Category: Impact Sourcing

The Business Case for Impact Sourcing | Sherpas in Blue Shirts

This blog is the second in a series of three on impact sourcing. In my first blog, I gave an introduction to impact sourcing in terms of what it is, its constituents, and why it matters. Now I’ll focus on its value proposition and business case.

Impact sourcing value proposition

The graphic below provides a snapshot of impact sourcing value proposition, which is based on five key elements, i.e., low cost, reliable delivery, access to alternate talent, stable workforce, and social benefits.

IS value prop

Low cost

Impact sourcing offers significant cost arbitrage over source locations for offshore BPO. At 70%+, this arbitrage is comparable than the arbitrage offered by traditional offshoring. In fact, as compared to traditional sourcing, impact sourcing offers savings across both “in-house employment” and “outsourcing” models. For example, in South Africa, people costs for impact workers are 8-10% lower than traditional workers when averaged over a three year period for in-house employment. In India, impact sourcing offers 35-40% savings as compared to traditional BPO in an outsourced model.

The drivers for these additional savings over traditional sourcing models vary by location. For example, in South Africa, lower costs are driven by lower attrition and some differences in salaries. In India, the savings are primarily driven by lower people cost and facilities cost in tier-3/rural location for IS operations as compared to tier-1 locations for traditional sourcing. To get a better understanding of cost for impact sourcing across different locations, check-out the detailed report.

Proven and reliable delivery

Our research shows that the performance achieved from impact sourcing is comparable to traditional BPOs with a robust track record of meeting client SLAs/KPIs and expectations. There are multiple examples as illustrated in the case studies of Teleperformance, Accenture, RuralShores, and SureHire. Even in cases where the performance of impact workers is not tracked, there is strong endorsement of performance being comparable to traditional workers.

Furthermore, companies have successfully mitigated the concerns (e.g., lack of talent, data security, and infrastructure) linked to service delivery using impact sourcing by focusing on skills development initiatives and replicating security infrastructure similar to traditional sourcing. For example, Aegis SA provides 12-16 week training program for impact workers that teaches basic office competencies and behavioral skills. In addition, there are several training institutes (Impact Sourcing Academy, Harambee, Careerbox, Piramal Udgam) that focus on developing the skill-sets of impact workers. Many pure play impact sourcing service providers (e.g., RuralShores) have implemented robust infrastructure to mitigate concerns on data security.

Large and untapped talent pool

Given most locations in Africa (South Africa, Kenya, Nigeria, Egypt, Ghana, Morocco) and Asia (India and Philippines) where impact sourcing is largely used have a high unemployment rate among the youth, impact sourcing provides an opportunity to access this large, untapped qualified pool. For example, there are over 155,000 unemployed graduates in South Africa. Over 35% graduate youth (age 15-29 years) in rural India are unemployed. Through impact sourcing companies tap into this alternate pool to augment talent supply. For example, impact sourcing has become TCS’ primary source for entry-level talent during non-campus-hiring season and enables extending its recruitment throughout the year. A detailed case study on TCS illustrates this in greater detail and provides insights on its outcome.

This talent pool is especially suited to serve the domestic market. Companies leverage this talent pool as source of competitive advantage for domestic service delivery, given local language capabilities and cost arbitrage. For example, RuralShores uses impact sourcing for vernacular language support for domestic market.

Stable and engaged workforce

One of the strongest elements of impact sourcing value proposition is the stability and motivation levels associated with impact workers. Our research shows that impact workers have 15-40% lower attrition than traditional BPO workers and exhibit high motivation levels that leads to improved performance over a period of time and lower hiring and training costs. This is endorsed by many companies using impact sourcing. A study by Careerbox comparing the performance of impact workers with traditional workers shows about 10% higher retention for impact workers measured after 90 days and 180 days of recruitment.

