Socially responsible global outsourcing
- Outsource Magazine
- On January 23, 2015
Since the first software contracts were outsourced to India in the late 1970s, global outsourcing has expanded across several dimensions. It has expanded geographically to encompass many new entrants in Asia, Africa and Latin America/Caribbean; and also marginalised areas in the global North. It has expanded in scope to encompass a wide variety of IT-enabled services including call centres; digitisation; and business, knowledge and legal process outsourcing. These expansions of geography and scope – enabled by digital infrastructure and skills – have in recent years led to a focus on the relation between global outsourcing and development.
Global outsourcing was originally seen only in light of neo-liberal and human capital paradigms: adding national export earnings, GDP and skills. Today it is increasingly related to inclusive and sustainable development paradigms and to corporate social responsibility (CSR). The movement is gaining momentum: for example, in 2009, the International Association of Outsourcing Professionals (IAOP) established a CSR Committee with the goal of defining a CSR guide for the outsourcing industry which in 2010 included an evaluation of the CSR of applicants to the Global Outsourcing Top 100. In 2012 IAOP announced the inaugural Global Outsourcing Social Responsibility Impact award. In 2013, the IAOP published the first Outsourcing Professionals’ Guide to Corporate Responsibility.
In parallel, the Rockefeller Foundation has generously funded a programme of research and sponsorship to incubate “impact sourcing” organisations. Impact sourcing arrangements are designed to employ people at the base of the pyramid with limited opportunity for sustainable employment as the workforce in BPO centres to provide high-quality, information-based services to domestic and international clients. Thus, the goal of impact sourcing is to achieve a social mission through commercial activities. Major industry players are involved in producing reports and implementing practical schemes – for example Accenture and India’s NASSCOM.
This backdrop formed the rationale for a two-day workshop in the socially responsible outsourcing unit at University of Manchester in October 2014 bringing together academics and practitioners to discuss this important area. The workshop was organised into a series of presentations and practitioner panels and thus the event was broad in scope.
Highlights included a discussion by Competa IT of the first example of the extension into software development of the Fairtrade standard familiar to many in relation to coffee and other commodity products and Competa IT’s development centre in Kenya is enveloped into the Fair Trade principles.
Academic and practitioner presentations focussed on Palestine as a location for global software development including the difficulties entrepreneurs face in setting and sustaining businesses in a war zone. Another highlight was the presentations on “human cloud” by Avasant and University of Amsterdam. Human cloud refers to microwork sites such as Freelancer, oDesk etc. Avasant gave insight into the size and scale of this area: it employs 20 million people in four main categories of operations (facilitator, arbitrator, aggregator, governor) with estimated human cloud revenue in 2015 of $2,555.36 million. The findings from University of Amsterdam research based on analysis of the oDesk platform opens up the life of oDesk workers. On the one hand freelancers gain new employment opportunities but intense global competition drives down prices and limits financial gains for most contractors.
Presentations from Manchester, Loughborough and LSE reported on in-depth analysis based on actual fieldwork visits of impact sourcing BPO centres in remote parts of India and Pakistan. These studies in various ways explored the challenges related to business models, benefits to the local workforce but also the tensions with local communities. Research findings demonstrated the fallacy of assuming that impact sourcing will be universally welcomed by local communities and the need to manage local cultural particularities. Managers may often “walk a tightrope” while striving to do well commercially benefitting from skills and reduced attrition rates at the same time doing good for marginalised people. The presentation by Rural Sourcing explored the particular dimension of the advantage presented by nearshoring – offering staff “location vs vocation” in software development centres outside of the major USA cities taking advantage of lower costs and skilled talent. Clients are attracted to the language, culture and time zone advantage.
Presentations from impact sourcing organisations DDD (USA, Laos, and Cambodia) and Datamation (India) made the point that customers do not always embrace the CSR dimension – it must be accompanied by a level of service and price equal to competition. Some customers do however explore the CSR synergy and future articles in this publication will explore this issue.
About the Author
Brian Nicholson is Professor of Information Systems at Manchester Business School, UK. Brian’s research themes to date are focussed on the global outsourcing of business services, and Information and Communication Technology (ICT) for development. He has published numerous academic publications in prestigious journals and two authored books (Global IT Outsourcing, Cambridge and recently Sustainable Global Outsourcing, Palgrave). He is co director of the Manchester University Centre for Development Informatics that contains the Socially Responsible Outsourcing Unit which Brian co-founded.