Global Links: Measuring the impact of sourcing on the world’s workforce

While it is almost a given that a company’s procurement decisions can contribute to poverty alleviation and inclusive growth around the world, a new group is actually doing something about it.

The Global Impact Sourcing Challenge (GISC) is the first business network to specifically focus on escalating impact sourcing as a way to increase employment and career development opportunities for disadvantaged workers. It is seen as the largest official commitment to “Sustainable Development Goals” outlined by the United Nations, as its main focus is on inclusive job creation.

“It is a great example of collaboration,” says Tim Hopper, responsible sourcing manager at Microsoft. “Through intentionally choosing impact sourcing, and increasing the number of impact worker jobs, companies are able to create social benefits on top of generating business value.”

Containing job erosion

According to the UN, roughly half of the world’s population still lives on the equivalent of about $2 a day, and with global unemployment rates of 5.7%, having a job doesn’t guarantee the ability to escape from poverty in many places. This slow and uneven progress requires multinationals to rethink and retool their economic and social policies aimed at eradicating poverty.

“A continued lack of decent work opportunities, insufficient investments and under-consumption lead to an erosion of the basic social contract underlying democratic societies that all must share in progress,” UN economists note.

Even though the average annual growth rate of real GDP per capita worldwide is increasing year on year, there are still many countries in the developing world that are decelerating in their growth rates and moving further from the 7% growth rate target set for 2030. As labor productivity decreases and unemployment rates rise, standards of living begin to decline due to lower wages.

Within the UN community, it is agreed that sustainable economic growth will require societies to create the conditions that allow people to have quality jobs that stimulate the economy while not harming the environment. Job opportunities and decent working conditions are also required for the whole working age population.

“There needs to be increased access to financial services to manage incomes, accumulate assets and make productive investments. Increased commitments to trade, banking and agriculture infrastructure will also help increase productivity and reduce unemployment levels in the world’s most impoverished regions,” the UN concludes.

Compelling case study

In one of several case studies compiled by GISC, Microsoft details how from a small start of four or five suppliers, it now has over 100 suppliers involved in impact sourcing. These are mainly suppliers of business process outsourcing (BPO) services with the type of work ranging from generic accounting and call centers to digital work including image-tagging and data input. Microsoft also extends impact sourcing into real estate facilities and other areas.

“People do impact sourcing because these companies can deliver business value,” says Hopper. “The employees are passionate and driven because they come from all walks of life. They are highly skilled and motivated to do good work.”

Sutherland Global Services has a BPO enterprise throughout Jamaica that has grown from 24 employees in 2012 to more than 5,000 today as a consequence of “inclusive employment initiatives.”

By enrolling in a three-day Microsoft Digital Literacy course, workers can become certified in the use of Microsoft products. Furthermore, Sutherland Jamaica has made a commitment to directly hire or find employment for at least 10% of graduates from the program.

Through these programs, and psychometric testing to assess aptitude, Sutherland identifies and hires workers who have previously been jobless over a long-term period.

Adrian Michael Knight, a Microsoft Xbox consultant at Sutherland Jamaica, was just one such success story. Today he helps customers who call in with queries about their Xbox accounts. “After leaving high school, I was unemployed for three years,” he recalls. “Today, I hope to be managing a portfolio on the Xbox program as a team leader.”

Bottom line

Procurement teams of global organizations have long held the responsibility for delivering multiple sourcing objectives, including faster, more cost effective, more reliable and more sustainable business services. The introduction of impact sourcing has enabled procurement professionals to achieve all of these objectives plus have a tangible social impact through their choice of suppliers.

The marketplace is growing by incremental movements, as evidenced by a handful of diverse global players, including iMerit, a data services company pledging to hire 2,500 new impact workers in the U.S. India and Bhutan by 2020. Five Splash, another Indian company, pledges to hire 750 workers for its business process management company, and Digital Divide Data, a BPO provider with a social model, pledges to hire 500 impact workers in the U.S., Kenya, Cambodia, and Laos next year.

Before embarking upon a similar journey, GISC advises the following:

• Identify suppliers. Target suppliers who are already impact sourcing service providers (ISSPs) or offer impact sourcing.
• Join GISC. In order to collaborate with other companies, find impact sourcing suppliers and use the impact sourcing standard to explain minimum requirements.
• Define opportunities. Identify which BPO and other processes impact sourcing could apply to.
• Communicate social impact. Tell purchasing employees about the social impact they’re having on impact workers around the world by their purchasing decisions.

Finally, it’s worth noting that the GISC is itself a collaborative initiative between buyers and providers of business services, governed by a steering committee of elected participants from member companies and financially supported by The Rockefeller Foundation. San Francisco-based BSR—profiled in “Global Links” in the past—provides executive leadership and secretariat support for GISC. •