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10 Meeting Social Objectives with Offshore Service Work:
Evaluating Impact Sourcing in the Philippines
Jorien Oprins and Niels Beerepoot
Meeting Social Objectives with Offshore Service Work
Introduction
Impact sourcing has recently emerged as a subfield of the global ICT-ITES
(information and communication technology–information technology
enabled services) sector and is premised on the potential of balancing com-
mercial interests with socioeconomic development (Malik, Nicholson, and
Morgan 2013). As defined by Carmel, Lacity, and Doty (2016, 19), impact
sourcing involves the practice of hiring and training marginalized individu-
als, who normally would have few opportunities for good employment,
to provide information technology, business process, or other digitally
enabled services. Its ambition is to deliver high-quality information-based
services produced by marginalized groups in (predominantly) the Global
South. Impact-sourcing service providers mediate between clients and
employees to balance the dual objectives of providing high-value services at
low cost for clients and meaningful employment to marginalized individu-
als by giving them access to IT-enabled service jobs ( Madon and Ranjini
2016 ). Because ICTs connect workers to work irrespective of their location
( Friedman 2005 ; Levy 2005 ), these technologies could help overcome the
social, cultural, and physical barriers that might otherwise exclude margin-
alized groups from participating in the labor market ( Monitor Group 2011 ;
Everest Group 2014 ).
The Rockefeller Foundation has been the leading global institution pro-
moting impact sourcing. It launched its Digital Jobs Africa Initiative in
2013 and commissioned key reports by the Monitor Group (2011) , Avas-
ant (2012), Accenture (Bulloch and Long 2012), and Everest Group (2014) .
These reports have mainly focused on the incentives for clients to purchase
services from impact-sourcing service providers. In addition, a growing
Jorien Oprins and Niels Beerepoot
© Massachusetts Institute of Technology All Rights Reserved
250 Jorien Oprins and Niels Beerepoot
number of scholars have recently taken an interest in impact sourcing.
Some studies have approached the model from an entrepreneurial angle
and analyzed the seemingly contrasting social and commercial aspects of
impact sourcing on service providers’ strategic decision making (e.g., Gino
and Staats 2012 ; Nicholson et al. 2015 ; Sandeep and Ravishankar 2015b )
and on how they position themselves in the local community (e.g., Sand-
eep and Ravishankar 2015a ). Other studies have examined the effects of
impact sourcing on service workers (e.g., Heeks and Arun 2010 ; Lacity, Rott-
man, and Carmel 2014; Madon and Sharanappa 2013 ; Malik, Nicholson,
and Morgan 2013) and on their local communities (see Madon and Ranjini
2016 ). Some scholars suggest that impact sourcing has the potential to fos-
ter socioeconomic development in the Global South by providing (direct
and indirect) employment to marginalized communities and by enhanc-
ing their knowledge and skill sets ( Heeks and Arun 2010 ; Madon and Sha-
ranappa 2013 ; Malik, Nicholson, and Morgan 2013; Madon and Ranjini
2016 ).
Beyond the evidence provided by these pioneering case studies of indi-
vidual impact-sourcing initiatives, knowledge is still limited on its success
in implementation across different local contexts and its effectiveness in
reaching out to marginalized individuals. In this chapter, we examine how
impact sourcing operates at the intersection of a commercial logic and
a social welfare logic. As a pro-poor model, it offers a good exemplar of
how the information and communication technologies for development
(ICT4D) debate has evolved, from an initial focus on ICT availability to
help the poor become users of digital content ( Heeks 2009 ; Avgerou 2010 )
by using ICTs as a tool for income generation, such as by doing work online
( Heeks 2009 ), to a focus on their impact, by achieving social and economic
development goals ( Heeks 2009 ). As argued by Heeks (2009 , 11), ICTs seem
well understood as tools for delivering information and services to the
world’s poor. Where they have so far been little understood is as tools the
poor can use to create new incomes and new jobs ( Heeks 2009 ).
