NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

This second part of my conversation with Leila Chirayath covers her vision Samasource, its business model and the pilot project currently under way in Kenya. Make sure to read the first part of this interview to have thorough vision of Leila’s background and the beginnings of Samasource.

Before reading, I encourage you to?watch the video below to get a grasp?of the?circumstances that inspired this social enterprise.

Francisco Noguera: What is your vision for Samasource?Leila Chirayath: Our vision is harnessing the world’s untapped talent through socially responsible outsourcing. That means we need to do two major things: One, work on the development of labor and environmental standards for the service industries, similar to a fair trade system for services which, shockingly, doesn’t exist. So that is one big part of our work: identifying the standards, working with partners to build the certification process and then an auditing and monitoring mechanism to ensure that the certified companies are actually meeting those standards.

The second piece is about harnessing all of that untapped talent. We believe the most effective way to do that is to be brokers and facilitate the flow of work from wealthy countries to poor individuals. That means creating some sort of a marketplace where we can do client development and build a unique brand around responsible outsourcing to draw clients. Our model will be similar to an online marketplace but with a much more robust back end that incorporates screening for social responsibility as well as quality of services.

FN: What kind of outsourcing does Samasource target?

LC: When we talk about outsourcing we’re talking about business process and IT services that vary in complexity. On the low end you have very basic routine processes that do not require a lot of skill like data entry and book digitization, which involves text conversion; in the middle tiers you have things like payroll, expense and medical forms processing; and on the high end you have software and web application development – often tools that enterprises build for themselves.

We’ve purposely been very broad in the services provided because for our new model to work we have to attract both a high volume of low-end work and a smaller number of high-value contracts like software development. Otherwise, our commission-based model is not sustainable.

FN: Does the Samasource model incorporate enterprise development services to build capacity and help vendors overcome their challenges (business skills, access to quality certifications, etc.)?

Actually that’s just what we are doing. Something interesting about the two-way model I just described is that it aligns itself very smoothly to a hybrid structure, which is what we are doing on the legal end. So we have a non-profit incorporated in California that manages the standards and certification processes, as well as capacity building with vendors in low-income countries.

On the other hand we have a for-profit organization focused on the market place is targeted to business development. More than just awareness of the concept of responsible outsourcing, the for-profit is looking at who are the potential clients in this space, how we can reach them, and how can we broker these services in the most efficient way possible.

But, going back to your question, ?there is a huge need to do more training and vendor development. In Kenya we’ve piloted this by conducting workshops and identifying the main entrepreneur incubator groups as potential partners. We’re working with them to put together training materials for outsourcing firms because we believe that if this idea of social responsibility and good labor and environmental practices is embedded from the beginning, there’s a much better chance that will come to effect some time later on.

FN: Will the non-profit’s activities be subsidized by the for-profit?

LC: Only in part. The idea is that, by having this hybrid structure, the nonprofit will not be dependent on traditional grants and donations. The for-profit will always have a social mission at its root, but will be able to fundraise with equity, run as a business and thus ensure its credibility. This is?a critical trait in this industry, both for vendors in developing countries and for clients in the US.

FN: Can you give us an example of the activities you are carrying out to build critical skills amongst potential vendors?

LC: Sure. One of the things we did in Kenya during the pilot was organize a Facebook Developer Garage in Nairobi (essentially a hackathon). That is a day when computer programmers come together and learn how to code, for Facebook in this case. What’s interesting is that Facebook has enabled a lot of small developers to generate income for themselves by writing applications that sit on people’s Facebook profiles.

We thought this event would be a great opportunity for young people in Kenya with computer science degrees, who know how to write the apps and great code, but not how to insert them into the Facebook platform. I spoke to people at Facebook and they actually do these conferences regularly, getting programmers together and teaching them how to tweak their little piece of software so that they can make it into a Facebook application. We also had coaches from Silicon Valley participating through a web-chat.

I think that opportunity needs to be democratized. The reason we did this is that there are so many opportunities being created within the web 2.0 world, but most of the people taking advantage of them are people “in the know” and located in Silicon Valley. Facebook supported us and over a hundred people came, including business leaders and students. We’re going to do it in four other countries in Africa over the next year.?

We also did it because it gives us great insight into who the best coders are in the country, so we don’t have to go to them. They come to us. Building the technology capacity in these countries is ultimately aligned with our mission. What will result ideally is a group of developers that come together and form a company to write, say, Facebook applications. Then they can become service providers in our network.

We’re also working with a couple Universities in Nairobi to develop a curriculum that teaches how to build engaging Facebook applications, in cooperation with BJ Fogg and his Persuasive Technology Lab at Stanford, where I am a Visiting Scholar.

FN: Going back to your pilot in Kenya, what is its current stage of development and what are the expected results?

LC: We’re working with seven firms in Kenya, for whom we are pursuing clients and contracts. In addition to the seven clients in Kenya we are working with two firms: one in the Himalayas called The Himalayan Techies and also Drishtee in India, which is running a distributed BPO project with a head office in Bihar. These two we took on because we decided to diversify our portfolio after the events in Kenya last January.

A successful outcome would be to broker 5 or 10 contracts for these firms by the end of the year. We’re aiming to establish proof of concept – to show that clients are interested in working with socially responsible firms, that there is a market for this label and that we have the operational capacity to facilitate the workflow.

We have also been in discussions with Social Accountability International, which runs the SA8000 certification program –the most respected in the field for manufacturing– about doing a version for our Kenyan services firms. We have received some funding and in-kind support from various Kenyan groups to do that. We are also figuring out what our own checklist of criteria will be before we have a?third party group doing that certification process. So we’ve spoken with World of Good, which is a great organization doing the same but for artisan crafts: fair trade labeling and establishing a marketplace for these producers. We have talked to them about how they developed their social accountability criteria for the firms and their networks and small producers who cannot afford to get fair-trade certified and they have adopted a similar approach.

Finally, we brought a volunteer filmmaker from Stanford who shot around 20 short segments profiling workers, students and managers in the outsourcing industry in Nairobi. The aim is to have them tell their stories because there’s no better articulation of the need for Samasource than a young Kenyan student speaking about how difficult it is to find a job after she graduates. This way we want to get the word out about socially responsible outsourcing.?

Editor’s note: Samasource has recently announced a partnership with oDesk, a leading online marketplace for services with over 100,000 buyers and providers, that centers on a “responsible outsourcing” awareness campaign for members of their network.