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The BPO industry helped reduce global poverty over the last 30 years — take pride in it!

May 2, 2018 Mike Dershowitz No comments exist
From the Desk of Mike Dershowitz

I’m still reflecting on my time at the PACE conference last week. It was my first call center industry conference, and there were a lot of people there who had been in the industry much longer than I have. I came away a little sad at what I experienced from those leaders that had been in the industry for quite some time.

First and foremost, there were a lot of people there who had lived on the front lines of globalization from the late 80’s, through the 90’s and into the oughts. What I found interesting was that some embraced it, some ignored it, and some rejected it — but they were all affected by it.

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As a newbie to the industry, I was keenly interested in their insights. Generally, as a lifelong learner, I’m always interested in what I don’t know I don’t know. The more I spoke to them, especially those in the latter two categories — ignoring and rejecting, I detected a sadness that surprised me.

It felt like a “those were the good times” melancholy, especially those that had been in the industry for closer to 30 years, when BPO clients first looked to the call center industry in the US to help them achieve their sales or service goals, and outsourcing was new.

For all three types of folks, it was clear that all had their specific challenges over the last three decades. All were affected by what has now become the shitty reputation of our industry — as a bunch of boiler room operators with no regard for the law. And let’s be honest, there are those in our industry who are 100% NOT like that, but the 4th estate is a fickle beast — and there are plenty of examples of how consumers, regulators, and clients have been pissed off by our industry, and so largely that’s the reputation our industry now has.

Fast forward to globalization in the oughts, and the perception gets worse. Customer service plunged as the Fortune 500 pursue the lowest cost possible per unit of work, pushing much of the risk of operating in low-cost environments into the hands of their outsourced, offshore operator. They, in turn, malheureusement, push that risk onto their employees. Cue the Chaos.

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As I was speaking to these people, talking about the bad side of our industry, there was a type of “co-lamentation” that took hold between us, and thus a small kinship formed — it was like we had been in battle together or something (even though I was just a consumer living through the Chaos of globalization during this time, and not really an active participant, like they were).

Once we got past that part of the conversation, they inevitably asked what I did, and I was honest — telling them how we’ve organized Rethink Staffing for the goals of poverty alleviation and income growth, and been rewarded with explosive growth.

The linking of the words “poverty alleviation” and “call center” were new to them. You could see the surprise come over their expressions as my words were met with furrowed brows and tilted heads by those, especially in the “reject” or “ignore” categories. For those in the “embrace it” category, I didn’t get as much surprise. What I did get was more of “huh, I never thought of it like that.”

I guess they never realized how much economic impact in the developing world the BPO industry was having on people’s lives. It’s a shame, especially since that’s probably the one thing our industry can be proud of over the last 30 years.

steps towards the unknown future
Image from Pixabay

But as I was talking to them about it, I realized that I didn’t have the numbers I needed to convince them. So here are really the only two numbers we need as an industry to prove that we are making a difference:

  • According to the World Bank, from 1993 to 2013, the percentage of the world living in abject poverty (less than $1.90/day) fell from 34.1% to 10.9%. Roughly speaking, we went from a third of the world living in abject poverty to a tenth. The news isn’t all bad.

Data are based on primary household survey data obtained from government statistical agencies and World Bank country departments. Data for high-income economies are from the Luxembourg Income Study database. Source: World Bank Development Research Group (License: CC BY-4.0)

  • According to research (Everest Group, p. 22), the effects of impact sourcing are most felt in three developing countries: India, Philippines, and South Africa. From 2006 to 2016, the total number of workers in the IT-BPO industry (defined as including Call Centers, IT-BPO, and BPO) of these countries, went from around 1.54 million employees to over 5 million.

World Stats for BPO workers

NOTE: Data for the Philippines came mostly from Bangko Sentral ng Pilipinas, Asian Development Bank, and Philippine Statistics Authority. Data for India were gleaned from NASSCOM and various news sources, including Network Magazine India. Data for South Africa were generally sourced from academic research and reports by The Business Trust and Deloitte.

According to worldometers.info, world population in 1993 was 5.59 bn people, which means that 1.89 bn were living in poverty. By 2013, the world population was 7.21 bn, but only 788 million were living in abject poverty. The population grew by almost 2 bn but we have over 1 bn fewer people living in poverty.

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Folks, the only force on earth and in the history of humanity that can make that type of wholesale change is economics (and mostly free-market economics for that matter). We should all be proud, but if we’re in the BPO industry, we have had a more direct impact.

One factor that the IAOP estimates and that is very important is the multiplier effect of BPO employment. There are actually two multiplier factors here. First, is the general economic factor — higher paid employees spend more money in their local economy (see my article on the multiple vs. percentage income change factors for why), thus creating economic growth from the vendors from whom they purchase.

The other factor is the support those employees give to those family members around them. In the developed world, chances are that you don’t have to give your family members much support, because there’s always enough to go around. But in the developing world, and I hear this all the time from my Agents at Rethink Staffing, they’re supporting siblings, parents, and extended family members. That’s the second multiplier factor.

The IAOP estimates that every BPO job creates another 3–4 jobs in the local economy in which that job exists. So, if the IT-BPO industry in India, Philippines, and South Africa created 3.5 million jobs more from 2006–2016, then you need to multiply that by a factor of 4 — or more than 14 million indirect jobs.

And, that’s just three countries. Imagine what the numbers would have been like if we were able to keep track of ALL the agents employed by outsourcing companies around the world in the same 10-year period. By now, the global BPO industry would have lifted hundreds of millions of more people out of poverty either directly or indirectly.

global poverty headcount from 1983 to 2016

Source: World Bank Development Research Group

Further, of the roughly 1.08 bn fewer people living in poverty, with the BPO industry generating millions of jobs and stimulating economic growth, you can confidently say that the IT-BPO industry has been a major architect of poverty alleviation over the last decade or so.

As early as 2007, India has seen at least 20% of its population in the “deprived” category moving out and becoming part of the middle-class or the “strivers” category which saw a corollary growth of 20%. Meanwhile, the Philippines saw a 70% decrease in the number of families belonging to the lower-income brackets between 2006 and 2015.

So, on an absolute basis, of the 23.2% of the world’s population that is no longer living in poverty today, you can say that the IT-BPO industry has had a direct role in moving people out of poverty, and ending their suffering that is living in poverty.

Conclusion: The numbers back you up: if you’re in the BPO industry, you’ve personally contributed to alleviating global poverty and suffering in the world. I don’t know about you, but that’s at least something to get you out of bed every morning. But more than that, it’s something to be proud of.

But we’re not done. More on that later.

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If you have questions about fair trade entrepreneurship and how it applies to your company or you just want to talk about outsourcing in general and how to set up a business in the developing world, feel free to contact me or leave your comments below.

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