As a case study for examining whether impact-sourcing initiatives are
effective in providing employment to marginalized individuals, we focus
on the experiences of an impact-sourcing venture in the Philippines. Where
previous studies have mainly looked at initiatives in India, we look at a
venture established by Visaya Knowledge Process Outsourcing (Visaya KPO)
in Tanjay, a small city located in the central Philippines. The country is one
of the largest beneficiaries of international offshoring of ICT-ITES activities
Meeting Social Objectives with Offshore Service Work 251
( IBPAP 2012 ; Tholons 2014; Usui 2012 ). Yet, only a few impact-sourcing
ventures have started so far. As the most prominent example, Visaya KPO
provides a useful case for examining who benefits from this new initia-
tive and how a balance is sought between simple contract fulfillment and
creating positive societal change. This chapter is based on semistructured
interviews with the management and workers involved in Visaya KPO. At
the managerial level, we examine the choices and rationale behind the ini-
tiative. At the workers’ level, we consider the service workers involved in
the initiative and their perceptions of their employment status. An impor-
tant issue in impact sourcing is whether it reaches the poorest and neediest
people (e.g., Heeks and Arun 2010 ; Nicholson et al. 2015 ; Sandeep and
Ravishankar 2015a ).
In this chapter, we first review the current state of the literature on
impact sourcing and examine how it functions at the intersection of ICT4D
and mainstream ICT-ITES service delivery. We then explain the research
methodology we used for this study before elaborating on the present state
of impact-sourcing initiatives in the Philippines. Subsequently, we concen-
trate on Visaya KPO’s impact-sourcing initiative and how it finds its bal-
ance between a commercial logic and a social welfare logic. The chapter
then focuses on the management’s rationale behind the geographic loca-
tion selected and the socioeconomic profile and perceptions of the service
workers it employs.
Literature Review: Impact Sourcing
In the past two decades, millions of IT-enabled services jobs have been
relocated, or “offshored,” from the United States and Europe to low-cost
economies around the world (Lambregts, Beerepoot, and Kloosterman
2016). What started with low-end IT activities being moved from the
United States to India has grown into the large-scale migration of multivar-
ious service production activities from advanced to developing countries.
Digital technologies have enabled new activities to take root in developing
countries and have encouraged these nations to envision new strategies
for national development (see Graham 2015 ). One concern with the rise
of the ICT-ITES sector is how access to employment in the sector is highly
uneven, and how the sector might even perpetuate inequality in develop-
ing countries ( Krishna and Pieterse 2008 ; D’Costa 2011 ). Jobs are highly
concentrated in urban areas and, in most cases, require a college education
252 Jorien Oprins and Niels Beerepoot
( Beerepoot and Hendriks 2013 ; Kleibert 2015 ). For ICTs to provide inclu-
sive employment requires experimenting with new delivery models for IT-
enabled services, such as impact sourcing, and identifying new production
locations.
Various authors who have studied impact sourcing view it as an ICT4D
model because its ambition is to provide ICT-enabled employment to mar-
ginalized groups (see Malik, Nicholson, and Morgan 2013; Nicholson et al.
2015 ). The general objective of ICT4D is to improve socioeconomic condi-
tions in developing countries through the use of ICTs ( Avgerou 2010 ). In
early conceptualizations of ICT4D, the focus was on providing marginal-
ized communities access to ICTs as a source of information and knowledge
( Heeks 2009 ; Avgerou 2010 ). More recently, rather than viewing margin-
alized communities as passive consumers, ICT4D regards them as active
innovators and producers of digital content ( Heeks 2009 ). It is here that
impact sourcing, if it pursues a social welfare logic, can be positioned in
fulfilling ICT4D objectives. Some authors, however, have highlighted the
tension within the impact-sourcing model between pursuing a commercial
logic (e.g., effectively competing with mainstream ICT-ITES service provid-
ers) and adopting a social welfare logic (e.g., providing income and training
to marginalized groups; Nicholson et al. 2015 ; Sandeep and Ravishankar
2015b ). To clarify how stakeholders in impact sourcing balance these log-
ics, we provide an overview of existing studies on impact sourcing in this
section. Herewith we focus on four groups of stakeholders involved in the
impact-sourcing ecosystem: the clients of impact-sourcing services, ser-
vice providers, service workers, and the communities in which they reside
(Carmel, Lacity, and Doty 2016).
