The BPO and IT Outsourcing industries have grown very fast over the last 2-3 decades. However there is still huge untapped potential globally for these markets.India is the undisputed leader in this industry with more than 50% market share.
Almost half of all urban jobs created in the 11 years from 1994-2005 were a result of the ITO and BPO industry in India – therefore the impact has been HUGEITO and BPO have created a very large number of indirect jobs as well. Facilitator should ask the class about examples of such jobs – housekeeping, transport etc. in IT companies. Real estate jobs to create housing for the new employees in cities etc.CSR is Corporate Social Responsibility (Social work). Many firms like Zensar and Infosys make immense contributions for the education and support of the underprivileged sections of society.ITO and BPO companies have set new standards in HR practices due to their global orientation. These companies are performance driven and encourage diversity and an open culture. Global customers do business with companies only when they encourage Diversity and Inclusion. For example General Electric (GE) asks for regular data from their vendors regarding the ratio of women workers.
The “big” ITO and BPO industries are going to get much bigger!
Note to facilitator: Engage the class in a discussion. Steer the discussion towards positive and negative SOCIAL consequences of outsourcing.Some common themes will emerge like infrastructure problems etc. – but these are not social consequences.The class should be able to get to one or more of the following:Loss of jobs in the developed worldRural to Urban “brain drain”Pressure on Urban infrastructure Exploitation of people in the developing countries (manufacturing)Benefits concentrated in only a few regions
Rural populations everywhere are moving to the cities in large numbers to seek employment and a better quality of life. This is causing huge pressure on urban infrastructure.
Even though many outsourcing initiatives only cause redeployment of the work force in the host country, in many cases it does lead to loss of jobs.Lately the developed economies are going through a severe recession which is making things worse. Unemployment is rising in almost all developed economies which are also the biggest outsourcers.Protectionist voices are being raised. For example in the US, the state of Ohio recently announced that the government will not outsource to any company that will do any part of the work outside the US
Many of you must have heard of the exploitation of workers in manufacturing facilities in Bangladesh, India etc. There was a big controversy about exploitation of Nike factory workers some time ago.The general perception is that work is moved to lower cost locations, and then it leads to exploitation of workers there.There are ethical issues being raised around outsourcing. One example is the outsourcing of childbirth through surrogate mothers in the developing countries. The next slide shows a video on this topic.
Note to facilitator: This is a video that explores the ethics of outsourcing childbirth to women in less developed countries. The purpose of this video is to tell the class that as outsourcing expands into new areas and new geographies, it will raise ethical issues, and outsourcing companies will have to be sensitive to social and ethical issues.The session is conducted by Michael Sandel.http://www.youtube.com/watch?v=ztgNTO3j3rE
The outsourcing vendor and the customer organization must be extremely sensitive to the impact of outsourcing on the client country.Every effort must be made to redeploy any staff who may be displaced. This can be done by investing in education and training of the staff.Similarly community service work must be undertaken in the client country as well to share the benefits of the outsourcing. Typically community service initiatives are only undertaken in the developing country.
Note to facilitator: Mr. GaneshNatarajan is the MD of Zensar Technologies and one of the leading global experts on IT outsourcing and new trends. Here he talks about being sensitive towards the host country during the outsourcing process.Ganesh_Natarajan_9_plus_10_plus_11.wmv
Reduce ill-feeling in developed countries by keeping work within the country. These locations are much cheaper in terms of infrastructure, real estate and employee salaries than the larger towns. Better telecom networks now make it possible for work to be done from anywhere.Reduce pressure on metros in countries like India. This is a challenge since the infrastructure in smaller towns and villages is poor.Leverage larger pool of workers – in countries like India, finding the right talent is a huge challenge. By going to smaller places, a much larger talent pool will become available.
Note to facilitator: Mr. GaneshNatarajan is the MD of Zensar Technologies and one of the leading global experts on IT outsourcing and new trends. Here he talks about taking outsourcing to the countryside.Ganesh_Natarajan_9_plus_10_plus_11.wmv
SRO works like this:The customer organizations and outsourcing companies consciously divert a part of their business to support SRO initiativesSmall firms are coming up that specialize in using the small locations, and developing the talent pool there to provide services. These firms have already established some level of credibility in doing business in these areas.Talented workers in the less developed regions are able find employment for these services.
