Want to help the poor? Hire them

The best way to end poverty is simply to give people work. It’s not considered “sexy” among donors who want to fund a school or cure a disease, but it’s effective.

As an undergrad about 10 years ago, I worked at the World Bank briefly and studied poverty around the world. Much of the talk at the time was on the outsourcing industry and how it was going to transform countries like India. Yes, there were big changes for those at the cusp of poverty, but not much for people at the very bottom – particularly those earning less than US$ 1.25 a day. The outsourcing industry had by then generated billions of dollars for a few wealthy businessmen in India, China and the Philippines, and I thought: what if we could invert the model to generate a few dollars for billions of people at the bottom of the pyramid?

The idea soon became a business plan, and in 2008 it became a non-profit called Samasource. I called my idea “socially responsible outsourcing”, a term that has since been shortened to “impact sourcing” and adopted by a growing number of organizations. The Rockefeller Foundation definition is:

… outsourcing that benefits disadvantaged people in low employment areas … they include those living in rural areas of developing countries or in slums, those without access to secondary or tertiary education, and educated people in areas of high unemployment.

In 2008, no one had heard of it. We were ahead in the movement to run outsourcing centres as non-profit businesses aimed at serving the poor, boosting their incomes and, importantly, demonstrating to the world that poor people want the same things as rich people: a decent job with a steady income, and control over their health, education, social and political choices.

The model is appealing because it distributes wealth using the mechanisms of the market. Foreign aid, on the other hand, collects revenues from taxpayers and maintains a costly bureaucracy to distribute it, sometimes creating perverse incentives along the way.

Impact sourcing is a cleaner model. Sourcing firms win business from corporations that have already set aside funds for completing projects, often competing with other vendors. They make a commitment to hire poor and marginalized people, pay a living wage, and agree to be audited. Clients pay nothing for the extra benefit of reducing poverty.

Impact-sourcing firms, many of which are run as non-profit businesses designed to break even or earn a small profit, use client revenues to offset the cost of recruiting and training a marginalized workforce. Workers gain a living wage, valuable computer and English skills, work experience, and socialization in a formal work environment, which are all factors known to catapult people out of poverty.

The movement is growing. Impact-sourcing within the outsourcing of business processes alone is expected to be a US$ 23 billion market by 2015. And now the real challenge begins. Today, roughly 75% of people living in absolute poverty (more than 1 billion people) are in middle-income countries such as India. How do we make sure that impact-sourcing reaches them? How do we launch more impact-sourcing groups in poorer places?

One idea is a campaign, “1% for impact-sourcing”. Every business owner would be encouraged to pledge 1% of its outsourcing budget to marginalized workers: an affirmative action programme for global poverty reduction. If every company swiftly moved in this direction, we could make good on our promises to eradicate poverty.

Author: Leila Janah is a social entrepreneur focused on technology, job creation and global justice. She is founder and CEO of Samasource, co-founder of Samahope, and a Director at CARE. She was named a Young Global Leader, Class of 2013, by the World Economic Forum.