Consultancy reports commissioned by the Rockefeller Foundation have
focused mostly on the first two stakeholders. Following Emerson (2003) and
Porter and Kramer (2011) , they have high expectations for impact sourcing
to scale up over time because it offers a “win-win” scenario ( Bulloch and
Long 2012 ; Everest Group 2014 ). For clients, the Everest Group (2014) and
the Monitor Group (2011) highlight the business value proposition when
buying services from impact-sourcing service providers. Compared with
mainstream ICT-ITES service providers, impact sourcing enables employ-
ing a low-cost untapped talent pool. At the same time, impact sourcing
helps businesses meet internal corporate social responsibility (CSR) objec-
tives by providing meaningful and relatively high-income employment to
Meeting Social Objectives with Offshore Service Work 253
marginalized individuals ( Bulloch and Long 2012 ; Everest Group 2014 ).
Optimistic accounts highlight how impact-sourcing service providers aim
at “doing well by doing good.” They “do good” by reaching out to mar-
ginalized communities, as a result of which they “do well” by having a
competitive advantage over mainstream ICT-ITES service providers (Bull-
och and Long 2012; Avasant 2012; Monitor Group 2011 ).
Various scholars have added to these reports by examining how impact-
sourcing service providers balance a social welfare and a commercial logic.
For example, Gino and Staats (2012) focused on the business model of
Samasource, one of the most prolific service providers in impact sourcing.
They found that rather than putting social welfare at the core of the busi-
ness model, the organization operates like any mainstream ICT-ITES ser-
vice provider, by aiming at the delivery of high-value services at low cost.
According to Samasource’s mission statement, the company’s goal is “to
connect poor people to the digital supply chain so that they can earn a
living and build valuable skills. But it accomplishes that goal by running a
business that delivers high value at low cost” ( Gino and Staats 2012 , 96). In
a similar vein, Nicholson and colleagues (2015) and Sandeep and Ravishan-
kar (2015b) argue that impact-sourcing service providers find themselves
having to operate between a social welfare logic and a commercial logic.
The researchers refer to impact-sourcing service providers as “hybrid orga-
nizations,” which speak a different language to clients than to service work-
ers and the communities in which they reside. While emphasizing local
social and economic development in their interaction with workers and
their communities ( Sandeep and Ravishankar 2015a ), to clients they speak
the language of competition and profit ( Nicholson et al. 2015 ). Although
their long-term existence as impact-sourcing service providers hinges on
their capability to speak both languages, they consider it most important
to master the latter one ( Nicholson et al. 2015 ; Sandeep and Ravishan-
kar 2015a ). Accordingly, Nicholson and coauthors (2015) find that when
choosing the location for impact-sourcing ventures and recruiting service
workers, impact-sourcing service providers often let commercial motiva-
tions prevail.
Service Workers and Their Communities
Notwithstanding these compromises, in examining social and economic
development, scholars have identified a range of benefits for service
254 Jorien Oprins and Niels Beerepoot
workers involved in impact sourcing. For example, Lacity, Rottman, and
Carmel (2014) focused on US prison inmates and found that in-prison
employment with an impact-sourcing initiative increases incomes, elevates
inmates’ social status in prison, builds their self-efficacy, and strengthens
their human capital. When studying impact sourcing in the Global South,
scholars have been guided by the ICT4D debate and international devel-
opment literature. Malik, Nicholson, and Morgan (2013) and Madon and
Sharanappa (2013) assessed the social development implications of impact-
sourcing organizations in India by using Amartya Sen’s capability frame-
work (see Sen 2000 ), and Heeks and Arun (2010) drew from the sustainable
livelihoods framework (see DFID 1999 ). They all found that impact sourc-
ing brings various developmental benefits to service workers, including ris-
ing incomes, as well as strengthening social networks and human capital,
that is, operational computer skills, English language skills, and knowledge
of ICT ( Heeks and Arun 2010 ; Malik, Nicholson, and Morgan 2013; Madon
and Sharanappa 2013 ). Moreover, they found that involvement in impact
sourcing helps service workers build their self-esteem and improves the
social empowerment of female workers, who experience greater respect,
recognition, and acceptance within their families ( Heeks and Arun 2010 ;
Madon and Sharanappa 2013 ; Malik, Nicholson, and Morgan 2013).
