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Building Value Chains: How Outsourcing Can Create Social Impact Value

| Friday October 8th, 2010 | 0 Comments

Businesses often outsource to cut costs.  But what about outsourcing to create value, specifically social impact value?  Better World Books, Benetech and Samasource are three innovative businesses that are doing exactly that.  The three firms spoke on a panel at SoCap 2010 to explain how the value chain came together after Good Capital, a VC firm that provided a round of funding to Better World Books, recognized the potential for synergies between them.

The chain starts with Benetech, a Palo Alto based company that provides technology solutions to solve social issues.  Benetech’s Bookshare program is a web-based digital library for people with print disabilities.  Speaking at SoCap 2010, Betsy Beauman of Benetech described how in 2007, after winning an award from the U.S. Department of Education, they realized they needed to grow quickly and needed a channel partner to do so.  Good Capital introduced Benetech to Better World Books, a social enterprise that collects and sells used books in order to fund literacy initiatives and donate books to communities in need around the world.  Better World Books has a warehouse in Indiana where they house over 6 million titles.  Now, when Benetech receives an order from a teacher in Mexico with a vision-impaired student, they place an order with Better World Books who finds the book in their warehouse and de-binds and scans it to put it in digital format.  The technology is by no means flawless, though, and the digital file needs to be proof-read for errors.  That’s where Samasource steps in.

Leila Chirayath Janah founded Samasource in 2008 on the premise that there are millions of people currently living in poverty who are capable of doing data work that computers cannot yet do.  Samasource takes the scanned files from Better World Books and outsources them to small businesses in countries like Kenya, India and Haiti that have trained English-speaking workers in basic computer technology.  The workers double check the RTF files against a PDF and make corrections to the book.  The electronic file is then sent back to Benetech Bookshare where it is placed into audio or large text format and then sent back to the school in Mexico.  As for waste, Better World Books CFO Paul Sansone explains there is virtually none.  The de-bound books are stored at Better World Book’s warehouse until all proof-checking is done and then they are either recycled or sent to literacy partners who re-bind and deliver them to new readers.

So what kind of overall impact are these three partners having?  Benetech currently has over 90,000 books that are being accessed by 100,000 members around the world.  The partnership with Better World Books and Samasource has allowed Bookshare to reduce the time to get a title to a member from 6 months to just 4-6 weeks.  From its 40 million book sales, Better World Books has donated over $9 million and 3 million books to nonprofit literacy partners and libraries around the world.  To date, it has delivered over 18,000 titles to Benetech Bookshare.  Samasource is now outsourcing $1.5 million in technology work small businesses that employ 900 people in 5 different countries.  One of its businesses in Kenya that does work for Bookshare and Better World Books started out with just 4 employees; it is currently employing 35 people, and plans to hire an additional 50 in the coming months.

All three companies are now exploring new ways to use their partnership to increase their impact.  For example, Benetech is developing a program with the U.S. Department of Education to figure out how to make pictures and images accessible to the vision-impaired.  They are working with Samasource to develop programs to train their employees to receive images, use crowdsourcing applications to understand their meaning and relevance to the reader, and digitize those image descriptions to create a more complete reading experience.

Vale is a second year MBA student at Duke University’s Fuqua School of Business and is interested in how for-profit businesses are finding innovative ways to create social and environmental value and how capital is being driven towards those businesses. Prior to enrolling at Fuqua she was the Deputy Director at Empowerment Group, a non-profit microenterprise development organization based in Philadelphia. This summer she interned with B Lab, auditing certified B corporations and working on the organization’s policy and capital markets initiatives. Vale has a BA in Economics and Political Science from Swarthmore College.


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