What is impact sourcing, and why is it relevant?
Impact Sourcing is a socially conscious business practice where companies are intentional about hiring individuals living in areas with persistently high unemployment and limited career opportunities. In many developing countries, job seekers significantly outnumber formal job opportunities. Therefore, socially oriented outsourcing strategies aim to make a positive economic impact on disadvantaged and marginalized sectors of the population, in addition to eradicating inequities faced by women and minorities.
The dual objective of impact hiring is to deliver top-level performance for brands that contract with impact outsourcers while uplifting individuals limited by socio-economic barriers. While the concept isn't geographically limited—first-world countries also embrace impact sourcing—we're focusing on issues in developing countries in this article.
Unemployment in developing nations
The consequences of persistently high unemployment can be devastating, especially for youth. In some African countries, for example, unemployment is 30-40% across people of all genders aged 18 to 35. The problem is even more pervasive for women faced with higher unemployment rates. According to the African Development Bank, it is easier for men to get professional jobs in Africa than for women, even if women have equal or better qualifications. Nonprofit organizations such as UNWomen are among the entities helping to address the gender pay gap, societal barriers, unfair practices, and other inequalities faced by women in the global workforce.
BPO and ITO embrace impact sourcing
Tech-enabled services, such as call centers or business process outsourcing (BPO), and information technology outsourcing (ITO), are among the sectors with high visibility in impact sourcing. Socially oriented BPO companies are leading the impact revolution by broadening the recruiting pool, cultivating new talent, and creating a more diverse workforce. This, in turn, produces more inclusive supply chains for corporations wishing to partner with impact-sourcing companies, also referred to as impact sourcing service providers (ISSP).
According to Everest Group, there are over 350,000 impact workers worldwide: 58% in Asia, 17% in Africa, 11% in North America, and 7% in Latin America. Women represent 52% of the global impact-sourcing workforce, a larger number compared to traditional (non-impact) outsourcing providers.
Is impact sourcing a form of charity
Impact sourcing is not philanthropy. Impact-oriented BPOs are for-profit commercial enterprises held to the same contractual standards as traditional BPOs. The misperception of impact recruiting being a charitable endeavor could be because some outsourcing service providers have relationships with non-governmental organizations, nonprofits, and national trade associations, designed to provide education and support for economic growth, not charitable hiring.
Hiring standards and impact sourcing benefits to BPOs, brands, and communities
Socially conscious outsourcing strategies have many advantages that we will cover in a future article. Here are just a few key observations:
Hiring standards. At most BPOs with genuine impact sourcing practices, not all workers who apply are guaranteed a job. They undergo the same rigors of interviewing, testing, screening, background, and reference checks. In fact, some BPOs require workers to be screened through a "vetting academy" before being offered a call center position. Genuine impact BPOs receive a substantial applicant flow, necessitating careful human resource vetting of candidates to ensure the BPO meets the client's performance standards by recruiting, hiring, training, and developing agents that match each client's skill-set requirements.
Communities. For many individuals, an entry-level BPO or ITO job is usually their first formal employment opportunity. BPOs can create jobs much faster than manufacturing and other sectors, therefore, many governments are embracing BPO and other tech-enabled services such as ITO. In South Africa for example, many BPO workers have increased their incomes by an average of 200-300%, enabling them to support multiple family members. The inflow of new income can have a generational impact and change the dynamics of an entire community.
BPOs. By recruiting qualified individuals with a strong desire to work in a call center, BPOs and the clients they serve benefit from an economically self-sufficient and loyal workforce, higher agent retention, competitive performance, scalability, and other positive social and financial outcomes. This is especially important in the call center industry, which is traditionally challenged with high turnover, intense competition for labor, saturated outsourcing markets, rising costs, and employee morale issues.
Brands (clients). Geographic diversity continues to be a major objective for brands that use BPOs. Many ISSPs are in emerging BPO markets which provide an opportunity to de-risk and diversify from more saturated outsourcing regions. A diverse mix of locations and employees enables brands to match customer demand with talented BPO resources more seamlessly and effectively. Companies that select impact-minded BPOs can simultaneously accomplish corporate social responsibility and business objectives. Everest Group indicates that employers investing in impact sourcing report long-term cost savings, reliable service delivery, improved brand equity, positive social impacts, access to new talent, and a stable, engaged workforce.
Challenges of impact outsourcing — balancing performance with purpose
While job creation and social responsibility are important, execution and service delivery are of equal, if not greater, importance. Without impactful performance, impact sourcing will flounder. Social mission notwithstanding, corporate brands expect their service providers to deliver results and fulfill contractual requirements. And again, BPOs are for-profit commercial enterprises, not charitable organizations.
