A presentation I made to the Stanford Graduate School of Business on November 20th, 2008, on starting Samasource, a social venture in the ICT services sector. Feel free to use any of this material, with author acknowledgment. For more information: www.samasource.org

1. Social Venture 101: Starting a
Social Venture
Leila Chirayath Janah
Founder & CEO
source responsibly. TM

2. What I’m Going to Talk About Today
How I ended up here
Overview of business process outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

3. How I ended up here
Overview of business process outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

4. 10 years ago...
Los Angeles, CA Akropong, Ghana

5. Competing Views on Development
vs.

6. Aha! Moment
Technology and knowlege jobs can lift entire families
out of poverty.
Home Work
Bombay, India Bombay, India
Dharavi, South Asia’s largest slum Call center floor
Over 2.5M people living on 175 hectares Many of India’s 1M BPO workers commute
from slum areas

7. The next Bangalore?
1 million English-speaking youth finish high school and college in Ghana and
Kenya each year. They can’t go to Bangalore, much less the U.S.

8. How I ended up here
Overview of business process/IT outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

9. What is outsourcing, anyway?
“The services trade at arm's length that does not require geographical proximity of the buyer
and the seller.” (Jagdish Bhagwati, Columbia University economist)
Business Process Outsourcing (BPO) is practiced by most of the Global 1000 and includes a
wide range of services:
Creative services, software and web application development, call
Client-facing processes
center, web-design and maintenance
Decision-based processes HR services, live chat and SMS services
Transcription, expense processing, video captioning, medical billing,
Rule-based processes
online reseach, translation
Data entry, transfer and coversion
Data entry, document management and scanning
tasks

10. Where is it done?
$120-150B global business process outsourcing market
Eastern Europe
USA $3.3B
$90B
China & Southeast Asia
$3.1B
Latin America &
India
Caribbean
$17B
$2.9B
Middle East & Africa
$425M
Source: NASSCOM-McKinsey Study 2005; http://www.indobase.com/bpo/global-market-of-bpo.html

11. Key Players
Large Outsourcing Firms
...7 billionaires
Online Marketplaces 11% 1%
US
46% Canada, UK, Australia
25%
Europe & Latin America
India
Africa
17%

12. How I ended up here
Overview of business process/IT outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

13. The problem: many poor regions are left out
Perception that economically
277% of per-capita income spent depressed regions are open for
on tertiary education in some
countries aid, not trade
+ +
>130M skilled workers in Africa Few opportunities for
and rural Asia smaller firms to connect to US clients
+ +
60% unemployment among No socially responsible
university and high school graduates option that promotes economic
development
=
=
Talent Client
Surplus Deficit

14. The problem: talent surplus (part 1)
32 million rural Chinese leave their towns each
year for big cities, in search of work
45 million rural Chinese youth are currently
enrolled in senior secondary schools
Source: Wang, Dewen. “China’s Rural Compulsory Education: Current Situation, Problems and Policy Alternatives.” Working Paper Series No.36. 2003
The Organization for Economic
Cooperation and Development (OECD)
reports that there are 130 million surplus
workers in rural India
Source: “Rural BPO.” Drishtee BPO Presentation. March 2008.
Over 990,000 young people graduate
from secondary and tertiary institutions in
Ghana and Kenya each year and face
staggering unemployment
Source: Kenya Ministry of Education; Ghana Ministry of Education; Samasource research November 2007 - March 2008.

15. The problem: talent surplus (part 2)
“You find people completing
“The dilemma in Kenya, and Africa at large, their university education with
is that the cost of education is getting so honors, and the best they
high...upon finishing, you can’t get a job that can get is a one-off job doing
will offer returns commensurate with what something unrelated to what
you’ve done in school.” they studied. So you end up
going back to the rural area
Freda Adundo, IT degree candidate, Kenya where you grew up to do
farming.”
Peter Kimwele, business
degree candidate, Kenya
“It’s like the Western countries are missing
a generation which they want to import
from Africa...our economy and our brains
are in America. Why can’t people earn an
income while they stay here?”
Martin Ntembe, business degree
candidate, Kenya
Source: Samasource interviews (Kenya School of Professional Studies: Nairobi). November 2007 - March 2008.