Evidently, the social and economic benefits gained by service workers
spill over to their communities ( Heeks and Arun 2010 ; Madon and Ran-
jini 2016 ; Madon and Sharanappa 2013 ; Malik, Nicholson, and Morgan
2013). Employment in an impact-sourcing initiative could positively influ-
ence children’s futures if it increases spending by service workers on their
children’s education ( Heeks and Arun 2010 ; Malik, Nicholson, and Morgan
2013). Moreover, the increase in income among service workers provides
an injection into the local economy through their consumer expenditures
( Heeks and Arun 2010 ; Madon and Ranjini 2016 ). As a result, small-time
local vendors may flourish. To date, however, no structural impact assess-
ments have been conducted on these spillover effects and how the recipient
communities benefit.
Although various authors have examined the developmental outcomes
of impact sourcing on service workers and, to a lesser extent, on the com-
munity in which they reside, more research is needed to understand more
precisely who enjoys the aforementioned benefits. This issue is important
to address because of the hybrid nature of the impact-sourcing business
Meeting Social Objectives with Offshore Service Work 255
model, in which service providers find themselves having to compromise
on the degree to which their employees are socially or geographically mar-
ginalized ( Nicholson et al. 2015 ). Yet, before examining how impact sourc-
ing balances social welfare and commercial logics, and how this affects the
extent to which the model offers employment to marginalized individuals,
we provide the methodological underpinnings of this chapter.
Research Methodology
The case study for this research is an impact-sourcing initiative established
and run by Visaya KPO in Tanjay, Negros Oriental, a province in the cen-
tral Philippines. We conducted our field research between September and
November 2015, selecting Visaya KPO out of four impact-sourcing ventures
that we identified in the Philippines. The other three initiatives were Data-
Motivate, Digisource, and Mynd Consulting. Together they employ around
450 workers. We approached all four initiatives and formally interviewed
or informally spoke with their managerial staff. For pragmatic reasons, we
then selected Visaya KPO as a case study. The managers of this venture, as
well as one of its clients and its service workers, were most accommodating
and willing to contribute to this research.
We became aware of the existence of Visaya KPO via the Department of
Information and Communications Technology (DICT), a Philippine gov-
ernment department responsible for supporting the country’s ICT-ITES sec-
tor. With its help, we established contacts with the CEO, vice president,
and operations manager of Visaya KPO as well as with two stakeholders
from Accenture, who had initiated the initiative and played a key role in
its establishment. With them, we held semistructured interviews to gain an
understanding of the managerial choices and rationale behind the initia-
tive. We asked about the interplay of a commercial logic and a social wel-
fare logic as well as about the long-term prospects of employment offered
by Visaya KPO. In addition, we conducted semistructured interviews with
30 of the 116 workers employed by Visaya KPO to identify their socioeco-
nomic profiles, their professional histories, and their perceptions of their
employment status. We employed purposive sampling to get a diverse
group of respondents in terms of employment duration (ranging from only
a few months to two years). Thirteen respondents were male, and seven-
teen were female. The interviews, on average, lasted one hour and were
256 Jorien Oprins and Niels Beerepoot
recorded, transcribed, and analyzed by grouping and cross-comparing the
data under the key themes that the research focused on. Finally, informal
conversations and observations in Tanjay served to cross-check the findings
derived from the interviews and helped us get an initial understanding of
the socioeconomic impact that this venture has on the local community.
Impact Sourcing in the Philippines
The Philippines is a lower-middle-income country with 25.2 percent of the
population living on less than US$1.25 per day in 2012 ( World Bank 2016 ).
Starting at the beginning of the current century, the country followed in
the footsteps of the world’s number-one service offshoring destination,
India, and became a major service offshoring hub ( IBPAP 2012 ; Tholons
2014; Lambregts, Beerepoot, and Kloosterman 2016). Over the years, the
Philippine ICT-ITES sector advanced from a multimillion-dollar industry
($350 million in export revenues in 2001) to a multibillion dollar industry
($18.4 billion in export revenues in 2014; Satumba 2008, 14; Remo 2015 ),
employing around one million workers in 2014 ( De Vera 2014 ). These
workers mainly conduct services in business process outsourcing (BPO)
centers at the lower end of the value chain (e.g., customer services, back-
office services, and data processing; Kleibert 2015 ). The sector initially con-
centrated in a few large urban areas, with an estimated 80 percent located
in Metro Manila ( IBPAP 2012 ; Kleibert 2015 ), and provided employment
to only a narrow labor market segment of young, urban, highly educated
people ( Mitra 2011 ).
