Impact Sourcing Chapter UK&I

Sourcing for everybody’s gain

Part 1: Impact sourcing, outsourcing and me

Before I begin let me say that I am not specifically an impact sourcing expert based on any conventional measure, like Malcom Gladwell’s 10,000 hour rule. I was introduced to and started working on impact sourcing initiatives almost four years ago as a part-time project because my boss asked me to, although I knew right away it was an opportunity I couldn’t pass on.

There are many truly inspirational people (like Murali Vullaganti) who have fully dedicated large portions of their life to impact sourcing, or similar social impact initiatives. I am far from this special category of altruistic human beings; in fact most of my career in outsourcing (a practice I have very safely exceeded 10,000 hours with) has been spent consolidating jobs from western companies and shipping them offshore to service providers based in lower-cost locations.

This type of practice is why the term outsourcing has become an honorary four-letter word (especially in places like Detroit where I grew up), and still today represents a large portion of the industry compared to pure growth creating net new jobs. I won’t get into the global view of these transactions where jobs are created in a different, almost always more poverty-stricken place in the world. Nonetheless, outsourcing has traditionally focused solely on the pursuit of corporate profit and left millions of people unemployed (at least temporarily). In seven years working as an outsourcing consultant I worked with hundreds of buyer clients, service providers and advisory partners and directors who helped mould modern outsourcing from the days when IBM salesmen sold data storage tape to clients out of the trunks of their cars. (I’ve heard more stories about Ross Perot and the wild west era of the mega deal than any 34-year-old reasonably should.)

Not once did I hear the term impact sourcing, or a proposal that involved any flavour of social impact. Outsourcing is mainly done by companies in struggling industries who have no choice but to restructure; cost savings was by far the highest priority in nearly every transaction I helped execute for my clients. While impact sourcing can be cost-competitive, it is not free nor is it a turnkey solution for clients (yet). It takes work and dedication to make these programmes successful. When I joined Google, impact sourcing GOOGLE 20 Intelligent Sourcing Special Report was a new concept we were trying to get off the ground and I was tasked to scale and develop it. To say I was blown away that, with my background, this was the first I was hearing about it is an understatement, and I had no idea how to begin. I’ve come to understand that the tech industry is simply blessed with explosive growth and the money and resources to focus on these programmes that other companies just don’t have, which is why you’ve seen firms like Microsoft and Bloomberg years ahead of most. Don’t misunderstand me, I know my former clients and colleagues would jump at the opportunity to do this work; the reason I’m writing this is to help bring impact sourcing to the broader outsourcing community. I will show you that this can be done by any company, with any provider, with a minimal investment that will pay for itself if done correctly.


Personal perspective

My contribution to the impact sourcing cause is not as an expert on the social uplift aspect of the impact sourcing industry; I have little understanding of what underprivileged groups are in most need of help and are best suited to perform BPO services.

Nor is it as a shining example of success. I have stumbled through trial and error to develop our programme at Google and we still have a long way to go to In an exclusive extract from his forthcoming paper, The Impact Sourcing Manifesto, Google’s Alex Rochlitz describes what he has learned in four years of impact hiring “While impact sourcing is cost competitive, it is not free.” reach our goals. My aim is to push impact sourcing into the hands of the people and companies who can truly make it explode. I’m fortunate to have gained a broad understanding of the outsourcing lifecycle, the players, its evolution and its future. I strongly believe that impact sourcing needs to be firmly sown into this future or it will never achieve its potential. Impact sourcing must become a standard HR and procurement business practice as fundamental as dual journal entries are to accounting, QA is to software development, and legal review is to contracting.

I know that it can be this and so much more and it is my sincerest hope this (forgive me) exhaustive manifesto helps to get it there. I call this a manifesto because though I speak with deep experience and passion, these are my own very unscholarly views (disclaimer).


Part 2:

A few critical gaps in how impact sourcing has been defined Impact sourcing has been defined many times over through important publications like GISC’s Impact Sourcing Standard, or simply the business model of companies like B2R and how their clients engage with them.


Per the Standard:

“Impact sourcing is a business practice where a company prioritizes suppliers that intentionally hire and provide career development opportunities to people who otherwise have limited prospects for formal employment.”

Despite this rather straightforward concept, “what is impact sourcing” is a question I have continued to hear regularly from people who understand traditional procurement or outsourcing practices and seek to fit impact sourcing into the same model. Impact sourcing has not taken off as quickly as it should have.

Since the Rockefeller Foundation and those involved officially named the concept in 2013, there are fewer than 100,000 impact workers identified by GISC globally out of millions of outsourcing jobs. GISC and other industry organizations took a huge first step in setting standards for impact sourcing; however, these concepts and definitions need to be expanded to factor in a broader scope and continuously updated to keep up with a constantly changing industry and global society. While it’s expected new ideas or businesses will take time to become standard practice, there are a couple of reasons the approach and definition of impact sourcing in the past has hindered its growth.