Examples will follow.
Education, medical care etc. are supported by the business through profits generated.
Note to facilitator: This is intended to be a lively discussion around possibilities and challenges. Engage the class in this discussion.Ask the class if they have seen any of these initiatives. One question to ask is what will be the impact if SRO is not practiced more widely. What will happen after 10 years? What about 20 years?Challenges – education, infrastructure, scalabilitySide effects – services economy in rural areas, less pressure on urban infrastructure, less pollution/travel, less dissatisfaction in host country.
Learning Objectives• At the completion of this session you will be able to: – Understand the impact of outsourcing in the developed and developing economies – Understand the challenges resulting from outsourcing – Understand how the outsourcing industry is addressing these challenges – List some success stories of socially responsible outsourcing Socially Responsible Outsourcing
Topics Index1 What is the impact of Outsourcing? In this session we are going to:2 What challenges have resulted from • Understand the challenges Outsourcing? created by Outsourcing, and how Socially Responsible3 What is Socially Responsible Outsourcing is addressing Outsourcing (SRO)? these challenges4 How does SRO work?5 Some examples of SRO Socially Responsible Outsourcing
Topics Index1 What is the impact of Outsourcing? What challenges have resulted from In this topic we are going to:2 Outsourcing? • Understand the impact of the growth of the outsourcing3 What is Socially Responsible industry Outsourcing (SRO)?4 How does SRO work?5 Some examples of SRO Socially Responsible Outsourcing
What is the size of the market? BPO and IT Outsourcing Market Unrealized Market Potential ($305 billion) Unrealized Current India ($ 26.2 billion) Market Market Others ($18.8 billion)Source: IAOP World Summit 2009 Socially Responsible Outsourcing
Impact of IT & BPO on India• Accounts for 45% of total urban employment generated during 1994-2005• 2.5 million direct jobs have created 5 million additional jobs• CSR contributions of firms towards education and healthcare• New standards set for HR practices and significant progress in Diversity and Inclusion Socially Responsible Outsourcing
The potential of the Outsourcing Industry• The BPO and IT Outsourcing industry has the potential to triple by 2020• Current impact of ITO and BPO is huge, but only confined to urban areas and some smaller cities• Huge potential to extend the model to developing economies beyond India, China, and Philippines Socially Responsible Outsourcing
Topics Index1 What is the impact of Outsourcing? In this topic we are going to:2 What challenges have resulted from Outsourcing? • Look at the social challenges created by the growth of the3 What is Socially Responsible outsourcing industry Outsourcing (SRO)?4 How does SRO work?5 Some examples of SRO Socially Responsible Outsourcing
DiscussionCan you think of some challenges that have resultedfrom Outsourcing? Socially Responsible Outsourcing
Concentration of Outsourcing Locations• The BPO and IT Outsourcing work is concentrated in a few countries and metros• Over 170 million skilled workers in Africa and rural Asia are left out• The benefits of outsourcing are not reaching marginalized regions and disadvantaged populations Socially Responsible Outsourcing
Rural to Urban Migration• Rural to Urban “brain drain”• Severe pressure on Urban infrastructure Socially Responsible Outsourcing
Issues in Developed economies• Some types of jobs have been displaced from developed economies to developing economies, causing a need for re-skilling• Economic stagnation and rising unemployment has compounded the problem• Protectionist voices being raised in the developed economies Socially Responsible Outsourcing
Ethical Issues• Exploitation of workforce in less developed locations• Ethical issues in outsourcing – the limits of outsourcing Socially Responsible Outsourcing
Outsourcing Childbirth – is it ethical? Socially Responsible Outsourcing
Topics Index1 What is the impact of Outsourcing?2 What challenges have resulted from Outsourcing? In this topic we are going to:3 What is Socially Responsible • Understand what Socially Outsourcing (SRO)? Responsible Outsourcing is4 How does SRO work?5 Some examples of SRO Socially Responsible Outsourcing
Socially Responsible OutsourcingSocially Responsible Outsourcing (SRO) is an outsourcing model that yields social benefits in addition to its traditional commercial benefits.For example an SRO firm may:• Be located in a marginalized region• Employ from a disadvantaged population• Contribute to the development of the community Socially Responsible Outsourcing