Compared to the country’s mainstream ICT-ITES sector, impact sourc-
ing is still of negligible size in the Philippines (and elsewhere). This can be
attributed to the offshoring of IT-enabled services to developing countries
still being a recent phenomenon (see Lambregts, Beerepoot, and Klooster-
man 2016). In this initial stage, Metro Manila in the Philippines and the
six largest metropolitan areas in India emerged as the first entry points into
both countries. More recently, firms have started to look beyond the com-
mon labor pool (Marasigan 2016), expanding production to class two and
even class three cities ( Tschang 2011 ).
1 Impact sourcing is part of the process
to look for new production locations and to test new delivery models (see
also Monitor Group 2011 ). As a CSR strategy, it fits the ambition of many
companies for their CSR activities to stay close to their core competencies
Meeting Social Objectives with Offshore Service Work 257
and result in a deeper engagement with local communities than traditional
philanthropy could achieve ( Emerson 2003 ; Porter and Kramer 2011 ).
Visaya KPO established an impact-sourcing initiative in Tanjay in July
2013. The multinational Accenture backed the rural impact-sourcing efforts
of Visaya KPO by guaranteeing that it would outsource some of its service
tasks to the company. Visaya KPO took on the role of for-profit impact-
sourcing service provider and started with 20 impact workers. Thereafter, it
attracted additional for-profit clients, which led the number of workers to
increase to 116 by late 2015. For the Accenture account, workers operate as
virtual assistants (e.g., making room reservations) for the offices in Metro
Manila or Cebu City, a low-skilled task, which suggests that Accenture is
not (yet) too ambitious in terms of delegating work to its impact-sourcing
unit. Other work includes medical transcription for a US-based company
and outbound sales for college education programs in the United States.
Empirical Results
This section focuses on the organizational motivations underpinning Visaya
KPO’s impact-sourcing initiative. We discuss the profile of service workers it
reaches, as well as the socioeconomic effects on the local community.
Balancing Commercial and Social Welfare Logics
Visaya KPO’s impact-sourcing initiative was initially triggered by a social
welfare logic. Like the impact-sourcing ventures examined by Sandeep and
Ravishankar (2015b), and following Porter and Kramer (2011) , Visaya KPO
emanates from Accenture’s desire to create economic value in a way that
also has positive outcomes for the community surrounding its operations.
Accenture is one of the largest international providers of ICT-ITES services.
In the Philippines, it employs approximately thirty-five thousand work-
ers in Metro Manila and Cebu City ( Hidalgo 2015 ). Inspired by the Rock-
efeller reports and based on the success of its earlier initiatives in India,
Accenture presented to Visaya KPO the idea of a “rural BPO” (Accenture
manager interview, October 7, 2015). Accenture’s interest in impact sourc-
ing illustrates how the model is gaining recognition among mainstream
ICT-ITES service providers. For the multinational firm, this meant meeting
its CSR objectives by providing high-income employment in an area where
people had few such opportunities. The salaries in Visaya KPO range from
258 Jorien Oprins and Niels Beerepoot
10,000 to 17,000 Philippine pesos ($200–$340) per month and are well
above the average local monthly salaries of 3,000 to 4,000 PHP ($60–$80).
Provincial differences in wage standards (based on variety in the local cost
of living) make it attractive for companies to look beyond Metro Manila,
where entry-level positions in the ICT-ITES sector have a salary of 21,000
to 24,000 PHP ($420–$480) per month. Although the rationale behind the
initiative was to stimulate social and economic development, in its practi-
cal establishment, this logic was intersected with one that is “rooted in
profit and competition” ( Nicholson et al. 2015, n.p. ), as best illustrated by
the cost savings from lower local salaries in Tanjay.
Accenture demanded that the quality standards applicable to all of their
offices in the Philippines be met. For Visaya KPO, rather than recruiting
personnel among marginalized communities, the focus was on establishing
a venture that could compete with mainstream ICT-ITES service providers
in, for instance, Metro Manila. To be cost effective, Visaya KPO needed to
attract other clients as well. The management of Visaya KPO feared that a
rural location, where operating costs would be relatively high and the pool
of qualified workers smaller, would complicate this. One manager said, “It’s
a lot harder sell for me to tell my client, ‘I will do your process in the town
of Tanjay.’ Then they’re going to say, ‘Where is that?’ … They have to be
concerned about downtime. They have to be concerned about service-level
quality” (Visaya KPO manager interview, October 15, 2015).
