Apr 11, 2013 - From $100.1 million to. $500 million. From $500.1 million to $1 billion. From $1.1 billion to $5 billion. From $5.1 billion to $10 billion. Over $10.
Social Responsibility Trends and Perceptions in Global IT Outsourcing Paper 3663 Ron Babin, DBA Peter Myers, MBA
Socially Responsible Outsourcing This presentation will examine some of the social responsibility issues in outsourcing and suggest how organizations can take a more socially responsible approach to outsourcing The authors of this paper would like to acknowledge and thank the International Association of Outsourcing Professionals (IAOP) for their support and contribution of data for this research. Socially Responsible Outsourcing
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Agenda • • • • • •
Research Approach Sample Demographics Trends Analysis and Interpretation Conclusions Next Steps
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Research Approach • Over the last six years, IAOP distributed an invitation to its global membership to participate in the survey during the February March timeframe of 2009, 2011 and 2013. • The email invitation was sent to approximately 10,000 individuals registered in the IAOP database. Data were collected on a proprietary IAOP survey mechanism. • The survey questions are guided by the international CSR standard, ISO 26000. Socially Responsible Outsourcing
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Sample Demographics • Total responses varied for each survey with 178, 207, and 186 submitted in 2009, 2011, and 2013 respectively. • 30% of the respondents are from customer or buying organizations. • 50% of the respondents are from outsource providers. • 18% of respondents are from advisors. • 2% are from academics and media participants. • Approximately 50% of the respondents are from the United States. Socially Responsible Outsourcing
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Demographics – Annual Revenue 16% 14% 12% 10% 8%
2009 2011
6%
2014
4% 2% 0%
Under $1 million
From $1.1 From $5.1 From $10.1 From $50.1 From $100.1 From $500.1 From $1.1 From $5.1 million to $5 million to $10 million to $50 million to million to million to $1 billion to $5 billion to $10 million million million $100 million $500 million billion billion billion
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Over $10 billion
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Demographics - Industry 25%
20%
15%
10%
5%
0% 2009
2011
2014
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Demographics - Discipline Communications & IT Management 2%
2% 2%
Document Management 12%
3%
Administrative Services
3%
Customer Relationship Management Facility Services
4% 10%
Logistics
4%
Industry-Specific Services Human Resource Management
4%
Marketing 9% 5%
Corporate Services Transaction Product Manufacturing
6%
Financial Management 9% Research & Development 7%
Legal 7%
9%
Sales
Real Estate and Capital Asset Management
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Trends 3.000
Protectionism, to keep services in our area and country Political instability in the countries from which you source Social resistance to global distribution of work
2.500
Corruption in business dealings with outsourcing suppliers
2.000
Climate change
1.500 2009
2011
2014
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Environmental damage resulting from your outsourced services
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Analysis and Interpretation Importance of CSR as a component of business strategy Clients
Doubled in four Clients years 2009 2011 2013
Providers
Providers 2009 2011
2013
IAOP, 2009-14
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Analysis and Interpretation How often clients give preference to outsourcing providers who have demonstrated CSR capability
Doubled in four years 2009 2011
2013
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Customers are sensitive to Social Responsibility “90% of consumers stated they would stop buying products from a company if they learned it was using deceptive or irresponsible business practices, and over half claimed they had in fact stopped buying a product or service in the past 12 months because of such behavior” Business Development Bank of Canada, 2013 Socially Responsible Outsourcing
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Royal Bank apologizes to outsourced workers Royal Bank chief executive Gordon Nixon issues public apology to outsourced workers.
Jeff McIntosh / THE CANADIAN PRESS
Gord Nixon, president and CEO of the Royal Bank of Canada, issued an open apology Thursday. By: Dana Flavelle Business Reporter, Published on Thu Apr 11 2013
The Royal Bank of Canada will make a public apology to the workers affected by the bank’s outsourcing arrangement with a foreign company. The apology comes at the end of a week of drubbing from RBC customers and labour critics after the bank’s outsourcing plans were disclosed in media reports. RBC should have been more sensitive and helpful to the affected employees, chief executive officer Gord Nixon says in a letter to be published in newspapers Friday.
