On October 6, 2015, our CEO, Dimitri Zakharov, was a keynote speaker at the UNCTAD conference on ‘Global e-Commerce – Breaking Barriers to Inclusivity’ in Cambridge, UK. The conference presents key findings from the UN’s annual Information Economy Report. Impact Enterprises was proud to present its work in Zambia as a shining of example of how e-services are expanding into Africa and presenting new employment opportunities for a generation of underserved youth.
Below is a transcript of the speech.
Impact Sourcing in Africa: How the e-services industry is bringing inclusivity to a new generation
I want to thank the UNCTAD and Torbjorn Frederikson for inviting me to speak to you all today. It’s a pleasure to be here not just to represent our company, Impact Enterprises, but also Zambia, and its emerging tech sector, and Africa as a whole. I want to discuss with you today the emerging digital service sector in Africa and from our perspective, the success and challenges faced.
To give some background, Impact Enterprises is the first socially conscious outsourcing company in Zambia. We provide personalized, cost-effective support services such as lead generation, content moderation, and order management for dynamic, growing companies and organizations.
We operate in an emerging sector called “impact sourcing.” This is the subsector of the broader business process outsourcing, or BPO, industry that brings sustainable employment to underserved communities. Today, it accounts for 12% of the overall $104B BPO industry and is growing 11% per year.
This has been happening in India, where companies are now moving away from the tech cities like Bangalore into Tier 2 or 3 rural locations. This is happening in Central and Southeast Asia. And of course, in Africa, where youth employment stands at 51%.
Our company, Impact Enterprises, launched in 2013 in Eastern Zambia. Zambia is a southern Africa country of about 14 million people where unemployment for 20-24 year olds is at 59%. Those who can’t find work often go into the informal economy, the majority being agriculture.
At Impact Enterprises, beyond simply providing jobs, as a social enterprise we are committed to the professional development of our employees. Through internal workshops, lectures, and assignments, we strengthen their work during employment with the company and function as a springboard for pursuing higher education or better employment opportunities.
To give you some statistics, for 57% of our employees, working at Impact Enterprises is their first formal job. Just over half of our employees are female. And 83% of our employees now support on average 3.5 other people. They’ve already become leaders in their families and communities.
Bringing the service sector to Africa isn’t just a social cause. It’s become an economic necessity. Like many African countries, Zambia is a commodity based economy. 70% of its exports are from copper mining, a large amount being demanded by China. The problem is, copper is now at a 6 year low and downturn in China has attenuated the Zambia economy.
What Zambia, and many countries, must do is diversify and this is where technology services can help. Like the manufacturing industry, technology services allows for expansion in worker productivity, with the added benefit of requiring relatively little investment to achieve economies of scale. This is why we’re seeing Africa becoming the next destination for outsourcing.
Best of all, companies are already seeing the benefits that impact sourcing has, even beyond the traditional outsourcing model. First off is of course the social impact. For our employees at Impact Enterprises, they report an average 74% increase in their salary from their previous income. 92% said their experience will help them get a new job in the future. One employee wrote, “My job has opened up my mind to how people run their businesses in the other countries.”
From a business case, impact sourcing is proving a better value overall. Compared to even traditional BPO services, impact sourcing has demonstrated added value of 4-6% in South Africa, 10-15% in Kenya. And for our clients, we’re providing cost savings of as much as 50%.
Impact sourcing also provides a new pool of talent that’s familiar with the domestic market. Africa already has the youngest population in the world and will have the fastest growing economy in the next 5 years. This is increasing demand for local expertise.
It also is showing lower attrition rates among employees compared to traditional outsourcing, between 15-40%. This means employees stay longer, gain specialization in their service, and provide superior support.
So why is this so difficult to implement?
Why can’t we just give everyone a computer and internet hookup and they start competing for jobs? Rather than look at the macroeconomic issues, I want to look at this from a different perspective. I want to discuss the evolution of the workplace and how that presents a barrier to entry for a new workforce.
Over the course of our human civilization, the workplace has evolved through 3 major phases. In the first phase, for thousands of years, people worked as individuals. 80-90% of the world’s population was farmers. Work was incredibly unstable and offered no protections. And we still see this in places like rural Africa, where women are growing and selling the exact same vegetables as everyone else for a living.