A similar story was conveyed by a representative from DataMotivate,
who argued, “One of the things that we try to balance is [to] tell the story
of the social impact. Because the experience is that most clients don’t care
about that. So we basically compete on quality and price, just like any other
BPO” (DataMotivate manager interview, November 26, 2015).
These anecdotes indicate how, contrary to Accenture, which refers to the
venture in Tanjay as “impact sourcing,” service providers can be anxious to
sell their initiatives to clients under that label. Similar to impact-sourcing
ventures in India ( Sandeep and Ravishankar 2015b ), they feared that to
market themselves as impact-sourcing service providers would raise doubts
about the quality of their service delivery.
To establish a profitable and competitive venture, Accenture and Visaya
KPO let a commercial logic prevail when selecting a location. They required
a place that had high-quality electricity, telecommunications, and Internet
infrastructure. Moreover, they insisted on colleges and a university being
Meeting Social Objectives with Offshore Service Work 259
nearby to serve as feeder pools for workers. This pool needed to be suf-
ficiently large as to allow the initiative to scale up over time. Although
many smaller provincial cities would have met these requirements, per-
sonal motivations eventually led to the selection of Tanjay (the hometown
of one of the initiators).
Tanjay is a class-four provincial city of approximately seventy-nine thou-
sand inhabitants ( PSA 2010 ). Its main sources of income are sugarcane,
farming, and fishing ( PSA 2016 ). It accommodates two colleges, whose
graduates, because of the lack of local opportunities, tend to leave the com-
munity to find jobs elsewhere in the Philippines or abroad. A Visaya KPO
manager explained the city selection: “So why tier four? We wanted to go
for the least capable [of] economic output but also … able to sustain the
size of manpower that we need. So if you go to a class five or a class six. …
if you go too low, you won’t be able to get enough manpower” (Visaya KPO
manager interview, October 21, 2015).
The choice of Tanjay aligns with location choices in impact-sourcing
ventures studied by Madon and Sharanappa (2013) and Malik, Nicholson,
and Morgan (2013). They examined initiatives in India, located twenty
kilometers from Ranchi, capital of Jharkhand state, and forty kilometers
from New Delhi. The closest larger city to Tanjay is Dumaguete, the provin-
cial capital, located thirty kilometers away. Dumaguete is home to a range
of colleges and universities, as well as BPOs run by mainstream ICT-ITES
service providers. This demonstrates how impact-sourcing ventures are
restricted in their geographic outreach, as digital connectivity and avail-
ability of human resources are critical for their establishment.
Profiling Service Workers and Their Communities
With Accenture and Visaya KPO purposely selecting a location with col-
leges and a university, all respondents had a high school degree and had
proceeded to college after graduating. Their demographics resemble service
workers employed by an impact-sourcing venture in India, who, on aver-
age, had 13.5 years of education ( Heeks and Arun 2010 ). Moreover, the
respondents’ educational qualifications are similar to those employed in
mainstream ICT-ITES contact centers in the Philippines ( Bird and Ernst
2009 ; Mitra 2011 ; Beerepoot and Hendriks 2013 ). Among the thirty respon-
dents in our research, two-thirds are college graduates with a background
in information technology, business administration, nursing, marketing,
260 Jorien Oprins and Niels Beerepoot
or communication. For workers who had not finished a college education,
Visaya KPO offered income opportunities unavailable to them in the main-
stream Philippine job market. In line with general observations on the Phil-
ippine BPO sector (see Marasigan 2016), academic qualifications are less of
a requirement for employment with Visaya KPO.
The majority of respondents classified their family as being part of the
middle class, similar to the backgrounds of service workers employed in the
mainstream ICT-ITES sector ( Mitra 2011 ). Moreover, like mainstream ser-
vice workers (see Bird and Ernst 2009 ; Mitra 2011 ), most respondents were
thirty-five years old or younger. Against the background of impact-sourcing
objectives, it was surprising to find that most respondents had formerly
been employed in mainstream ICT-ITES contact centers for a period rang-
ing from seven months to five and a half years. Before the establishment
of Visaya KPO in Tanjay, they used to be employed in Metro Manila, Cebu
City, Bacolod City, or Dumaguete. As such, the initiative was given a head
start, as many workers already had experience in BPO work. Training on
the job took just one month and focused on the specific line of business
that they worked on. All respondents viewed Visaya KPO as just another
mainstream ICT-ITES service provider and were not familiar with the term
“impact sourcing,” nor were they aware of their part in a multinational
firm’s CSR initiative.
