francisco-based outsourcing firm, which successfully practices Impact Sourcing in various locations. Global clients have accepted the model mainly because of its additional cost benefits due to low wages and effective staff utilization. Other service providers, such as Digital Data Divide (Kenya), TechnoBrain (Tanzania) and Rural Shores (India), have taken similar approaches.
But does Impact Sourcing really promote more inclusive employment? On the one hand, predictions are promising. The Monitor Group estimated that it will be a $20 billion market by 2015 out of which $10 billion will be the direct income for 780,000 people. By 2020, according to Avasant, the market will grow to employ 2.9 million people. On the other hand, the current model also bears considerable risks. First, global clients accept it mainly for its cost advantages, whereas potential social benefits do not play a role in sourcing decisions. Second, and relatedly, a strong focus on highly-standardized (and low-paid) jobs for workers from disadvantaged social and economic backgrounds may prevent them from seeking advanced training and more lucrative employment opportunities.
To counteract these challenges, some Impact Sourcing Service Providers have started extending the IS model, often in collaboration with NGOs and community organizations, by providing advanced training for staff from rural areas and slums, beyond the requirements of any particular jobs. For example, Craft Silicon Foundation in Nairobi, Kenya, operates a bus that provides computer training to youth in one of the largest urban slums. While only a certain percentage might be future hires of Craft Silicon, others learn skills they can employ in various ways in their lives. Another example is that of iMerit based out of India which provides an immersive work readiness programme known as ‘market aligned skills training’ (MAST), teaching IT and technical skills, workplace readiness and communication skills, and providing continuous training with new clients and technologies. Other service providers reinvest into the local community. For example, B2R, based out of rural India, returns 33% of their profit after tax back into the community they operate in. Yet, how sustainable these initiatives are, in particular when external funding sources run dry, is a critical question. Will global clients see a value in socially-responsible hiring and training, and will providers make Impact Sourcing feasible and scalable to promote more inclusive growth?
In sum, Impact Sourcing is a promising new initiative to boost more inclusive employment in developing countries. Yet, it may take a coordinated approach by local governments, development agencies, lead suppliers and buyers to upgrade it from pilot projects to new employment models and training infrastructures that can sustainably promote more inclusive employment and development.
Chacko Kannothra and Stephan Manning have conducted field research on impact sourcing in Kenya, India and the United States. For further information, please email us: Chacko.Kannothra001@umb.edu, Stephan.email@example.com.
Photo credit main picture: The University of Namibia at Windhoek / World Bank Photo Collection via Flickr