Have you ever wondered who does those annoyingly repetitive tasks of data validation, number checking and content moderation? I may have found the answer. This week I’d like to profile a technology company which has come up with an innovative “win-win” solution to connect some of the world’s biggest and most sophisticated tech companies with the jobless poor in developing countries. The company Samasource which means “equal” in Sanskrit does this through a concept called microwork or the division of big tasks into smaller ones which can be performed by unskilled labor online. It is a brilliant idea that proves people from villages and urban slums can be reliable parts of the global knowledge economy supply chain. It is so good that it has as the Financial Times described really taken off and thrust the company and its creator into the limelight being labeled Wired magazine as one of the 50 people who can change the world and by the Wall Street Journal as one of businesses rising stars.
WHAT IS THE BUSINESS ABOUT?
Samasource digital services non-profit that acts essentially as an intermediary service which connects low-cost labor to do specific short-term jobs in developing countries with large technology companies such as Google, LinkedIn, Microsoft, etc. that need data checking, content mediation done at a low-cost and don’t really care where the work is being done. The model it uses is called “microwork” which essentially divides large jobs into small tasks—microwork—and sends it to centers in developing regions, where employees complete it using a web-based interface. Most of the work involves basic repetitive tasks such as internet research, data updating and validation, content moderation, transcription, etc. It is the type of work that can be done by people with very little training or education in remote locations. In doing so it provides the microworkers – often women, a living wage (typically $100 to $300 a month), as well as the opportunity to gain skills that can help them in the long-term. And the likes of Google, by using microwork centers instead of large for-profit vendors, can get jobs done for 30% to 40% less. This is an attractive “win-win” value proposition.
HOW DID IT START?
Samasource, based in San Francisco, was founded in 2008 by the now larger than life Leila Janah. Who at a very early age decided to dedicate her life to reducing poverty for as may people as possible. And who had grown largely frustrated by the traditional forms of development aid where large sums of money are directed to governments and big institutions instead of people on the ground (a frustration I share). She had her epiphany about what to do after she finished Harvard College in 2005 when she was working for a consulting firm that sent her to India to help a large outsourcing company. During that trip she thought if outsourcing could generate billions of dollars for a few entrepreneurs, then, why couldn’t the same model be used to benefit more than a billion people at the bottom of the pyramid. With that thought Samasource was born.
In the beginning it was not easy and she survived with very little support but for a few donors who transferred her money through PayPal. Then in the summer of 2009, she caught her first break as Samasource was selected as one of two non-profit members of the Facebook Fund, an incubator of tech startups that used Facebook in new ways. This started a spiral of interest from large donors and tech companies. First the Rockefeller Foundation gave them a small grant to help get the company off the ground and soon after they also got support from The MasterCard Foundation, Ford Foundation, the U.S. Department of State, Cisco Foundation, eBay Foundation and Google.org. Since then it has grown dramatically and now has more than 30 employees and sources work in places like Haiti, India, Kenya, Uganda and South Africa.
WHAT IS THE SOCIAL NEED IT ADDRESSES?
Essentially Samasource provides employment opportunities for the rural poor in developing countries. It aims to create jobs with fair wages for individuals with limited opportunity in rural or economically depressed communities. According to their website there is a global shortfall of 1.8 billion formal jobs. Most people in developing countries work in the informal sector doing either farming or domestic service work. These jobs do not provide people with the opportunity to save and grow their incomes to break the cycle of poverty. Samasource hopes to contribute to the solution for this problem by providing formal microwork and a chance to earn a higher income and through this more importantly a chance to build their sense of dignity. They estimate than ~43 million people world-wide could benefit and to date they say they have paid more than $2.5 million to over 3,000 workers across nine countries.
WHAT IS THE BUSINESS MODEL?
- Value proposition – Its value proposition is its ability to source projects from the likes of Google, LinkedIn and Microsoft and to recruit and manage labor in developing countries. It also adds value by being to break apart large projects into manageable short term pieces of work and then recompile them in a form which creates value to the customer.
- Customers – large technology companies that need large data verification and moderation services done at a low-cost (similar motivation as traditional outsourcing).
- Channel – is 100% done online through proprietary software platform which allows them to verify the quality of work
- Revenue Streams – Samasource presumably gets paid on a contract basis from large companies needed outsourced data verification services. It could also in theory receive revenue through training programs and licensing of its software to third parties.
- Cost Structure – Costs include the overhead from the office in San Francisco, the field centers and technology infrastructure as well as the development and maintenance of its proprietary software SamaHub. The majority of its costs though should be from the wages it pays to its microworkers – who are paid fair wages and also whom receive free training as part of their employment.
- Key Partners/Resources/Activities – The key resource I would say is the software technology platform which allows jobs to be separated and done on a wide variety of machines at a low-cost. In addition the relationships with key donors and tech giants are fundamental to its success.
WHAT ARE SOME CONCERNS I SEE WITH THE MODEL?
- Social benefits to the poor – As with any outsourcing model one could call into question the notion of large companies cutting costs by avoiding have to pay health and other social benefits to the employees who are doing work for them. While microwork does provide formal jobs does it provide the type of benefits and security a full-time job would provide? In addition by sourcing in developing countries minimum wages are often far below what they would have to pay in OECD countries where most companies are headquartered. One could ask if this is fair. But I guess the real question is what is the alternative? If it is farming or domestic work then I think for sure these jobs provide the step on the latter to a better life.
- Machine competition – What is the likelihood that computers will eventually be able to do at a lower cost what these low-skilled laborers are currently performing? Will there always be a demand for such jobs? Eventually I would imagine that machines will replace humans for most of these jobs.
- Identifying labor in sufficient volume – I think for the business to grow it is fundamental that Samasource is able to identify, train and quality control large amounts of low-skilled labor. This seems like a daunting task with such a small admin labor force. Can this model continue to work?
- Quality control – The jobs will only to continue to come to Samasource and others like it as long as the work which is being performed maintains a low enough error rate. It is absolutely critical the company minimizes job error, otherwise a large customer will leave, tell his/her friends and never come back. A huge risk for such a business.
WHAT DO YOU THINK?