The Outsourcing Dilemma presents an interresting case for SROI (Social Return On Investment) that somehow struck my globally-social-conscious-citizen nerve.
Recently, the Roberts Enterprise Development Fund has been promoting the calculation of Social Return on Investment (or SROI) as a means of addressing these types of situational issues. SROI works much like standard business ROI calculations but attempts to quantify the social impact of investment as well as the economic. In the case of DDD (Digital Divide Data), consider the unfortunately common case of Soriya Nove, age 22. After being sold at the Thai border, she was rescued from a brothel last year and is now staying at a shelter for victims of sex trafficking while working for DDD. The cost for DDD to train her is roughly $1,000; she has the equivalent of a U.S. second grade education. In applying the SROI model to this case, one might measure the social impact like this:Estimate that one in four urban Cambodian prostitutes have a lethal STD. Next estimate that the average prostitute my spread this STD to at least 20 people per year who then spread the disease to one additional person each, totaling 40 people now infected with a lethal STD annually and who will die prematurely. Now consider that the average prostitute works for three years and you arrive at a total of 120 people now likely to die because of one person's activities. When DDD hires 60 trafficked women, the math adds up to 1,800 lives saved! That means that a $33 investment for DDD results in one life saved. This is an impressive SROI, and it doesn't even consider the increase in standard of living, education, earnings power, and health care that come with DDD employment.
Somewhere in the social fiber of US culture is a sense that this is the right thing to do. Politically, this is such a hot potato that I suspect that the very mention of the phrase SROI in the halls of Washington would mean death to any political career. And for the thousands on indivuals whose jobs have been outsourced: SROI is much like the business man who wet himself while wearing a dark suit - he had a nice warm feeling, but nobody else knew the difference.
Update 18 November 2004: Be sure to read Dr. Jeffrey Cornwall's reaction to this article in his blog The Entrepreneurial Mind. Jeff identifies a third dimention to the outsourcing debate that deserves attention and further discussion:
"The choice is not simply one of free markets or government controls. There is a third dimension made up of moral and ethical criteria that should be shaped by our culture. Sadly, we seem to keep trying to insulate our culture from the moral virtues which should be at its core. In business, just as in government, we have moved to defining ethics in a purely legalistic manner. That is a sure ticket to more government involvement in the day-to-day aspects of our economic lives. The challenge is to integrate our shared moral traditions into our business decision making rather than simply default to government bureaucrats and lawyers."