16. How I ended up here
Overview of business process/IT outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

17. One (small) solution:
Mission
to create knowledge jobs for skilled, economically disadvantaged people
to create business value for US enterprises through low-cost, high-quality business
process and IT outsourcing services
Method
a new socially responsible outsourcing concept among
Defining and promoting
US enterprises
small- and medium-sized outsourcing firms (SMOs) in
Training
economically disadvantaged regions
Connecting SMOs to a global marketplace for services

18. a new “socially responsible outsourcing” concept
Defining and promoting
among US enterprises
small- and medium-sized outsourcing firms (SMOs) in economically
Training
depressed regions
Connecting SMOs to a global marketplace for services

19. One solution: socially responsible outsourcing
Low-income
Foreign capital Small firms
Individuals
$$$
a small slice of the
$160B services
poor people with
outsourcing industry
micro-, small- and untapped talent
mid-sized businesses
Socially responsible outsourcing promotes economic
development and reduces poverty

20. One solution: socially responsible outsourcing (2)
Socially responsible outsourcing creates positive social impact by:
Outsourcing jobs in sub-Saharan Africa
1
Ghana
directly generating jobs for skilled Senegal
workers in low-income regions with Kenya
high unemployment levels Uganda
0 1,000 2,000 3,000 4,000
2 1 direct job 2.5 indirect jobs
indirectly generating jobs for
semi- and unskilled workers
3
reducing skilled-labor emigration, or
“brain drain,” in low-income regions

21. Wait, what does “socially responsible outsourcing” mean?
Right now, it’s a nascent set of guiding principles for buyers who want to help low-income
and socially disadvantaged people pull themselves out of poverty.
Buyers are encouraged to follow any 2 of the 3 principles in choosing a service provider for
outsourcing work.
Principle Clarification
1
Includes firms located in: (a) a developing country, as
Hire firms in poor or very defined by the World Bank*; (b) an economically
poor regions distressed region (e.g., Ceara, Brazil; Bihar, India)
2
Hire micro-, small- and mid-
Includes firms that employ between 1 and 249 people
sized firms
3
Hire firms that are owned “Disadvantaged” means: belonging to an ethnic or
by, or employ a majority of, religious minority group, living at or under the poverty
disadvantaged people line, physically or mentally disabled
*http://www.imf.org/external/pubs/ft/weo/2008/01/pdf/statapp.pdf

22. What kinds of service providers are included?
Principles Example
1 + 2 Daproim Africa, a 10-person
Hire firms in poor Hire micro-, small- digitization company headed by a
or very poor and mid-sized firms person from rural Kenya
regions
1 + 3 Digital Divide Data, a nonprofit
Cambodian data entry firm that
Hire firms in poor Hire firms that are
or very poor owned by, or employ a employs 500+ socially
regions majority of, disadvantaged people
disadvantaged people
2 + 3 Preciss International, a 15-person
data entry firm headed by 2 women
Hire micro-, small- Hire firms that are
and mid-sized owned by, or employ a Oriak Digital, a 10-person online
firms majority of, research and transcription firm
disadvantaged people
headed by a Kenyan woman
For case studies, see the following slides.

23. Current Focus
Defining and promoting a new “ethical outsourcing” concept among US enterprises
small- and medium-sized outsourcing firms (SMOs) in economically
Training
depressed regions
Connecting SMOs to a global marketplace for services
Samasource is piloting a web-based brokerage
process with 8 small firms in Kenya, India, and Nepal

24. Brokerage model
Our platform and sales team will help US firms identify, manage and
pay providers...
US enterprises
due diligence > quality assurance > payment solutions > web-based tools
SMOs in Africa and rural Asia firms
direct jobs
indirect jobs (x2.5)
...and create needed knowledge jobs in poor regions

25. Continued
Brokerage model: results to date
Services offered include data entry, digitization, transcription,
website and software development
5
2 contracts signed: Website development
1-4 plus industry knowledge 3 proposals out: Web testing (750 Industries); Website redesign
American Association of University Professors
4
Client-facing processes
3
Decision-making and problem-solving processes
2 proposals out: online research (World Trade
2
Specific rule-based processes
Press); fact-checking (Google)
3 contracts secured: validation of books (Benetech)
library card conversion (Digital Divide Data)
1
1 proposal out: additional book digitization
Data entry, transfer and conversion tasks
(Benetech)
Projects and proposals underway or in development

26. Brokerage model: prospective market
Nonprofits
Rationale: Nonprofits face increasing competitive pressure to outsource and
have mission-related reasons to outsource responsibly; existing options in
India, China are risky from a PR perspective
Size: 1.4 million registered 501(c)3 organizations spend $5B on
administration & overhead annually
Over 98% of nonprofits outsource at least some IT-related functions
Socially Responsible Companies
Rationale: CSR movement moving deeper into global supply chains;
increasing number of “triple-bottom line” companies concerned with social,
environmental, and financial impact
Size: Networks like Business for Social Responsibility have 200+ members
committed to CSR practices; sector could spend up to $6.6B annually on
responsible outsourcing

27. Stories from the Field
“Samasource is really adding “One of our workers, Mona, has two kids
value by allowing and is a single mom. She really cried when
organizations to focus on our contracts were terminating earlier this
delivering quality services to year. This is her life, this is her livelihood. We
clients rather than procuring need to generate a sustainable pipeline for
business.” business development to ensure this doesn’t
keep happening.”
Gagan Singh, Source for
Change, India Gilda Odera, Skyweb Evans, Kenya
“Business development is a major challenge
for us. We can’t afford to send salespeople
to the US every few months to drum up
businesses and work on branding”
Steve Muthee, Daproim, Kenya