The lower attrition rates are driven by the strong emotional bond and loyalty towards the employer that helped educate, train and provide employment to the disadvantaged worker. In addition, impact sourcing provides a strong fit with personal/family aspirations (e.g., opportunity to work in local community without migrating to urban centers). Furthermore, for most impact workers BPO is a preferred career option compared to alternatives (e.g. agricultural, industrial labor), as it offers higher salaries and better work environment.

Social Impact

These four value proposition elements – low cost, reliable delivery, access to alternate talent, and stable workforce – are built around the fifth one – the social impact. In fact, the value proposition for impact sourcing exists because of the types of employees hired. Impact sourcing employees are high potential but disadvantaged economically, socially or some other way. For example, they may come from a low-income area or not have had the opportunity for a university education. Impact sourcing offers these types of people an opportunity to earn and build transferable workplace skills. As a result, employees improve their well-being, and the well-being of their families and communities. (See my blog Impact Sourcing 101: The Fundamentals of a Powerful Global Sourcing Model for a full explanation.)

A study done by RuralShores among 650 respondents across 11 of its centers shows significant improvement in the living standards of its employees after joining RuralShores. To illustrate this with a few indicators, 46% of its employees purchased mobile phones, 56% purchased consumer durable goods, average of 20% increase in family savings. This is echoed in Accenture’s experience of impact sourcing where annual income of impact workers increased by ~33% post employment.

Impact sourcing really is a win-win with tangible positive impact on business and on people. Any which way you look at it, the combined value proposition of impact sourcing is compelling, especially for certain types of BPO work.

In my next blog, I’ll share my perspectives on the aptness of impact sourcing to business.


Everest Group, supported by The Rockefeller Foundation, conducted an in-depth assessment on impact sourcing (IS) as a business process service delivery construct. The study presents a detailed, fact-based business case for IS that substantiates the benefits of the IS model for Business Process Outsourcing (BPO). Additionally, it sizes the current IS market for BPO work, profiles the landscape, details the business case, and shares experiences of companies through case studies and testimonials. The report focuses on Egypt, Ghana, Kenya, Morocco, Nigeria, South Africa, India, and the Philippines.

The Rockefeller Foundation aims to catalyze the IS sector in Africa through its Digital Jobs Africa Initiative. The Foundation’s role is to ensure positive social and economic impact on 1 million people by supporting high potential but disadvantaged youth to work in the dynamic outsourcing sector in Africa, benefitting them, their families and communities. The Foundation recognizes that the most sustainable and scalable path to achieving this impact is because of the tangible business value impact sourcing provides. Impact sourcing enables companies to purposefully participate in building an inclusive global economy, gaining business efficiencies while changing people’s lives.


Visit our impact sourcing page for more information.

Be sure to join our webinar, The Business Case for Impact Sourcing on Tuesday, October 7, 2014.


Photo credit: The Rockefeller Foundation

Impact Sourcing 101: The Fundamentals of a Powerful Global Sourcing Model | Sherpas in Blue Shirts

I recently concluded an engagement on impact sourcing. Did you say, what? That was my first reaction as well when I initially heard about impact sourcing. I knew about other global services constructs – rural sourcing, crowd sourcing – but not impact sourcing. Turns out, I wasn’t alone. During the course of my research I realized there is a lack of awareness about impact sourcing in the market. For uninitiated folks like me, I hope this blog – the first in a series on the topic – helps create awareness about impact sourcing and its role within global services delivery.

What is impact sourcing?

So, what is impact sourcing?

Impact sourcing (IS) is a business process service delivery model that provides quality and cost at parity with traditional BPO services, but with optimized enhancements such as:

  • A qualified, trained, untapped talent pool with skill sets aligned to match client needs,
  • Lower attrition rates and higher corresponding levels of employee engagement, and
  • Opportunities to fulfill corporate social responsibility and diversity objectives while operating within a traditional BPO framework

Put simply, it is a BPO service delivery model that employs high potential but previously disadvantaged individuals for service delivery that provides positive impact on both business and society.

