“Impact Sourcing” = outsourcing for social betterment

Impact sourcing refers to “the strategy of harnessing the Internet to bring low-cost data management jobs to remote and impoverished communities,” as David Bornstein wrote in the New York Times. He described two social enterprises that extend computer-based employment to people with modest educations in developing countries:

One of them is Digital Divide Data, a pioneering organization that employs 900 people in Cambodia, Laos and Kenya and was founded way back in 2001. The other is Samasource, a fast-growing enterprise that was established in 2008 and has already received recognition for its ability to manage “microwork” in a kind of virtual assembly line that spans 1,600 workers across Haiti, India, Kenya, Pakistan, Uganda and South Africa ― some of them living in refugee camps.

Both Digital Divide Data (DDD) and Samasource were founded by former management consultants whose experiences in the developing world led them to redeploy their skills to alleviate poverty.

Essentially, these companies help people from disadvantaged backgrounds gain a foothold in the global economy.  It is offshored outsourcing, but with an
ethical aspiration:

Samasource, which is headquartered in San Francisco, has demonstrated the ability to generate business from companies like Facebook, Google, Intuit and LinkedIn, and distribute it across independently-owned outsourcing firms. (It currently has 16 partners.) In exchange, Samasource requires that partners adhere to an ethical code of conduct. They must reinvest at least 40 percent of revenues in training, salaries, and community programs. They must hire workers who were earning less than $3 a day. (Once employed, they generally earn $5 a day, and often more.)

DDD takes a different, more directed approach:

It looks for high school students who would “otherwise not have gone on to college,” explains Hockenstein, and offers them a four year work study program, during which they spend six hours a day working and the rest of the time pursuing higher education. DDD has graduated about 400 people who earn four times the average income in their countries. Because DDD spends more time with employees, it can provide them with deeper skills training. This allows them to take on more complex work, like electronic publishing. DDD also provides career counseling services.

This is an interesting approach which essentially views “the bottom of the pyramid” as a potential pool of productive talent or “producers,” which is, in my opinion, much more attractive that the typical view of potential buyers (of branded stuff at higher prices) or “consumers.”

It also reminds me of a parallel development of more than 20 years ago in the electronics industry: electric designs can rather easily be cut up in components (modules) with well-defined interfaces (current, resistance, frequency, etc) that can be performed by different people in different places—the result is the disintegration of the computer industry.  The same is happening with digitizable service work…

As you can imagine, “impact sourcing” also has been criticized.  In today’s NYT, David describes some of these criticisms: this exploits poor people in the developing world and it reduces jobs in the developed countries.

Apparently, more than 70% of Americans believe that outsourcing harms the US economy. Obviously, as I emphasize in class, this incorrectly equates outsourcing
(who does the work) with offshoring (where is the work performed) and assumes that any work performed offshore implies a loss of domestic jobs.  David Bornstein, however, correctly points out that this need not be the case, especially if the offshored work is work that just wouldn’t be performed domestically because its cost would outweigh its value.  Accurately digitizing large swaths of information falls into this category:

“We’re focusing on the lowest rung of outsourcing work that even the big Indian companies don’t want any more because it’s priced too low for them,” explained Leila Janah, the founder of Samasource, a nonprofit organization that currently channels “microwork” ― small tasks like entering, cleaning or verifying data ― to 1,600 people in Haiti, India, Kenya, Pakistan, Uganda and South Africa. “At higher prices, it simply wouldn’t make sense for many businesses to offer most of this work,” she said, because they wouldn’t be able to make a profit on the output. Now that such microwork can be distributed and managed affordably around the world, it’s possible to create jobs that would otherwise have been handled poorly by machines or not handled at all.

“To our knowledge, none of the assignments we’ve taken were for work previously done in the U.S.,” explained Jeremy Hockenstein, the founder of Digital Divide Data, which employs 900 people in Cambodia, Laos and Kenya. He offered an example. “The Harvard Crimson would never have paid $5 million to digitize its archives — but they could afford to pay a few hundred thousand dollars to do it.”

I admire these companies and hope many will follow in their footsteps.  (But, I know that others surely will exploit this for their own benefit, such is life…)