Regardless of whether the initiative directly reaches marginalized work-
ers, any sizable new business venture in a small town like Tanjay has a
positive socioeconomic impact, especially when salaries are much higher
than the local average. Respondents mentioned that they favored not hav-
ing to commute to Dumaguete or move to larger cities like Cebu City or
Metro Manila. Employment in their hometown enabled workers to spend
more time with their families. Female respondents with young children or
family members who needed care were particularly likely to mention that
because of Visaya KPO, they are able to earn a relatively high income while
staying close to their families. One woman noted that the Visaya KPO office
in Tanjay was “very accessible to me, in our house. If it’s our break, I can
check my kids, and then go back to the office” (Visaya KPO service worker
interview, October 26, 2015). Another recalled, “When I was four years old,
my mother went to Hong Kong to work. I don’t want my son to experience
that. … It’s not easy to grow up without a mom. … As long as I can have
a living here in Tanjay” (Visaya KPO service worker interview, October 27,
2015).
Meeting Social Objectives with Offshore Service Work 261
Along with social development, the spread of BPO work to smaller towns
adds to economic growth beyond the country’s congested major cities.
While we lack evidence on the number of indirect jobs generated in Tan-
jay, optimistic accounts elsewhere ( NASSCOM 2010 ; Kite 2014 ) suggest that
every job in the ICT-ITES sector generates four additional jobs in support
services (e.g., security, housekeeping) and through workers’ expenditures.
In Tanjay, small local vendors and restaurants have fared well since the
establishment of Visaya KPO. Businesses have been improved, and some
gradually started selling their wares at night to target service workers on the
“graveyard shift.” Accordingly, respondents expressed that the outlook of
Tanjay has changed, for example, “Tanjay is more industrialized right now”
(Visaya KPO service worker interview, November 14, 2015), and “When
people knew that there’s a call center here, there are a lot of restaurants
being built. Soon we will be having a Jollibee here” (Visaya KPO service
worker interview, November 14, 2015).
2
While these are only anecdotal examples of indirect local socioeconomic
developments, they are illustrative of how ICT advancements provide new
employment opportunities in what used to be the periphery of the global
economy (see also Mann and Graham 2016 ). Whether this takes place
through specific impact-sourcing ventures or mainstream service provision,
it is part of an economic transition in which digital work enables educated
young people, who live in more remote areas in developing countries, to
compete on the global labor market without having to move to capital cit-
ies or abroad.
Conclusion
The ICT4D literature has recently started to address the question of how
marginalized people can utilize ICTs for income generation by doing ICT-
enabled work. Impact sourcing is built on this premise, and this chapter
has examined how impact-sourcing initiatives in the Philippines fulfill
these objectives. Our study found that only a few impact-sourcing initia-
tives exist in the Philippines, and, compared to mainstream service out-
sourcing, their total employment is negligible. Given the recent interest in
impact-sourcing initiatives among philanthropic foundations and business
representatives, however, common practices among the current initiatives,
which are the pioneers in this field, need to be explored. Understanding
their successes and setbacks provides valuable lessons for new ventures and,
262 Jorien Oprins and Niels Beerepoot
more generally, about the potential of impact sourcing as a development
tool. Even a small portion of work in the global ICT-ITES sector being car-
ried out in impact-sourcing ventures would positively affect the lives of
many workers and their families.
In line with findings from various studies in India (see Gino and Sta-
ats 2012 ; Nicholson et al. 2015 ; Sandeep and Ravishankar 2015b ), a com-
mercial logic is prevalent in the impact-sourcing case that we examined.
To effectively compete with mainstream service providers, the founders of
our principal case study, Visaya KPO, required a location with high-quality
digital connectivity and available qualified staff. This led to the recruitment
of workers who have, in most cases, a college degree and previous work
experience in the ICT-ITES sector. By recruiting these workers, Visaya KPO
compromises on its ambition to employ workers with more marginalized
backgrounds. Critics could argue that impact sourcing is mainly driven by
motivations to tap into a lower-cost labor pool, hiring educated workers in
lower-cost locations rather than integrating workers from more marginal-
ized backgrounds into existing operations in Metro Manila or Cebu City.