Eventually, the second phase emerged, which is the idea of the company. This really took hold after the Industrial Revolution and was a drastic shift. Now we began working in teams and hierarchy emerged. More importantly, we had stable, predictable jobs and the corporation protected the individual. We started being able to choose our careers and the idea of work/life balance emerged.
Now, in developed countries, we’re seeing the third phase emerge. This is the time of the freelancer. Thanks to technology, the individual can take on an entire company in a David vs Goliath fashion – think of Uber. We are seeing very horizontal and flexible companies that are blending our work life and personal life.
This third phase is how many of us here are starting to think. But this poses a problem. What we often see in social agendas that try to address the issue of unemployment in developing countries is trying to deploy a Phase 3 type model without having the population adopt the principles of working in a Phase 2 company. For instance, a model of using cell phones to perform microwork in rural locations.
To illustrate this problem, at Impact Enterprises, at the end of last year we conducted our first bi-annual survey. One of the questions we asked our employees was, “What skills have you gained from your employment here?” And the response we got was a complete surprise.
The top answer wasn’t that they learned to use a computer better or how to utilize the internet for research. The top answer was, “I learned to be responsible.” They learned how to dress for work, be on time, work independently, and be accountable for their projects. As one person wrote, “I now understand how to survive in a corporate world.”
This is an incredibly important finding that shows the implication of bringing digital services to a place like Africa. In Zambia, where most people still have a deep connection to the village that still operates in the Phase 1 individual mentality, we can’t overlook the step of adopting the responsibilities of teamwork.
That’s not to say that there aren’t brilliant individuals who can dive into the Phase 3 marketplace and succeed, but this isn’t a scalable approach.
For a sustainable service sector to exist, it requires a deep investment in individuals. We’re talking about more than just digital literacy. We’re talking about shaping the mindset of the future of work.
Last week, as many of you know, the UN adopted the Sustainable Development Goals as the successor to the Millennium Development Goals. On the flight over here, I reread the new SDGs and took note of the last one – number 17.
To strengthen the means of implementation and revitalize the global partnership for sustainable development
What we’ve seen change over the last 20 years is a move from a sole reliance on the public sector for change, to a stronger partnership with the private sector.
If you go to South Africa today, what you will see is a rich, mutual dialogue that’s happening between different stakeholders. There’s corporations that are working directly with universities and training facilities to shape the curriculum. The government is talking with companies to shape policy to meet global demand. Multinational organizations are raising awareness with customers on the benefits of impact sourcing.
In Zambia, this dialogue is only just now emerging and is requiring the private sector to step up to the challenge. At Impact Enterprises, we’ve taken on the role of multiple stakeholders to prepare our workforce for the responsibilities they take on.
This year, in 2015, we’ve launched an ongoing curriculum of workshops that address the soft skills necessary for the workplace, such as professionalism, teamwork, and problem solving. We bring in guest speakers to talk about their careers. Here our employees are doing the “marshmallow challenge” which is a creative thinking exercise.
We’re particularly proud of the weekly women’s group we’ve started that allows the female employees at Impact to get together and support each other in their lives. They discuss career advice, self-esteem, gender equality, and in general how to be a better person.
What the impact sourcing sector is doing is opening new possibilities, both for the communities we’re impacting locally as well as the market opportunities we’re creating globally. It’s asking, who are we missing? How far can we go?
So I want to close out not with my words, but with one of our employees. The other month, we featured our women’s group on our company blog and we asked for them to contribute, and loved this quote from Debra. She’s the one right in the middle in the white dress. Debra started with us in May of this year and has been with us for the last 5 months.
“Being at Impact Enterprises means a lot to me. With a dream of becoming a midwife vigorously bubbling in my spirit, it has helped in numerous ways to reestablish my self-esteem and confidence as a woman.
With this at the back of my mind, I look forward every day to pursue this dream. When a person is surrounded by positive minded, dream-oriented, enthusiastic individuals, life is worth living because you know you can make it everywhere.”
Thank you Debra. Thank you to the whole Impact team. And thank you all today.