Guiding Principles For Socially Responsible Outsourcing v1.0

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

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