While many economists are concerned that international trade aggravates inequalities[i], Samasource is proving that it is possible to increase productivity for companies in the US while creating income opportunities in emerging markets. The key to their success? A Ford insight in the context of the Fourth Industrial Revolution. The World Economic Forum characterizes the Fourth Industrial Revolution by the “convergence of breakthrough technologies (…) that are transforming productions processes and business models across different industries.”[ii] Every day the world becomes more digital and more connected, while physical barriers become less significant. Samasource is a nonprofit that understood this trend and embraced the international trade of digital services as its core business. Founded in 2008, Samasource sources data projects from companies in the US, breaks them down into smaller components, and recruits and trains workers (mainly youth and women) in Kenya, Uganda, and India to complete these projects. Founder Leila Janah was inspired by Henry Ford’s assembly line. “Ford figured out a way to break down the making of an incredibly complex machine [the Model T] into small chunks that people with basic training could complete. He moved the Model T from the craftsman’s studio into the mainstream. The assembly lines of the future apply the same thinking to digital work.”[iii] Samasource’s clients include Google, Salesforce, and Walmart. The latest contracted Samasource to improve its e-commerce offer through machine learning via Product Classification. “Product Classification (…) is extremely data-intensive, as information is received in high volumes and various formats from a multitude of internal and external sources. Although algorithms can handle large datasets with relative ease, the scale, depth, and level of complexity of Walmart’s classification service requires human judgment and verification to ensure that the algorithms function consistently and correctly”[iv]. Samasource assigned a team in Nairobi, managed from San Francisco, to work as an extension of Walmart’s team. All parties considered the project a great success.
According to Accenture, outsourcing has become a major pathway for increased productivity. Apart from lowering costs, outsourcing allows companies to focus on their core business and solves capacity issues[v]. Leveraging on this market opportunity, Samasource has expanded its business and employed over 9,000 workers, most of them in the developing world.[vi] On one hand, Samasource was praised for delivering high quality to clients and fighting poverty. On the other, it received a lot of criticism for outsourcing to emerging markets work that Americans could have done. As a response, Samasource has established work hubs in San Francisco and New York.
On the short-term, Samasource is focused on scaling its business through two key strategies; (i) online training, and (ii) advisory services offering. Created in 2013, Samaschool provides training on digital skills and gig economy platforms. In 2016, it provided in-person training for 187 people in the US, but reached 29,940 people worldwide through its online training[vii]. Instead of replicating its model in different regions, Samasource is increasingly advising other players entering the so-called impact outsourcing space. It has been supporting UN agencies and the International Rescue Committee on their projects to improve livelihood opportunities for refugees in the Middle East and East Africa. These two initiatives helped Samasource break-even in 2016[viii].
On the medium-term, more and more competitors are entering the (impact) outsourcing space, with different business models. While Samasource has an impactful but expensive model, in which it establishes its own brick and mortar delivery centers, provide extensive training, and employ people full-time despite the workflow of projects, many companies are providing online freelancing platforms to match supply and demand for digital work, at lower costs. According to the World Bank, work on digital freelancing platforms currently accounts for 6% of the outsourcing market, but it has been growing 30% annually and is expected to reach $25 billion by 2022, employing over 30 million people[ix]. One medium-term alternative for Samasource would be to create its own freelance platform. While it could cannibalize part of its current portfolio, it could also be an opportunity to expand its services and segment them based on the type of activity, skills demanded, or level of excellence required.
Currently, Samasource outsources tasks that require low to mid skills. The Big Data movement and the development of artificial intelligence represent big market opportunities, as they demand a lot of digitalization, data entry, image tagging, transcription, and other relatively simple digital tasks. However, once both stabilize and the demand for these mid to low skill tasks decrease, what will be the future of Samasource? Can they include more high skill tasks (such as coding or software development) on their business model? If demand for work declines, can Samasource keep employing people in both emerging markets and the US? How to justify it in face of isolationist and extreme nationalist pressure?
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[i] Schwab, Klaus. “The Fourth Industrial Revolution: what it means, how to respond.” World Economic Forum, January 2016.
[ii] World Economic Forum. “Impact of the Fourth Industrial Revolution on Supply Chains”, October 2017 http://www3.weforum.org/docs/WEF_Impact_of_the_Fourth_Industrial_Revolution_on_Supply_Chains_.pdf
[iv] Walmart and Samasource Case Study, accessed on November 15th 2017
[v] Accenture on the Future of work, accessed on November 15th 2017
[vi] Samasource 2016 Impact Report, accessed on November 15th 2017
[vii] Samaschool 2016 Annual Report, accessed on November 15th 2017 https://docs.wixstatic.com/ugd/e4cc5f_39a0d0a3b43a45668f969ef645c727e3.pdf
[viii] Samasource 2016 Annual Report, accessed on November 15th 2017
[ix] World Bank, The Global Opportunity in Online Outsourcing, accessed on November 15th 2017 http://documents.worldbank.org/curated/en/138371468000900555/The-global-opportunity-in-online-outsourcing