The Business Process Outsourcing industry (BPO) is undergoing a transformation that could soon be adopted by other industries. Many BPO companies are now implementing a new hiring model commonly referred to as impact sourcing, designed to combine socially responsible hiring practices with an opportunity to engage untapped labor markets.
But is there a business case for being socially responsible through hiring strategies? Many companies are finding the model competes well with traditional labor practices in terms of cost, performance, and hiring risk.
What is Impact Sourcing?
Impact sourcing is an inclusive employment practice through which companies intentionally hire people who would otherwise have limited prospects for sustainable jobs. For example, by providing jobs and training to youth, impact sourcing can be the start of a meaningful career path leading to a lifetime of employment.
Impact sourcing is generally defined by two characteristics:
- Creating jobs in underserved communities where there is high unemployment.
- Or, in established BPO labor markets, intentionally hiring workers who have few prospects for sustainable jobs and providing the training needed for them to be successful.
Examples of Impact Sourcing
There are common misconceptions about this hiring model; impact sourcing is not just about employing people in developing countries. The model is relevant in every country and many companies employ this practice in the United States. For example, intentionally hiring disabled workers in the US, or recruiting youth in areas of high unemployment are both classified as impact sourcing.
Global examples include training and job placement for victims rescued from human trafficking, recruiting young people in Sub-Saharan Africa for IT jobs, and hiring women in communities where there is a disproportionately high unemployment rate for them.
The Global Impact Sourcing Coalition
In 2013, The Rockefeller Foundation launched the Digital Jobs Africa and global impact sourcing initiative to create sustainable employment opportunities and skills training for youth in areas of high unemployment. The global BPO industry is now beginning to embrace this hiring practice and encourage adoption in other industries.
This led to a partnership between the Rockefeller Foundation and BSR (Business for Social Responsibility)to launch the Global Impact Sourcing Coalition (GISC) in September 2016. The GISC now includes membership of many of the largest BPO organizations who represent over 800,000 BPO workers, about 6% of the global industry in the first six months since inception. These companies share a common purpose and commitment to impact sourcing to bring jobs to previously overlooked communities.
Is there a Business Case for Impact Sourcing?
Impact sourcing is not philanthropy and cannot be just about corporate social responsibility. The industry must demonstrate the financial and operational business case for this hiring model. As it happens, there is a strong business case for impact sourcing. Several recent studies including one by the Everest Group in 2016 have proven the benefits.
The cost of impact sourcing is comparable to traditional hiring models for the BPO industry yet it provides business advantages that include 15% – 40% lower attrition rates, higher levels of employee motivation, and access to new sources of untapped labor markets. As a result, the total cost of impact sourcing workers is often less than traditional workers because they stay longer on the job, reducing recruitment and training expenses. Their longevity in the workplace also translates to higher levels of proficiency over time.
How you can Leverage Impact Sourcing
With so much emphasis put on corporate social responsibility today, procurement leaders are looking for ways to show they are making a positive impact on society. There is something that each of us can do to help reduce youth unemployment and poverty and for many, impact sourcing offers this opportunity. A simple step is to encourage your BPO suppliers who employ outsourced workers, to add impact sourcing to their labor market strategy and ask them to quantify how many impact sourcing workers are attributed to your business. To learn more about impact sourcing and the Global Impact Sourcing Coalition: http://gisc.bsr.org/