SRO – Being sensitive to the client country• Redeploy, not displace staff• Invest in education and training• Invest in the community• Being sensitive in dealing with people getting displaced Socially Responsible Outsourcing
Benefiting the Host Country Socially Responsible Outsourcing 18
SRO – Using less developed Regions• Use less developed regions in developed economies – US States like Idaho• Less developed countries like Ghana, Bangladesh, sub-Saharan Africa• Tier-3 and smaller towns in countries like India and China Socially Responsible Outsourcing
Topics Index1 What is the impact of Outsourcing?2 What challenges have resulted from Outsourcing? In this topic we are going to: What is Socially Responsible • Understand how Socially3 Responsible Outsourcing Outsourcing (SRO)? works4 How does SRO work?5 Some examples of SRO Socially Responsible Outsourcing
SRO – taking outsourcing to the villages! Socially Responsible Outsourcing
SRO – How does it work? Small slice of Create more Small firms in $160 B opportunities the poorest services for talented places Industry rural workers Socially Responsible Outsourcing
SRO – How does it work? AFTER: Graduates earning six times SRO: average annual Young people income, pursuing work six hrs/day careers providing services to clients to BEFORE: support their Disadvantaged family and young people education with limited education and opportunities Socially Responsible Outsourcing
Topics Index1 What is the impact of Outsourcing?2 What challenges have resulted from Outsourcing? In this topic we are going to:3 What is Socially Responsible • Look at some real-life Outsourcing (SRO)? examples of how SRO works4 How does SRO work?5 Some examples of SRO Socially Responsible Outsourcing
SRO Case Study – Digital Divide DataLocation: Phnom Penh, Cambodia• Nonprofit Social Venture led by Harvard graduate Jeremy H.• Started in Phnom Penh in 2002 with 25 employees• Form processing, transcription• Education for sex-trafficked women, medical care, scholarships• Currently employs 500+ people at 3x minimum wage• Operationally self-sufficient with revenue from clients Socially Responsible Outsourcing
SRO Case Study – Himalayan TechiesLocation: Kathmandu, Nepal• Social venture led by American Ellie Skeele and Nepali MIT grad Rabi Kamacharya• Started in Kathmandu in 2000 with 3 people to provide jobs for educated but underprivileged Nepalis• Software and web application “I was working in Bangalore before. development; IT consulting services Now I am home, in Nepal, working on better technology and allowed to• Provides training, on-site recreational give my opinion about how things facilities, and direct exposure to clients should be done. I feel like I am respected at HT.” Prakash Gautam, Technical Lead at Himalayan Techies Socially Responsible Outsourcing
SRO Case Study – Drishtee BPOLocation: Saurath Village, Bihar, India• Award-winning social venture led by Satyan Mishra and Kunal Chawla• Started in 2000 to leverage technology in rural poverty alleviation• Types of services: Transcription, online research, survey and form Processing• Distributed rural delivery model reduces risk and taps into skilled rural workers• Provides in-depth training for workers with little prior experience Socially Responsible Outsourcing
DiscussionAll of you have seen the huge gap between the haves andhave-nots in today’s society. Please discuss the questions onthe following slide in light of this session on SRO. Socially Responsible Outsourcing
SRO Discussion Questions1. Do you think SRO is a practical solution to today’s social inequality? Why or why not?2. What challenges do you see in implementing SRO in the less developed regions of your country?3. If implemented widely, do you see some beneficial side-effects of SRO? Socially Responsible Outsourcing
Summing Up…• Outsourcing has created a huge impact in some economies like India. The potential market is much larger• The benefits of outsourcing have so far only been visible in a few countries and only in large cities• Socially Responsible Outsourcing promises to take the benefits of outsourcing to less developed regions, and less privileged populations• SRO also has promise to resolve other difficult problems like urban infrastructure, & scarcity of talent Socially Responsible Outsourcing
References• Socially Responsible Outsourcing from the Ground Up: http://www.iaop.org/firmbuilder/articles/34/187/1845/• Socially Responsible Outsourcing viewpoint: http://www.zensar.com/zensar-media/editorials/538-socially- responsible-outsourcing• Is your outsourcer a sweatshop?: http://www.computerworld.com/s/article/315482/Is_your_o utsourcer_an_IT_sweatshop_ Socially Responsible Outsourcing