Impact Sourcing and Rockefeller Foundation’s Poverty Reduction through Information and Digital Employment (PRIDE)
Through its Poverty Reduction through Information and Digital Employment (PRIDE) work, the Rockefeller Foundation has been learning about the potential effect of Impact Sourcing on the lives of the poor and vulnerable worldwide. It supports Impact Sourcing organizations and sponsors research into the field aimed at understanding the environment required to scale up Impact Sourcing as a preferred option within the outsourcing industry. By engaging others in these efforts, the Rockefeller Foundation has built a coalition of key stakeholders to be ambassadors for Impact Sourcing and assist to move the field forward. Impact Sourcing is outsourcing that benefits disadvantaged individuals in low employment areas. It looks beyond the common source of supply for traditional outsourcing to provide higher-income employment and access to new income opportunities to individuals that might not otherwise be employed in this sector. These individuals are typically people who are at a unique disadvantage and lack access to traditional employment. They include individuals living in rural areas of developing countries or in slums, those without access to secondary or tertiary education, and educated individuals in areas of high unemployment. Impact Sourcing is taking place across the globe. The Rockefeller Foundation’s focus, in terms of supporting the development of Impact Sourcing, is currently on Ghana, Kenya, South Africa and India. According to the Monitor Group, Impact Sourcing employment provides measurable increases in income levels. Data suggests that Impact Sourcing employees’ incomes increase between 40% and 200%. In addition to the benefits of formal, stable employment, this research also suggests that Impact Sourcing employment increases family investment in health care and education. However, it is not just society that benefits from Impact Sourcing; clients of the Impact Sourcing service benefit through access to a service at a cost and quality point competitive to traditional outsourcing, and the Impact Sourcing Service Provider (ISSP) benefits by being able to bring a new, innovative and competitive offering to its clients. For all the players within the Impact Sourcing ecosystem it’s a win-win scenario. This feasibility study, with the support of the Rockefeller Foundation, examines the demand side of Impact Sourcing, exploring the value proposition of Impact sourcing from the buyer’s perspective, and determining whether Impact Sourcing can be a viable business model.
This study aims to provide evidence that big businesses, as well as smaller ISSP players, have an integral role within Impact Sourcing and can realize significant benefits from such initiatives. The paper highlights and recommends steps that big businesses, particularly traditional outsourcers, as well as smaller ISSPs and philanthropic organizations should take in order to set up successful Impact Sourcing initiatives. Specifically, it gives guidance on scaling initiatives and provides a set of pilot options that companies might consider if interested in developing Impact Sourcing as part of their core business offering.
This feasibility study seeks to examine the demand side of Impact Sourcing from the perspective of the buyers of outsourcing services, and determine whether it can be a viable business model. It aims to provide evidence that big businesses, as well as smaller ISSP players, can have an integral role within Impact Sourcing and can realize significant benefits from such initiatives. Specifically, it offers guidance on scaling initiatives and provides a set of pilot options that outsourcing companies might consider if interested in developing Impact Sourcing as part of their core business offering.
The current outsourcing market is estimated at $512 billion (see Figure 2).While the majority of outsourcing services are delivered from India, a growing number of outsourcers are establishing delivery centers or otherwise sourcing labor from other low-income locations, such as The Philippines, Mauritius and Brazil. Other emerging markets, including Kenya, Ghana, Rwanda and Uganda, have included outsourcing in their national growth strategy. These countries are most likely to benefit economically and socially from sustainable job creation and growth. Simultaneously, Asia, Africa and Latin America will account for 97 percent of population growth over the next 20 years, making the developing world the largest source of potential future employees.
The Issue – Rising World Population in Need of Employment
One of the greatest issues facing developing countries is a growing population in need of employment. Countries with rapid growth rates are experiencing a “youth bulge,” with young people entering the workforce forming a significant percentage of the population. To employ youth entering the workforce and help decrease unemployment among the young by 50 percent, over 700 million jobs will need to be created by 2020.
The Opportunity –
Growth in Outsourcing Gartner forecasts that Business Process Outsourcing and Technology Outsourcing will grow to $574 billion by 2015 (see Figure 2, Global Outsourcing Market Size). Based on forecasts from Avasant, Impact Sourcing is predicted to make up 11 percent of the Business Process Outsourcing market in 2015 (see Figure 3).
One Potential Solution
Impact Sourcing is one potential solution to the issues and opportunities present globally today. By providing previously unavailable employment opportunities to talented resource pools through Impact Sourcing, individuals, businesses and society benefit from harnessing untapped skills.
Impact Sourcing is a viable business model as long as two conditions are met:
1. There is sufficient demand for the services and the client (buyer of the services) is able to meet its outsourcing objectives.
2. The model offers a competitive and sustainable solution.
In order to confirm or reject this hypothesis, we set out to analyze the following questions:
• Is there client demand for Impact Sourcing
• What products/services are in demand?
• What is the value proposition to clients?
• Which clients would be willing to undertake the offering?
• Is the offering competitive and sustainable?
• What is the business model? Can the model be leveraged and scaled?
• What is the cost model/pricing structure? Is it competitive?
• How is the offering executed?
• How is success measured?
• What social impact can be realized?
• How can associated risks be mitigated?