October 20, 2014

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Impact Sourcing: Outsourcing for Social Good?

Parts of Africa, South America and Southeast Asia are touting the job creation potential of Business Process Outsourcing (BPO) as one tactic to promote poverty reduction.

Bio_jeffrey_puritt

By Jeffrey Puritt

Though its advent still seems quite recent, the outsourcing industry is going through a noteworthy maturation process. For evidence, one can start by looking at India. Best-known as the largest outsourcing destination for the Fortune 500, India’s outsourcing dominance is now being slowly eroded by other regions with young, educated, lower-cost workforces like the Philippines, as well as locations offering multilingual talent like Latin America and Eastern Europe.

More country leaders are realizing the positive aspects that outsourcing can bring to their people and their emerging economies. For example, though poverty is still a major problem in India, wage increases from the booming outsourcing industry of the late 1990s and early 2000s have helped create a large and growing middle class. The same is happening in the Philippines now, with more young people benefiting from stable, in-demand jobs.

But even as the industry enters into the equivalent of middle age, outsourcing still suffers from a long-standing image problem. As I write this, there is a bill on the floor of the US Congress to explicitly discourage outsourcing in the call center space. Introduced by Congressmancall center Tim Bishop, the "US Call Center and Consumer Protection Act of 2013," would bar corporations that send US call center jobs overseas from receiving federal grants and loans.

While the concern regarding domestic job displacement and the political debate over outsourcing is understandable, I believe that focusing only on the negative is equivalent to “throwing the baby out with the bathwater.” There is another side to this discussion. What rarely comes up in the outsourcing discourse is that there is a growing segment of the industry that is capable of, and focused on, delivering positive social outcomes, particularly in the developing world.

The Social Benefits of Business Process Outsourcing

In the Philippines, the government actively touts the job creation potential of Business Process Outsourcing (BPO) as one explicit tactic to promote poverty reduction. Across parts of Africa, Central and South America, and Southeast Asia, organizations like San Francisco-based Samasource are working to bring the benefits of the digital revolution to unemployed young people through outsourced call center jobs.

Other industry players have even been working to rebrand “outsourcing” to the less controversial “impact sourcing,” a term coined and promoted by Digital Divide Data (DDD), a non-profit social enterprise that offers outsourcing services in developing countries. Like many progressive outsourcers, DDD focuses its efforts on poverty alleviation by attempting to provide access to decent-paying jobs and skills development for folks who might not otherwise be employed in the BPO sector.

In a recent Huffington Post article, DDD co-founder Michael Chertok writes that, “while international aid for economic development often fails, business has the potential to bring millions of people out of poverty. For no enterprise is this more true than the unsung $300 billion industry known as Business Process Outsourcing (BPO).”

Business as a Poverty Alleviation Tool

DDD’s is an effort that I applaud. It offers a tangible model for bringing the benefits of outsourcing to small, rural and remote areas. The spread of modern telecommunications ensures that impact sourcing will continue to grow and provide opportunities for poor people around the world.

Still, there’s no doubt that impact sourcing remains in its infancy. In many ways, it reminds me of the financial industry’s attempts to increase access to credit among poor populations. In the past 20 years, the concept of microfinance (making small loans to poor people, often women) has emerged as a powerful force against poverty. Providing access to capital helps would-be entrepreneurs and small business owners to help themselves.

But to achieve the greatest possible scale of social benefit, some argue that small non-profit microfinance institutions can’t do it alone. Without the protective regulation of banks, they may not be able to attract sufficient capital necessary to meet demand. Thus, their impact could be stunted.

One could make a similar argument about outsourcing. While small players and non-profits can undoubtedly make an impact at the margins, larger players operating with a progressive mindset have an opportunity to drive larger-scale, country-level change. But they must be committed to social impact and not be purely driventechnology jobs in Africa by profit.

Of course, some outsourcers will struggle to fully embrace the benefits of engaging in socially responsible business. For them, the status quo of cost-cutting and margin management persists, and they’ll continue to seek lower costs at all costs. But over time, I believe they too will evolve as local employees, communities and the clients of BPO services insist upon partnerships that combine bottom-line results with meaningful social change.

Progressive Business Process Outsourcers

As BPOs have matured, they have realized how community development, corporate social responsibility (CSR) and promoting employee well-being positively impact staff retention and service quality. A new white paper that my company, TELUS International, published with CSR consultancy Impakt Corporation called Outsourcing for Social Good: A BPO Perspective, describes how recognizing the positive impacts of social responsibility have created a dramatic transformation in the way many traditional BPOs operate.

Progressive BPOs are going beyond increasing employee salaries. They’re increasingly offering programs that help employees and their families fundamentally improve their lives.

For example, some firms now offer onsite post-secondary and college-level education for their employees. Contrary to the expectation that educating the workforce would increase staff turnover, many BPOs are finding the opposite to be the case.

Progressive BPOs are also increasingly mobilizing employees to volunteer in their communities by supporting basic needs like building roads and schools, as well as volunteering for local grassroots charitable organizations. In addition to building concrete value in the community, these efforts engage employees in work they find meaningful, and corporate volunteer activities demonstrate to employees that the company cares.

Social Change – An Investment that Pays Off

Changes like these aren’t rooted in altruism alone. BPOs aren’t compromising their own profitability by contributing to developing-world communities. Rather, they’re taking the long view and understanding that the more investment they put into their community, the more value it will cultivate.

It’s an investment that pays off. According to the TELUS International white paper, when a business helps improve the lives of its workers and their communities, it enables the business to improve its value for customers far beyond cost savings. Investing in people and communities actually improves the quality of the firm’s products and the effectiveness of its services as their employees reward their employers with a higher degree of loyalty, engagement and productivity.

Increasingly, socially responsible companies like the technology heavyweights in Silicon Valley are aligning with these progressive outsourcing firms for the social change they create, as well as the quality of service they provide. BPOs today are going above and beyond business as usual – getting involved in their communities to produce amazing results.

As our industry matures, we’ve got real successes to demonstrate – hundreds of thousands of individuals’ lives and BPO whitepaperentire communities which have been improved through global business.

Our challenge, however, lies not just in producing sustainable results, but in evolving the public perception of the outsourcing industry, particularly here at home in North America. That means spreading the word, and working with all willing partners to continue to create real, measurable change. Domestic employment opportunities are a real concern; and this issue warrants real discussion and meaningful, progressive solutions. But in my view, putting the outsourcing genie back in the bottle and pretending that we don’t all live and work in a global village, however, is not the answer.

About the Author:

Jeffrey Puritt is President of TELUS International, a global BPO provider of contact center outsourcing solutions. With locations throughout North America, Central America, Asia and Europe, TELUS International’s almost 16,000 team members support the customer service needs of some of the world’s largest and most respected brands. Learn more at: telusinternational.com.

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The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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