How Impact Sourcing is Creating a Middle Class in LATAM

Impact sourcing is growing in many parts of the world, including Latin America and the Caribbean, and it is moving families and communities from poverty into the middle class. NSAM spoke to Samasource and Alorica about what's happening and what still needs to be done.

impact sourcing

Ethical business is now a core agenda for employees and, by consequence, companies around the world, with a drive to move beyond notions of corporate social responsibility. Even the glamor of Silicon Valley is wearing thin, with workers now looking to companies perceived as doing good.

One area that is increasingly of interest is impact sourcing, a socially responsible business process outsourcing approach that benefits businesses, communities and individuals. Impact sourcing is growing in many parts of the world, including Latin America and the Caribbean, and it is moving families and communities from poverty into the middle class.

Heather Gadonniex of Samasource

Heather Gadonniex, VP Marketing and Strategic Partnerships at Samasource, says that companies like Samasource can deliver high quality digital services at competitive market rates, while improving the lives of workers and their economies at large.

Samasource specialises in image, video and sensor data annotation and validation for machine learning algorithms for applications from self-driving cars to smart hardware, and its social business model has helped over 50,000 people move themselves out of poverty.

The Global 2000 spends trillions of dollars annually on goods and services. “Imagine if just 1% of this global spend went to impact sourcing. We believe this is where companies can … have the most positive impact on helping solve some of the world’s greatest challenges and meeting sustainable development goals – using purchasing power for good,” Gadonniex said.

Samasource has focused on providing jobs in AI and data annotation specifically and currently employ over 2,800 workers. Through that network of 2,800, they believe they have positively impacted 50,000 people – workers and dependents – who have been able to move themselves out of poverty.

Gadonniex believes impact sourcing can be beneficial to Latin America and the Caribbean, if done right. She cites the example of Venezuelans who, following the economic collapse, have resorted to crowdsourcing platforms to find work such as data annotation within the AI industry.

Microworkers in countries like Venezuela often earn very little. “Too often companies take advantage of those most in need by contracting work and paying pennies on the dollar without adequate training, support and overall education,” she said.

She cautions, though, that employment is not enough. “Impact sourcing is only sustainable and beneficial for economies when workers are provided training that leads to upskilling and career growth, full-time employment, benefits, and a living wage. In fact, currently, there are very few standards in place that address ethical digital procurement in the AI industry. This industry is in the early stages of understanding supply chain impacts, particularly as it relates to the procurement of training data annotation and labeling services – similar to where the apparel industry was over a decade ago.”

This is exactly the approach that Alorica uses in its impact sourcing initiatives across the region, offering training and support to those from disadvantaged communities, without the expectation that they would necessarily work for Alorica.

Jose G. Ramirez of Alorica

Jose G. Ramirez, VP of Operations and Chief of Staff: LATAM and The Caribbean at Alorica, says: “We are creating a middle class in most of the countries that we are operating in in the region. We provide jobs that pay more than the average jobs in some markets. We have young people who make a better living than what their parents can afford just by working for companies like ours. We believe that we are creating change and also helping the local economies.”

Ramirez stressed that impact sourcing is part of Alorica’s DNA. “It is not only part of our values but it is also living up to our name. Our slogan is making lives better one interaction at a time, and that’s what we are doing. I think it also builds a name for the brand in the region,” he said.

He added that this has benefits for the company, including being able to not only source top talent but also to retain it, keep them engaged and to bond with the teams as a family, “just because we are doing the right thing.”

“That money coming from abroad changes economies. It’s happening in Latin America and it is happening fast,” Ramirez said. “Impact sourcing is becoming more important in the different markets.”

Nairim Avila, Talent Acquisition Regional Director for LATAM at Alorica

Nairim Avila, Talent Acquisition Regional Director for LATAM at Alorica, explained that they partner with local organizations or government in different ways to support impact sourcing in those countries.

In Jamaica Alorica partnered with a local organization, which creates over 3,500 employment opportunities for disadvantaged populations. Alorica provided training to people from inner city communities in Kingston around contact center work.

“After the training, they were able to come to our site. Of those who came to our site, 24% applied for work and we hired 20 people out of those,” Avila explains.

For Guatemala and the Dominican Republic, Alorica is part of the BPO Cluster Association, which is also involved in impact sourcing. The Cluster sponsors some English language skills training and Alorica forms part of that language teaching. With all these initiatives, trainees do not have to pay any fees, and Alorica also often covers costs such as transportation and meal vouchers. Those who are trained are not obligated to work for Alorica, but can move into any part of the industry.

In this way, it is not just hiring people from particular communities; it is also about investing in those communities so that people have the skills, the expertise, the knowledge and the awareness to move into careers in the BPO industry.

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While most of Alorica’s clients do not have a specific impact sourcing strategy, Ramirez says socially responsible business is a huge movement globally and the biggest brands want to work with vendors who want to do good. There are often unforeseen benefits too – particularly in terms of retention.

While impact sourcing is not the only reason Alorica’s attrition rates are so low, it is part of the equation. The company runs at sub 5% attrition, as a regional target. In really tough markets like Panama, where competition is high and unemployment is low, they are running at 4.6% monthly. In Jamaica, where there is high unemployment and a great deal of need, Alorica is running sub 3% monthly in some accounts. “The only accounts that skew that amount are the seasonal accounts for retail,” Ramirez explains.

There are challenges to getting impact sourcing right. Ramirez says that more could be done if there was more support from local governments. “Sometimes it is difficult to coordinate these efforts with local government, even though we have support from local governments. It takes a lot of time to navigate through local government bureaucracy. Sometimes you are not allowed to do impact sourcing the way we want, because there is no political will.”

It is also really hard to capture data around impact, in terms of the business and the communities. “We try to do what we can with the resources we have,” Ramirez says. “There is just really no formula on getting impact right.”

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