Corporate Responsibility Magazine published its annual list of America’s ‘100 Best Corporate Citizens’ last week, with Microsoft moving up three places to claim top spot for 2015.
Now in its 16th year, the widely regarded ranking places an emphasis on the concept of ‘corporate accountability’, and Microsoft’s accolade represents quite a turnaround for a company that received plenty of negative press back in the 1990s, with the vendor performing particularly strongly in the areas of employee relations, human rights, and the environment.
The idea of transforming perceptions through the implementation of corporate social responsibility (CSR) initiatives is nothing new; indeed, the term itself dates back as far as the 1960s. However, the concept has received fresh impetus in recent years, spurred in no small part by the emergence of socially responsible outsourcing (SRO). But what exactly is this new arm of the outsourcing industry and why should organisations even begin to care about it?
Simply put, SRO is an outsourcing model that creates social benefits by employing workers from socioeconomically disadvantaged populations in profitable outsourcing centers to provide high-quality, information-based services to domestic and international clients. Also known as ‘impact sourcing’, the concept was first formally defined by the Rockefeller Foundation in 2011, and its implementation has been gaining traction ever since as a growing band of organisations strive to demonstrate their CSR credentials while embracing the IT outsourcing (ITO) and business process outsourcing (BPO) models of service delivery.
This burgeoning industry has already thrown up numerous success stories around the world, and with the Rockefeller Foundation announcing a $100 million commitment to further develop impact sourcing during last year’s IAOP Outsourcing World Summit, there are certain to be more on the horizon. One such company is Digital Divide Data, a social enterprise that delivers digital content, data, and research services to clients worldwide while upholding a focus on providing skills, jobs, and education to young people in Cambodia, Laos, and Kenya.
As for why organisations should even begin to care about the SRO concept, the question can be answered in three ways. Firstly, there is a growing expectation among customers, shareholders, and internal stakeholders alike for organisations to be seen to be embracing social responsibility.
Research suggests that attention to global social issues has doubled in the minds of outsource buyers in the past five years, and it is no coincidence that the proportion of businesses that believe their customers do not care at all about CSR has been steadily declining over the same period.
Secondly, the implementation of SRO can reduce costs and increase the value of outsourcing. A growing proportion of organisations around the world now identify social responsibility as a crucial part of their business strategies, and with good reason. Numerous industry and academic research studies show that company performance, measured in a variety of ways, improves with the introduction and encouragement of CSR initiatives. And the most compelling economic case for SRO is the potential for attrition rates to be 15—40 per cent lower than industry norms, resulting in tangible savings through lower training and hiring costs and the inherent benefits of ongoing workforce knowledge.
Thirdly, SRO provides a safety buffer when things go wrong, as they inevitably sometimes do. While 90% of all large organisations now accept outsourcing as a fundamental business practice, it remains a particularly sensitive issue in the public’s mind. As such, there is a pressing need for organisations to acknowledge the impact of outsourcing on society; for example, while offshoring can dramatically increase operational efficiency, it can also lead to employment reductions in the local market, a touchy issue even at the very best of times.
The Royal Bank of Canada (RBC) fell foul of this particular scenario back in 2013 when 45 of its local IT employees saw their jobs outsourced to an offshore provider. Not only did the Canadian workers lose their jobs, but they were also required to train the temporary foreign workers that were set to take their place, and the ensuing backlash on social media resulted in a PR disaster for the bank.
The CEO was forced to publicly apologise and promise a review of RBC’s outsourcing practices, but had the bank’s decision been based on ethically grounded SRO principles, the most damaging aspects of the criticism could probably have been avoided.
So the reasons for at least considering socially responsible outsourcing are clear for all to see, and once the step to embrace it has been made, it is critical that the organisation stands by its decision. For many, there will be a temptation to cast aside the SRO agenda at the very first sign of economic pressure, but long-term gains wait for those that retain the courage of their convictions.
Setting measurable goals that are reported regularly will be an important factor in maintaining the SRO component of an outsourcing strategy, while I also advise organisations to regularly revise their SRO goals in order to reflect successes, new targets, and ongoing alignment with broader CSR objectives.
The SRO market is currently estimated to make up about 12 per cent of the global BPO market, and it is growing at a slightly faster rate than the overall outsourcing space. This growth shows no signs of abating, and with the promise of reduced costs, lower staff attrition rates, and enhanced PR value up for grabs, SRO is all set to become a default consideration for IT executives looking to outsource as part of a wider commitment to social responsibility. Can you afford to ignore it?
The columnist is group vice-president and regional managing director for the Middle East, Africa and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC).