Impact Sourcing

Outsourcing assists clients with transforming their business models to realize value, increase agility, source talent, and in recent years contribute to the Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DE&I) initiatives of the enterprise.

One of these ESG/DE&I initiatives is Impact Sourcing, which “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.” ¹ Impact Sourcing not only provides opportunities for individuals but focuses on investment in the community; examples include PeopleShores investment in Clarksdale, MS with a regional delivery center and Indivillage, which is working to bridge the rural-urban divide in India.

In addition to the fundamental and heart-warming benefits to the people finding new capabilities and being able to participate more fully in the global economy, utilizing rural talent does help reduce cost. However, companies are finding reduced attrition rates to be a major benefit of utilizing Impact Sourcing Service Providers (ISSPs). The NASSCOM (National Association of Software and Service Companies) Foundation’s Next Generation Outsourcing report found that “attrition rates in rural area of India are 2–3 percent compared to up to 35 percent in urban areas.” This level of employee loyalty is driven by the investment in education, proximity to the employee’s family and the contribution to the community.

Many ISSPs are members of the Global Impact Sourcing Coalition (GISC), which launched in September 2016 with a mission to “build more inclusive global supply chains through advancing wide-scale adoption of Impact Sourcing.”² The Coalition quickly developed the Impact Sourcing Standard, which defines the minimum requirements and best practices for ISSPs to demonstrate their commitments to inclusive employment. Impact Sourcing started with a focus on providing Business Process Outsourcing (BPO); however, clients will find that mature ISSPs are also providing IT Outsourcing (ITO) services.

Outsourcing has always, and will continue to, contribute to client diversity spend utilizing the relationships of global service providers. However, there is a market trend to develop a specific ISSP program which contracts directly with these historically niche providers, which allows the enterprise to negotiate investment in new communities and pricing, which can include federal, state and local tax credits.

When considering outsourcing service providers, KPMG facilitates the selection of potential providers based upon the selection criteria most important to our client’s business outcomes, which now includes ESG/DE&I and Impact Sourcing. 

Footnotes:

1. Source: Global Impact Sourcing Coalition (GISC) Website (gisc.bsr.org) main page (November 8, 2022)
2. Source: Global Impact Sourcing Coalition (GISC) Website (gisc.bsr.org/about) main page (November 8, 2022)).