Sateen Sheth

Drafting a Plan for Impact Sourcing: Identifying the Key Initiatives to Scale and Sustain Impact Sourcing

Thirty-one experts from all over the world involved in the Impact Sourcing sector wrestled with this intriguing and challenging question over five days at the Bellagio Impact Sourcing Conference. The five-day conference was convened by the Rockefeller Foundation and facilitated by the William Davidson Institute last month at the foundation’s conference center in Bellagio, Italy. To learn more about conference proceedings, please read here.

Impact Sourcing refers to a growing arm of the global business process outsourcing (BPO) sector that intentionally employs people from disadvantaged communities (i.e. base of the pyramid (BoP) workers, youth workers, and disabled workers) who otherwise would not have an opportunity for sustainable employment. As previously covered on NextBillion, Impact Sourcing is an exciting and emerging space that has demonstrated the potential to alleviate poverty for millions of people in a sustainable manner through job creation and employment. While the promise of Impact Sourcing is great, its potential has yet to be reached due to several challenges such as securing new client work, engaging large buyers and providers of services, and the difficulty of hiring and training workers from disadvantaged communities.

The first few days of the conference were intended to help attendees understand the Rockefeller Foundation’s strategy and approach, provide an overview of the IS landscape and definition, share perspectives on challenges from different players within the IS ecosystem, and provide advice and best practices from experts in relation to developing standards, certifications, and metrics.

Once attendees had developed a common understanding of the challenges and issues facing the sector, the conference then turned towards action. Specifically, attendees were challenged with recommending strategic objectives that could be turned into actionable initiatives that would best take Impact Sourcing to scale and prepare the industry for sustainability. An initial brainstorm generated nearly thirty ideas, which were organized by key themes and then prioritized by the group. The six key strategic objectives identified by attendees represent the most impactful means to growing the sector and moving it forward. These include:

1. Developing actionable partnerships within the Impact Sourcing ecosystem

In order for Impact Sourcing to reach scale, larger buyers of services and BPO providers must start to engage in the sector in a meaningful way. This initiative would help develop such partnerships and pilots between large BPO providers, smaller ISSPs and large buyers to create supply and demand for BPO services in emerging destinations such as Africa.

It will be critical to find ways for suppliers to work together to reduce individual risk and gain entry to markets where cost, risk, and lack of demand currently prohibit expansion. In addition, large BPO buyers must identify opportunities to work together on Impact Sourcing strategies to reduce their individual risk and expedite adoption by the rest of the buyer community. A strong business case with real metrics that demonstrate the value proposition of Impact Sourcing will also be essential to ensure executive approval from larger BPOs and buyers of services. To this end, it is important to develop pilots with specific and measureable objectives where the data can be leveraged to develop a compelling business case.

Hybrid models of partnership, such as establishing career paths between Impact Sourcing Service Providers (ISSPs) and larger BPOs and sharing infrastructure between ISSPs and larger BPOs must also be explored.

2. Marketing Impact Sourcing

Currently, the Impact Sourcing sector has limited brand value and is not differentiated or understood in relation to traditional outsourcing. Many perceive Impact Sourcing as more of a CSR strategy than a sustainable business model.

An initiative would be developed that creates awareness, and identifies and develops a brand around Impact Sourcing, including considering options such as potentially creating a fair trade label for Impact Sourcing and ISSPs. A marketing plan that highlights Impact Sourcing as a legitimate sourcing option with the added benefit of social impact is something the nascent sector needs. Impact Sourcing should be discussed by customers as the “obvious choice” and an opportunity for them to get additional value out of their outsourcing work.

In order to develop such a marketing plan and approach, a compelling value proposition and business case with solid metrics will need to be present to show the benefits of Impact Sourcing compared with traditional BPO models.

(From the Impact Sourcing Conference, a five-day meeting convened by the Rockefeller Foundation and facilitated by the William Davidson Institute last month).

3. Enhancing the IS Business Case

As mentioned in the previous two initiatives, developing a clear and compelling business case will be critical in order to demonstrate the true value of Impact Sourcing. In order to scale, the sector must also create a persuasive, data-driven business case aimed at buyers, funders, partners, talent and ISSPs. An Impact Sourcing business case will include a compelling sector description, data-driven value proposition, and articulation of services. In order to develop such a case, data will need to be collected from ISSPs and larger BPO providers. Ideally, various stakeholders within the ecosystem also will need to be interviewed for case studies and testimonials, and impact assessment studies will also need to be performed to understand the long-term impacts of ISSP employment on individuals and their households.

The business case should also reflect the metrics and standards of the sector, will feed into an overall marketing strategy, and be repurposed to separately target specific audiences.

4. Standardizing IS metrics and measurement

As the sector matures, developing standardized metrics will be essential in order to demonstrate value within the sector and to allow buyers to tell their impact stories as well as compare, select and measure service providers. In addition, there is a need for quantifiable data to monitor compliance and assess progress. Thus, developing an initiative to create standardized metrics and rating systems specifically for Impact Sourcing is imperative. Developing such standards will need stakeholder engagement and consensus on which metrics will need to be included. The Impact Investing sector, which has worked to develop reporting and rating standards (e.g. IRIS, GIIRS), could be leveraged as an example to follow. Other potential standards relating to labor and security should also be considered.

5. Creating an IS online platform

As Impact Sourcing is a new sector, the easy exchange of information and access to resources is imperative for future success. In addition, new customers to the market need a hub where they can learn more information and perform business matching services such as selecting relevant providers. An initiative would be developed to help create an Impact Sourcing online collaboration platform that would include a directory of ISSPs (listing items such as skills, capabilities) and enable other collaborative engagement between various stakeholder groups. Functionality on such a platform could include discussion forums, job postings, resource library, database of suppliers, and buyer and investor inquiry tools.

6. Supporting Impact Sourcing training

Currently, there is a shortage of skilled workforce in the BPO sector, leading to high levels of attrition and raising salary costs, particularly in the countries like India, Philippines and South Africa. In the emerging Impact Sourcing countries, staffing resources are available but not always employable as many lack the required skillset. There are also a lack of team leaders and skilled lower management resources, which is inhibiting scale of the sector overall.

Thus, it will be a critical to develop an initiative that enhances Impact Sourcing training capabilities worldwide. This may include determining standard curricula for the sector, creating an ISSP leadership program/academy, online training programs, and enabling evaluation and certification by accredited institutions.

Each of these strategic objectives is individually complex and will require multi-stakeholder engagement and collaboration to successfully execute the associated initiatives that are eventually developed. That being said, it is interesting to note that the majority of the objectives are dependent on each other in order to achieve success. For example, the business case is a key part of the marketing strategy, metrics are a key part of the business case, etc. This illustrates the importance of a coordinated, strategic approach to implementing developed initiatives in order for the sector to reach its goal of achieving scale.

The energy to move towards the execution of these objectives through specific initiatives has been exciting to see; several working groups have been created and are moving forward with the goal of helping Impact Sourcing meet its vast potential.