Brands report concerns that BPOs with impact hiring programs may overfocus on job creation and underwhelm on performance. Or that impact BPOs may not match up to traditional BPOs in service delivery, technology, compliance, innovation, market presence, client experience, leadership depth, and other areas. These concerns could materialize if the brand chooses the wrong BPO firms. It goes without saying that vendor selection is critical to outsourcing success—with or without the impact factor. High-echelon impact BPOs with a track record often lead the pack in head-to-head stacked rankings against other impact and traditional BPOs.
Impact hiring for some brands is an important factor in selecting a BPO, whereas other brands do not score BPOs as highly on social hiring practices. Every organization has unique requirements, and if a brand doesn't rate impact sourcing as a selection criterion, that is perfectly fine. In either case, the BPO must meet and exceed contractual standards and not assume that social impact practices are the high-water mark or a primary differentiator.
Why is impact a "thing" now?
Impact sourcing has gained momentum in recent years, but it isn't a new phenomenon. While the Rockefeller Foundation formally defined impact sourcing years ago, call center companies have utilized the concept for a very long time.
In fact, I am a product of impact sourcing, and many of you are probably benefactors of it.
My family emigrated to the U.S. from East Africa when I was five. As an underprivileged person in New York City, at age 18, I was hired by a call center outsourcing firm. In that call center were others like me — limited by socio-economic barriers and thankful for the opportunity to work and earn a decent wage.
This fortuitous job opportunity turned into a lifelong “accidental” career in the call center BPO industry, and I couldn't be more thankful or more appreciative for that chance. I am even more grateful that I can give back today by creating jobs and opportunities for others.
BPO companies have been hiring impact workers in the U.S. and globally for decades. India fueled the offshoring of BPO services in the 1990s, employing workers from all socio-economic backgrounds, including those previously marginalized and from poorer communities. The same could be said about the Philippines, Latin America, and, more recently, Africa.
Are all call center reps impact workers?
Not all call center workers are impact hires. Most BPOs are traditional, not impact-focused, which does not make them any less qualified. It simply means that the BPO may not have operations in disadvantaged communities and likely has other types of social impact programs.
Even within many impact organizations, not all workers come from disadvantaged backgrounds. Impact workers have the necessary skills, talent, and qualifications for entry-level and even management positions. However, socio-economic hurdles and lack of opportunities prevent them from finding long-term, stable, gainful employment.
Can impact workers handle complex tasks?
Impact workers and impact BPOs aren't lesser skilled than traditional workers and BPOs. We advise brands not to assume that only large BPOs or certain types of workers in traditional BPO markets can perform complex outsourcing tasks.
When new outsourcing markets emerged years ago, corporate brands would outsource transactional work to up-and-coming firms requiring lower-skilled workers. But over the past 15-20 years, emerging markets and smaller/mid-sized BPOs have matured and can support a variety of workstreams outsourced today.
Agents hired by impact outsourcing enterprises are engaged in the most technical and complex outsourcing needs that require four to six weeks of training. Like traditional BPO agents, impact agents are on equal footing in applying their skills and talent to achieve the desired economic value, outsourcing performance, and social impact.
Are impact BPOs too small?
Not at all. Our impact-oriented BPOs range in size from 10,000 to 100,000 employees. In fact, many of these BPOs are winning market share and attracting new business from the largest outsourcing buyers. In many instances, mid-sized BPOs — with and without impact hiring — are outperforming larger Gartner-rated BPOs.
Brands today want customer intimacy, agility, speed, prioritization, flexibility, customization, de-risking, ease of business, and scale. Many large outsourcing buyers report to us that some of the biggest BPOs have frequent leadership turnover, more corporate bureaucracy, and, yes, staffing issues. That is counterintuitive given that large BPOs often tout horsepower, size, and scale as a differentiator. The debate over big vs. medium vs. small BPO is ubiquitous, and we can cover the topic more in a different article.
Impact outsourcing isn't what you do; it's who you are. We're coining a phrase: "Born" Impact Sourcing Companies — organizations created with impact, purpose, and social mission in their DNA. These authentic impact-oriented companies will continue to lead the market while delivering the high performance expected from discerning brands that utilize BPO services.
We understand brands' concerns when exploring BPO solutions in emerging markets. We were among the first to suggest South Africa as a BPO destination in 2009, Egypt in 2004, Eastern Europe in 2005, and even prior, nascent, and newer markets in LATAM and Asia since 2001. Most brands seek competitive performance and cost and, of course, high quality, safe, secure, compliant, and experienced BPOs with well-balanced business and social responsibility practices.
Again, impact should not be your only key differentiator. We've discussed how important it is for all of us to be socially conscious corporate citizens who look out for those less fortunate and work to eradicate inequalities. At the same time, BPOs that hire disadvantaged workers are only as good as the performance of their workers and leadership teams.
Regardless of what business strategy or corporate social mission you choose to follow, today's BPO market can be unforgiving for service providers who fail to lead, differentiate, and innovate. Hence, why impact sourcing requires impactful performance.