guiding principles for socially responsible outsourcing v1.0
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Socially Responsible OutsourcingGuiding Principles
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The $160 billion global services industry has created over 1.5 million jobs
These are mostly concentrated in big cities in China, India and the Philippines
As a result, over 170 million skilled workers in developing regions such as Africa and rural Asia are left out
Unemployment is one of poverty’s greatest ills.
Socially responsible outsourcing can help.
Summary
The Problem
277% of per-capita income spent on tertiary education in some
countries
+>175M skilled workers in Africa,
rural India and China
+60% unemployment among
university and high school graduates
=
Talent Surplus
Client Deficit
Perception that economically depressed regions are open for
aid, not trade+
Few opportunities for smaller firms to connect to US clients
+ No socially responsible
option that promotes economic development
=
One Solution: socially responsible outsourcing
Socially responsible outsourcing promotes economic development and reduces poverty
Foreign capital Small firms Low-income Individuals
$$$a small slice of the
$160B services outsourcing industry
micro-, small- and mid-sized businesses
poor people with untapped talent
Socially responsible outsourcing creates positive social impact by:
directly generating jobs for skilled workers in low-income regions with high unemployment levels
indirectly generating jobs for semi- and unskilled workers
reducing skilled-labor emigration, or “brain drain,” in low-income regions
1Ghana
Senegal
Kenya
Uganda
0 1,000 2,000 3,000 4,000
2
Outsourcing jobs in sub-Saharan Africa
1 direct job 2.5 indirect jobs
3
Socially Responsible Outsourcing: Impact
Guiding Principles v1.0
Includes firms located in: (a) a developing country, as defined by the World Bank*; (b) an economically distressed region (e.g., Ceara, Brazil; Bihar, India)
Hire firms in poor or very poor regions
Hire micro-, small- and mid-sized firms
Hire firms that are owned by, or employ a majority of,
disadvantaged people
“Disadvantaged” means: belonging to an ethnic or religious minority group, living at or under the poverty line, physically or mentally disabled
Includes firms that employ between 1 and 249 people
Objective: help low-income and socially disadvantaged people pull themselves out of poverty.
Buyers are encouraged to follow any 2 of the 3 principles in choosing a service provider for outsourcing work.
Principle
*http://www.imf.org/external/pubs/ft/weo/2008/01/pdf/statapp.pdf
Clarification1
2
3
What kinds of service providers are included?
Principles Example
Digital Divide Data, a nonprofit Cambodian data entry firm that employs 500+ socially disadvantaged people
1
Hire firms in poor or very poor
regions
Hire micro-, small- and mid-sized firms
2+
1
Hire firms in poor or very poor
regions
+Hire firms that are
owned by, or employ a majority of,
disadvantaged people
3
Hire micro-, small- and mid-sized
firms
2 +Hire firms that are
owned by, or employ a majority of,
disadvantaged people
3
Daproim Africa, a 10-person digitization company headed by a person from rural Kenya
Preciss International, a 15-person data entry firm headed by 2 women
Oriak Digital, a 10-person online research and transcription firm headed by a Kenyan woman
For case studies, see the following slides.
Case Study: Daproim Africa
• Run by Steve Muthee, a young entrepreneur from rural Kenya
• Started in 2006 with 4 people
• Types of services: form and survey processing, transcription, digitization, web development
• Offers part-time work to local university students and facilities for disabled workers
• Plans to grow to 20-30 people
• First large project branded as a socially responsible outsourcing firm: $13K
• In pipeline: projects for clients including Benetech, a Bay Area nonprofit, and the African Braille Center
Location: Nairobi, Kenya
Case Study: Digital Divide Data
• Nonprofit social venture led by Harvard graduate Jeremy Hockenstein
• Started in Phnom Penh in 2002 with 25 employees
• Types of services: form and survey processing, transcription, digitization
• Offers education for sex-trafficked women, on-site medical care, scholarship program (financed through donations)
• Currently employs 500+ people at 3x Cambodian minimum wage
• Operationally self-sufficient with revenue from services for clients including the Harvard Crimson
Location: Phnom Penh, Cambodia and Vientiane, Laos
Case Study: Preciss International
• Run by two women, Mugure Mugo and Ivy Kimani
• Started in 2002 with 5 employees
• Types of services: online research, data processing, subtitling, transcription
• Offers part-time work and on-site training to university students, young mothers and recent graduates
• Planned growth to 70-80 employees
• 30% of revenue goes to floor employees
• In pipeline: projects between $10K and $100K for clients in the US and UK
Location: Nairobi, Kenya
Case Study: Oriak DigitalLocation: Nairobi, Kenya
View Video >> http://www.youtube.com/watch?v=bjD97YlNhDU
Appendix
How the guiding principles were developedSamasource spearheaded a series of conversations with many organizations from November 2007 to July 2008 to help develop the “1.0” version of these guidelines.
They are only the beginning. In this first iteration, we left out several important considerations, such as labor and environmental standards for service providers.
It is our hope that these principles evolve into the first fair trade system for services.
To learn more, please visit www.sourceoutpoverty.org.
Responsible business groups Service Providers
Buyers
Academics
Industry Consultants
+
Organizations consulted
Outsourcing: Quick Facts
Eastern Europe$3.3B
China & Southeast Asia$3.1B
Latin America & Caribbean
$2.9B
Middle East & Africa$425M
$120-150B global business process outsourcing market
India$17B
Source: NASSCOM-McKinsey Study 2005; http://www.indobase.com/bpo/global-market-of-bpo.html
USA$90B
About
a new socially responsible outsourcing concept among US enterprises
Defining and promoting
Missionto create knowledge jobs for skilled, economically disadvantaged people
to create business value for US enterprises through low-cost, high-quality business process and IT outsourcing services
small- and medium-sized outsourcing firms (SMOs) in economically disadvantaged regions
Training
SMOs to a global marketplace for servicesConnecting
the social impact of ethical outsourcingMeasuring
Method
Premal ShahPresident, Kiva
Darren BerkowitzFounder & CEO
Emeka OkaforDirector, TED Global
Katherine BarrPartner, Mohr Davidow Ventures
Ken BanksDeveloper of Frontline SMS
Mohamoud Jibrell CIO, Ford Foundation
Samasource teamLeila Chirayath
CEOJoy Sun
Initial director
Alice WangBusiness Development and Finance
Henry ThairuKenya Program Advisor
Visiting Scholar, Stanford University
Consultant, Katzenbach Partners
World Bank Development Research Group
BA, Harvard University (African Development Studies)
Expertise: Outsourcing, social enterprise, development
Investment Associate, FT Ventures
Investment Banking Analyst, JP Morgan
Consultant, UN Industrial Development Organization
BS, Economics, BS Finance, MIT
Expertise: Outsourcing, finance, and business strategy
Director, Clinton Foundation HIV/AIDS Initiative
Stanford Graduate School of Business (MBA expected June ’10)
BS, Georgetown University (Foreign Service)
Expertise: Non-profit management and operations, development
Deputy Vice Chancellor, Jomo Kenyatta University of Agriculture and Technology
Chairman, Kenya Council of Science and Tech
PhD, Norwegian University of Science and Technology, Trondheim (Thermodynamics)
Expertise: Entrepreneurship, education, technology in Africa
Advisory Board
61 2 53 4Appendix