Wairimu Kagondu

Impact Sourcing: What do we know?

Over the past few years, the Impact Sourcing sector has experienced tremendous growth in momentum and visibility. Impact Sourcing is a global opportunity to employ high potential but disadvantaged people in the outsourcing sector. Beginning with companies such as Digital Divide Data, Samasource and Rural Shores, all of whom were pioneers in the field, the practice has grown to become a global movement estimated to have the potential to become a $20 billion market by 2015.

Evidence of this growing momentum can be seen in the increasing number of Impact Sourcing Service Providers (ISSPs) and a growing interest on the part of traditional BPOs-for instance Wipro and Infosys, two early leaders in outsourcing, have both started targeting a more disadvantaged population through partnerships with local ISSPs. Impact Sourcing began in rural communities in India, where BPOs employed people with talent but very limited job opportunities. The concept has permeated the world – from wealthy nations to developing countries. The common thread is that employers are more than ever seeking out workers who have the basic skills necessary to do a job, but are often overlooked because of location, circumstance, economics or education level. Increased media interest has led to a profiling of Impact Sourcing in publications such as the New York Times and in 2011, the International Association of Outsourcing Professionals (IAOP) named Impact Sourcing as a ‘Trend to Watch for’ in 2012.

While there is growing momentum around this sector, it is still in a nascent stage and much work remains to fully map and size the opportunity. A series of reports supported by the Rockefeller Foundation through its Digital Jobs Africa initiative and carried out by its partners, as well as NextBillion’s recent series on Impact Sourcing, are highlighting the incredible opportunity and necessary next steps for the Impact Sourcing Sector.

Impact Sourcing is a global opportunity – and one that is growing:

A report by the Monitor Group provided the first ever sizing of the sector globally. The report, Job Creation through Building the Field of Impact Sourcing, estimated that Impact Sourcing had the potential to grow into a $20 billion market by 2015, directly employing 780,000 people. Several trends were identified as driving this growth including the increasing reach and decreasing cost of telecommunications, increased levels of education allowing a global workforce to benefit from this opportunity and increasing demand for the digitization records across the private and public sectors.

These trends create an opportunity that is global. In its report, Assessing the Opportunity for Building a Thriving Industry, the William Davidson Institute identified 20 countries around the world – seven of which are in Africa – that show the highest potential to develop Impact Sourcing capabilities. The assessments include analysis of each country’s business process outsourcing (BPO) industry, Impact Sourcing Sector and labor force. The analysis provides a basis for the design of interventions to promote the growth of the IS sector in these countries.

Impact Sourcing workers can move quickly up the BPO value chain:

The WDI report also provides a detailed analysis of Impact Sourcing workers in terms of both the types of work they currently undertake and tasks they have the potential to carry out. The analysis reveals that while Impact Sourcing workers initially enter the market at the lower end of the BPO value chain, carrying out tasks such as data entry, processing and conversion, they can quickly move up, carrying out more complicated and higher paying duties such as data codification, secondary research and accounts payable support. This allows not only for increased earnings, but also skills development, positioning these workers for further upward mobility in the sector or to higher paying jobs in other sectors.

Clients care about cost and quality, but also embrace shared value

For Impact Sourcing to scale and meet its social impact objectives, it will need support from a market that actively seeks Impact Sourcing services. A report by Accenture, Exploring the Value Proposition for Impact for Impact Sourcing, investigates the value proposition of Impact Sourcing with recommendations to multi-national businesses. It finds that while cost and quality continue to be top priorities for companies when making the decision to outsource, demand exists for Impact Sourcing as long as buyer values of low cost and high quality continue are met. Of the buyers profiled, half expressed interest in Impact Sourcing and client teams interviewed were open to considering Impact Sourcing for up to 25 percent of their outsourcing portfolio.

Building on these findings, a second Accenture report: Recruitment, Training, and Impact Measurement; a Recommended Approach for Impact Sourcing, developed a recruitment, training and impact measurement approach for Impact Sourcing.

Targeted Policy interventions could significantly scale the sector

Avasant explores the policy landscape for Impact Sourcing in a report entitled Incentives & Opportunities for Scaling the Impact Sourcing Sector. This report showcases case studies of best-practice policies and incentives for the sector, as well as recommendations for governments to scale Impact Sourcing. The report outlines several key areas of intervention, including creating anchor local demand through government digitization projects, enhancing supply though support for human capital development, support for infrastructure development to increase access, and enactment of IS supportive policies such as tax breaks for ISSPs.

The Rockefeller Foundation is committed to building the knowledge of best practice for the Impact Sourcing. As a part of the Digital Jobs Africa initiative, the Foundation recently convened thirty-one leading Impact Sourcing experts in order to develop an action agenda that will help scale and sustain the sector. More stakeholders are entering the space – whether they’re large buyers and services providers or new ISSPs – testing new models for cost efficient training and the most conductive enabling environments. No doubt the industry will collectively benefit from this growing knowledge base to make Impact Sourcing a much more substantial practice in the outsourcing sector.

Wairimu Kagondu is a program associate with the Rockefeller Foundation’s Africa Regional Office.

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