Measuring outcomes

One reason is business people want to define outcomes in a black and white manner. The definition of impact sourcing above is a subjective statement that can mean different things depending on who is answering the question, where in the world we are talking about, or the point in time you are observing an individual’s career journey. Unlike traditional diversity, equity and inclusion initiatives defined by firms e.g. hitting a percentage of female executives, or percentage of minority employees, impact sourcing has a much more broad and nuanced definition that makes tracking status more difficult. This is part of the brilliance of impact sourcing; it makes opportunities limitless and applicable to any social cause an individual or organization is passionate about, but creates a challenge for tracking progress and preventing companies from exploiting the cause (I’ll expand on this later).

The focus on tracking impact sourcing headcount has been very frustrating for me at times when I’ve been focused on creating real impact, but accurately measuring success is critical to bringing stakeholders and new players into the fold. How to track and report impact sourcing headcount has not been adequately established in the best possible way. Senior leaders at buyer and provider companies alike need to understand in simple terms what impact sourcing means, and have an equally simple way to define progress and measure ROI. I’ll get into more details on what impact sourcing means later, but in one sentence: Impact sourcing is a very deliberate and Intelligent Sourcing Special Report 21 DEPOSIT PHOTOS / SERGEYNIVENS “Impact sourcing has not taken off as quickly as it should have.” GOOGLE 22 Intelligent Sourcing Special Report programmatic initiative by an employer to recruit and employ people who without this deliberate programme have little to no chance of employment with said employer, or for the role they are hired for.

One key piece of feedback I got from a wise boss of mine was tracking only static headcount figures is missing a big piece of the picture. If you’re going to boil someone’s life and career down to a headcount number, do them the courtesy to track the evolution of the process, e.g. total impact hires over time, and what are people doing after being given their first opportunity (hint: if things work correctly they are moving on, are no longer an “impact worker” and are joining the general population). This is most certainly reliant on having strong data, but even with a huge portfolio of vendors at Google I devised a way to reliably collect this fairly manually (hint number 2: outsource this task and let the vendor managers overseeing operations validate the details). Another reason impact sourcing has developed slowly is for a large part it started and was modelled around grassroots organizations doing pure impact sourcing work, but largely excluding the traditional outsourcing model and the firms who employ 99.9% of the outsourcing industry.

There is no need to define impact sourcing for a provider that does nothing else (I will define these firms as “impact providers”, i.e. a service provider that employs only impact workers), and therefore a very clear detailed definition was not as important. However, as impact sourcing expanded to providers that employ hundreds of thousands of people, most of whom fit into traditional corporate backgrounds and hiring standards (e.g. college graduates), it became critically important to create more guardrails. Most of the big enterprise outsourcing providers don’t have experience with this practice. In my experience, it took years working with individual vendor operations teams to get leadership commitment and learn together how to do impact sourcing from scratch. Hopefully, as providers expand their programmes you’ll have an easier time getting started, but it isn’t a switch flip solution for either party.


Part 3: Defining roles: the buyer, provider and advisor

When I first joined GISC and started learning about how other companies have approached impact sourcing, it was clear the industry put a lot of the onus on buyers to lead this charge. GISC in fact defines impact sourcing as a practice where “a company” (this can only mean buyer company) is “prioritizing suppliers that intentionally hire and provide career development opportunities…” In other words, impact “sourcing” is the procurement of services performed by impact workers, not the employment of impact workers itself. It makes sense to think about it this way; buyers have the money to spend and the influence over providers to engage in impact sourcing. I don’t disagree that the buyer has an important role to play to promote and expand impact sourcing (AKA change the industry); however, downplaying the role of the provider and other outsourcing industry participants (like advisors and consultants) is really limiting for a few reasons.

  1. This is assuming that impact sourcing is primarily being done by niche impact providers who need to be prioritized, not all outsourcing providers. Impact sourcing doesn’t require buyers to hire new suppliers; existing suppliers can be influenced to start new programmes of their own. In a way, isn’t this even more impactful? As a side note, I get nervous when I talk about the impact sourcing opportunity with larger suppliers as my priority, fearful that I am implying that smaller impact providers should not be supported. This could not be further from the truth. We need impact providers to flourish and to teach the outsourcing industry (especially big providers) how to do impact sourcing correctly and with the biggest societal uplift. However, I have a different idea for how to promote them that solves several key challenges they face (I’ll get into this later).
  2. Thinking about impact sourcing in this singular dimension excludes the utopian dream of what impact sourcing can become, not just an outsourcing practice but the way every company approaches recruitment, training, and employee support. Microsoft is doing this already and not for entry-level customer service or content management roles; it is hiring engineers to work at one of the most prestigious technology companies in the world. Impact sourcing is not about hiring for low-skilled roles (although this is the low-hanging fruit to use an awful business term), it’s about removing all bias from the recruitment process.
  3. Finally, outsourcing providers do not need their clients to ask them to engage in impact sourcing. In most cases, they can hire whoever they want as long as service levels are maintained. This may be the most important point I can make. Large providers, whether they work in partnership with impact providers or develop their own programmes from scratch, don’t need their clients to ask for impact sourcing; they are already the most capable recruiting and training entities in the world.

This is an edited excerpt from Alex Rochlitz’s forthcoming paper, The Impact Sourcing Manifesto.

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