In the latter case, Philippine national labor law would require companies
to pay marginalized workers at par with the existing workers, which is not
attractive for companies given the extra training these workers require.
Most workers in this research were not even aware that their workplace was
regarded as an impact-sourcing venture. Rather, they viewed it as a conve-
nient workplace close to their homes, which provided them with a better
income compared to local alternatives. Even toward clients, the initiative
was only selectively advertised as an impact-sourcing venture.
The case of Tanjay illustrates the commonalities that impact sourcing
has with mainstream ICT-ITES service delivery, as impact-sourcing ventures
effectively operate in the same market. Impact sourcing mainly adds to the
already ongoing geographic spread of ICT-ITES service work. The relocation
of service jobs to class-two cities in the Philippines starting about a decade
ago, driven by high competition among BPOs in Metro Manila and the
necessity for strategic diversification, has been well documented (see Kleib-
ert 2015 ; Beerepoot and Vogelzang 2016 ). Via impact sourcing, the sector
is now moving to more remote destinations (albeit not too peripheral) but
is not reaching new groups of workers who fall outside the scope of main-
stream service outsourcing. Herewith impact sourcing resembles observa-
tions made about microcredit (see Morduch 2000 ; Banerjee et al. 2015 ),
Meeting Social Objectives with Offshore Service Work 263
where beneficiaries are not always the most financially strained or those
without access to other financial institutions.
Whereas some prolific international impact-sourcing organizations (e.g.,
Samasource, Digital Divide Data, RuralShores) explicitly state their objec-
tive to provide employment to marginalized communities, the empirical
evidence from various studies referred to in this chapter points to ambi-
guity in the use of the concept. Contrary to ICT4D conceptualizations
that unambiguously declare the aim to use digital technologies to provide
employment to marginalized people, employing college-educated workers
in a rural setting is, in some key reports, enough to classify as impact sourc-
ing (see Monitor Group 2011 ; Bulloch and Long 2012). This shows how the
model falls short in its role as a manifestation of ICT4D. Another shortcom-
ing of impact sourcing is that it relies too much on an existing business
model (doing IT-enabled work in an office-based setting), which is cost sen-
sitive and requires economies of scale to be viable. The high start-up cost
in remote locations means that a commercial logic prevails, which makes
it hard to distinguish impact-sourcing ventures from mainstream ICT-ITES
service providers.
Despite the deficiencies of the impact-sourcing model, the case of Tanjay
illustrates how it provides new employment opportunities in places that,
until recently, were not on the radar of the global ICT-ITES sector. Beyond
the evidence provided in this study, the longer-term effects and conse-
quences of impact sourcing on the workers and their communities require
further, more systematic, investigation (see also Carmel, Lacity, and Doty
2016). Since most impact-sourcing ventures that have been studied started
only recently, another subject for investigation is whether, in the medium
term, impact-sourcing initiatives will make more effort to recruit marginal-
ized groups rather than (mainly) searching for new locations. At the cross-
road of both logics, hybrid forms of organization could emerge that employ
workers from marginalized communities. Only through such efforts can
impact-sourcing ventures claim distinctiveness from mainstream ICT-ITES
service delivery. Doing so would also make them more attractive to socially
minded clients who are willing to pay a premium for employing marginal-
ized workers.
A final subject for investigation is the challenges faced by lower-end
ICT-ITES service providers and, hence, by impact-sourcing ventures. Impact-
sourcing ventures might be confronted with the increasing automation
264 Jorien Oprins and Niels Beerepoot
of service work (see Brynjolfsson and McAfee 2014 ; Ford 2015 ), which
requires a strategic reorientation of their activities. Dual goals of moving up
the value chain (by doing higher value-added activities) and meeting social
objectives could eventually be too much to combine, but those visions are
illustrative of how impact sourcing is filled with ambition.
Notes
1 . In the Philippines, cities are classified based on their average annual income.
Classes range from one to six, with class-one cities (e.g., Cebu City) earning the
highest average annual income, and class-six cities earning the lowest average
annual income ( Bureau of Local Government Finance 2008 , order no. 23-08).
2 . Jollibee is a Philippine multinational chain of fast food restaurants similar to
McDonald’s.
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