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Why is this important? April 24, 2013 People and rescuers gather after an eight-story building housing several garment factories collapsed near Dhaka, Bangladesh.
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Analysis and Interpretation Issues considered by clients in evaluating the CSR capabilities of outsourcing providers
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Analysis and Interpretation Future expectations of the importance of corporate social responsibility 56% 52% 49%
26%
24%
23%
2009 2011 2013
22%
14% 14% 7% 5% 1%
2%
Much less important
3%
4%
Less important
IAOP Surveys 2009, 2011, 2013
Stay the same
More important
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Much more important
Analysis and Interpretation Methods planned to increase CSR commitment 50%
Increase resources and/or personnel in the CSR area
57% 46%
43% 46%
Reporting publicly on CSR activities
Increasing emphasis on CSR activities of service providers
38% 30%
Increase audits of outsourcing provider(s)
41% 48% 38%
Conduct more outsourcing provider training on social and/or environmental standards
33% 42% 31%
Make CSR a board responsibility
25% 25% 19% 20%
Hire external expertise to advise CSR program
31%
Other
0% 0% 13%
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2009
2011 2013
Conclusions 1. 2.
3.
4.
5.
The trends identified in the data are clear: there is a growing expectation regarding CSR in the minds of outsourcing buyers. Some of the data suggest that CSR as a strategic topic may be plateauing, but it continues to remain an important if not critical topic for most organizations. Our research will continue to survey the outsourcing industry on this topic; at this point we can suggest that formal CSR capabilities will continue to be important in the outsourcing relationship between buyer and provider. A few years ago, in the first 2000 decade, the topic of CSR was not considered in outsourcing; today, we suggest, that outsource buyers and providers increasingly focus on CSR as important capabilities in the outsourcing relationship. Increasingly we expect to see CSR as a required component in the outsourcing process. Socially Responsible Outsourcing
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The Next Step: Impact Sourcing • Using the power of business process outsourcing (BPO) to create sustainable jobs can generate stepfunction income improvement for those at the base of the economic pyramid (BoP). • This emerging field, termed Impact Sourcing (IS), employs people at the base of the pyramid, with limited opportunity for sustainable employment, as principal workers in business process outsourcing centres to provide high-quality, information-based services to domestic and international clients. • Strongly supported by the Rockefeller Foundation Source: “Job Creation Through Building the Field of Impact Sourcing”, Monitor Inclusive Markets ,Working Paper, June 2011 Socially Responsible Outsourcing
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References “Job Creation Through Building the Field of Impact Sourcing”, Monitor Inclusive Markets , Working Paper, June 2011 http://www.rockefellerfoundation.org/blog/job-creation-through-building-field “Sustainability Practices in Global IT Outsourcing” By Ron Babin and Brian Nicholson Manchester Business School Working Paper No 602 Electronic copy available at: http://ssrn.com/abstract=1683288 “How green is my outsourcer? Measuring sustainability in global IT outsourcing” By Ron Babin, Brian Nicholson. Strategic Outsourcing: an International Journal 4.1(2011): 47-66.
“Corporate Social Responsibility and Global IT Outsourcing” By Ron Babin, Steve Briggs, Brian Nicholson Communications of the ACM, Vol. 54 No. 9, Pages 28-30 “The Case for Impact Sourcing”, EVEREST GROUP (2014), at http://www1.everestgrp.com/impact-sourcing.html “Information Technology Impact Sourcing” HEEKS, R. (2013), Communications of the ACM, 56, 4. Socially Responsible Outsourcing
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Thank you Questions? The authors of this paper would like to acknowledge and thank the International Association of Outsourcing Professionals (IAOP) for their support and contribution of data for this research. Socially Responsible Outsourcing
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