28. How I ended up here
Overview of business process/IT outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

29. Case Study: Oriak Digital
View Video >> http://www.youtube.com/user/samasource

30. Case Study: Daproim Africa
• Headed by Steve Muthee, a young entrepreneur
from rural Kenya
• Started in 2006 with 4 people
• Types of services: form and survey processing,
transcription, digitization (tiers 1-2)
• Before Samasource; average revenue per project
$4K
• First large project with Samasource: $13K
• In pipeline: projects between $10K and $100K
• Plans to grow to 20-30 people

31. Case Study: Preciss International
• Run by two women, Ivy Kimani
and Mugure Mugo
• Started in 2002 with 5
employees
• Types of services: online
research, data processing,
subtitling
• 4 proposals/trials initiated
through Samasource
• In pipeline: projects between
$10K and $100K
• Planned growth to 70-80
employees

32. Case Study: Digital Divide Data
• Nonprofit social venture started by
Harvard grads in Phnom Penh
• Employs 500 people at 3x Camodian
minimum wage
• First project: digitizing old issues of the
Harvard Crimson
• Operationally self-sufficient with
revenue from services such as
digitization, double-key data entry, and
survey management
• Social programs: education for sex-
trafficked women, on-site medical care,
scholarship program -- financed
through donations

33. How I ended up here
Overview of business process/IT outsourcing
The problem with outsourcing for development
One (small) solution: Samasource and Socially
Responsible Outsourcing
Case studies
Achieving impact
Questions?

34. Results to Date
2007 2008 early 2009 late 2009
Milestones Reached Pilot Alpha launch Beta launch Full launch
July-November - 5
contracts; 15.5K visits ~10 vendors 10-25 vendors 25+ vendors 35+ vendors Who
March-July - oDesk data entry, data entry, data entry,
additional services
transcription, software transcription, software transcription, software
partnership, GSVC finals
Nairobi pilot & Facebook
Developer Garage; 50%
increase in Kenyan
service providers since Kenya, India Kenya, India East Africa, India East Africa, India Where
then
Feb - Deployed client
survey (40+ responses)
Offline (MOUs with Online Online with Online with
Jan ’08 - Web platform specific firms), supplemented by minimal offline minimal offline How
with Kenyan vendor oDesk offline inputs support support
Nov/Dec ’07 - Won
Business in
Self-reported with Certification and
Development Challenge; Self-reported with
5-10% annual 5-10% annual
conducted feasibility Self-reported background Standards
auditing by third auditing by third
study in Kenya with 20+ check/follow-ups
party party
vendors

35. Team
Leila Chirayath Joy Sun
CEO Initial director
Visiting Scholar, Stanford University
Director, Clinton Foundation HIV/AIDS Initiative
Consultant, Katzenbach Partners
Stanford Graduate School of Business (MBA
World Bank Development Research Group
expected June ’10)
BA, Harvard University (African
Development Studies) BS, Georgetown University (Foreign Service)
Expertise: Outsourcing, social Expertise: Non-profit management and
enterprise, development operations, development
Alice Wang Henry Thairu
Business Development and Finance Kenya Program Advisor
Investment Associate, FT Ventures Deputy Vice Chancellor, Jomo Kenyatta
Investment Banking Analyst, JP Morgan University of Agriculture and Technology
Consultant, UN Industrial Development Chairman, Kenya Council of Science and Tech
Organization PhD, Norwegian University of Science and
BS, Economics, BS Finance, MIT Technology, Trondheim (Thermodynamics)
Expertise: Outsourcing, finance, and Expertise: Entrepreneurship,
business strategy education, technology in Africa
Advisory Board
Premal Shah Darren Berkowitz
President, Kiva Founder & CEO
Emeka Okafor Katherine Barr
Director, TED Global Partner, Mohr Davidow Ventures
Ken Banks Mohamoud Jibrell
Developer of Frontline SMS CIO, Ford Foundation

36. Key Lessons for Aspiring Social Entrepreneurs
• The hybrid model: to be or not to be?
• Avoid agnosticism - look at critical decision factors and choose
• For SS: team priorities, cost to launch, risk inherent in business
model
• If possible, identify a revenue model
• Incubation time - overestimate
• Refine your pitch (to team members)
• Recruit an all-star advisory board
• Partner whenever possible
• Take advantage of free stuff
• Google tools, Salesforce, conferences, etc.
• Find a peer group
• Physical space
• Measuring progress/benchmarking
Above all, know that this is one of the hardest things you’ll ever do, and
prepare for it.
(living in a van, selling your guitar, tutoring on the side, etc.)

37. Thank you!
Leila Chirayath
leila@samasource.org
www.slideshare.net/leila_c
www.samasource.com
www.youtube.com/user/Samasource
Facebook.com >> Samasource
www.sourceoutpoverty.org