 

Here are some facts to set the context:

Impact sourcing is sizable (235,000-245,000 FTEs). There are many instances where it is practiced across countries in Africa (South Africa, Kenya, Nigeria, Egypt, Ghana, Morocco), India, and Philippines. In fact, our research shows that across these countries, impact sourcing constitutes ~12% of the overall BPO market. Not only that, it is growing at a faster clip than the overall BPO market.

What constitutes impact sourcing?

Our experience shows that there is no one answer to what constitutes impact sourcing. Depending on who you are talking to and the social context, impact sourcing constituents vary by how one defines a disadvantaged individual. Broadly, the constituents can be classified in three different categories:

  • Economically disadvantaged: Near/below poverty line, located in low income areas, lack of access to jobs or prior work experience
  • Socially disadvantaged: Minorities, historically underemployed or marginalized group (e.g., black and Asian communities in South Africa, certain castes/tribes in India), gender groups
  • Physically disadvantaged: Differently-abled, diagnosed with health conditions (e.g., HIV/AIDS) limiting equal opportunities in the workforce

Why does it matter?

Impact sourcing has the potential to engage high potential individuals in meaningful employment opportunities and make a real difference in their lives. These individuals in the absence of impact sourcing would not have access to jobs or their situation/background would put them at a disadvantage as compared to mainstream workers. Impact sourcing provides these individuals a platform that helps boost their confidence and provide opportunities to bring themselves at par with the mainstream workers through direct and indirect impact.

  • Direct impact: Our research shows that impact sourcing typically leads to an improvement in workers’ lifestyle (40-200% increase in individual income), professional development, increase in confidence levels, reduction in tendency to migrate, and reduced stress levels
  • Indirect impact: The increase in individual income typically benefits 3-4 family members due to increased spending power for family and household and facilitates a stable environment. This is especially empowering for women. In addition, it strengthens communities by creating a 3.5-4.0x multiplier effect on the local economy and improves future employability of disadvantaged individuals

So one impact worker can potentially lead to a much wider impact that uplifts many more in the community.

More than a feel good factor

There are many large, global companies across buyer and service provider organizations that currently use impact sourcing for BPO service delivery. These companies experience measurable business benefits of impact sourcing while also positively impacting the worker, their families and communities. In order to scale the practice of impact sourcing, more companies need to adopt the practice.

Our research suggests there is a compelling business case to impact sourcing in addition to the social benefits. This business case is based on strong foundational elements with credible supporting evidence.

To give you an idea of the business benefits of impact sourcing, check out the performance improvements Teleperformance has experienced using impact sourcing, the access to new talent that Aegis has because of their involvement in impact sourcing, and the plans Microsoft has for impact sourcing,

In my next blog in this series, I will share impact sourcing’s value proposition and its business case. Watch this space for more.

Everest Group, supported by The Rockefeller Foundation, conducted an in-depth assessment on impact sourcing (IS) as a business process service delivery construct. The study presents a detailed, fact-based business case for IS that substantiates the benefits of the IS model for Business Process Outsourcing (BPO). Additionally, it sizes the current IS market for BPO work, profiles the landscape, details the business case, and shares experiences of companies through case studies and testimonials. The report focuses on Egypt, Ghana, Kenya, Morocco, Nigeria, South Africa, India, and the Philippines.

The Rockefeller Foundation aims to catalyze the IS sector in Africa through its Digital Jobs Africa Initiative. The Foundation’s role is to ensure positive social and economic impact on 1 million people by supporting high potential but disadvantaged youth to work in the dynamic outsourcing sector in Africa, benefiting them, their families and communities. The Foundation recognizes that the most sustainable and scalable path to achieving this impact is because of the tangible business value impact sourcing provides. Impact sourcing enables companies to purposefully participate in building an inclusive global economy, gaining business efficiencies while changing people’s lives.

Visit our impact sourcing page for more information.

Be sure to view our webinar, The Business Case for Impact Sourcing from October 7, 2014. Download now.

Read part 2 of this blog series.

Read part 3 of this blog series.


Photo credit: The Rockefeller Foundation

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