Creating Jobs in Urban Settings by Unleashing the Power of Emerging Sectors

Young people will make up an increasingly large part of the global population. Rural communities are aging, and young people are migrating to urban areas (and abroad). Mounting evidence suggests that few young people see a future for themselves in the agriculture sector. Then the question is: what does the future hold for creating jobs in urban settings? While the agriculture sector is here to stay, we need to also focus on emerging (new) sectors to create jobs at scale in urban settings. Niall Condon, Clara García Parra and Andi Stefanllari use the RisiAlbania project of the Swiss Agency for Development and Cooperation (SDC) and share evidence of how to do this at scale. The project selected and supported the Business Process Outsourcing (BPO) sector. Jobs were created. The resilience of the sector is also enhanced for responding to international trends, as well as its capacity to advocate for a better regulatory environment (Zenebe Uraguchi).

In keeping with global urbanization trends, some donors are slowly shifting their focus away from agricultural development: an increasing number of market systems programmes are trying to stimulate job creation in urban settings.

Based on the little available evidence there is, a recent blog argued that programmes that follow systemic approach – also known as market systems development approach – will always struggle to create jobs at scale, attributing this to difficulties in stimulating increases in the productivity of traditional economic sectors in developing countries. And it is undeniable that creating new, decent jobs is difficult.

But it is not impossible.

The RisiAlbania project has recently published a case study that aims to start filling some of the evidence gaps and shares insights and initial results from the work in the Business Process Outsourcing sector in Albania. The case study shows that one way of overcoming the challenge of creating jobs at scale in urban settings is for projects to select new, emerging sectors rather than traditional, donor-crowded ones where productivity increases tend to be marginal. One of these sectors is Business Process Outsourcing, more commonly known by the acronym BPO.   

So… what is BPO?

BPO is the allocation of specific business processes, particularly routine or non-core business tasks such as customer support, to external service providers. Globally, the BPO sector has grown rapidly over the past couple of decades, driven by the transfer of processes from firms in developed countries to ones in emerging economies. Today, BPO is a multi-billion-dollar industry creating employment for millions of people in developing countries.

BPO in Albania: a slow start

The BPO sector emerged in Albania in the mid-2000s when call centres were established by Italian entrepreneurs who recognised the opportunity to provide BPO services to Italian businesses from Albania. The sector gradually expanded through further investment by Italian BPO providers as well as through the emergence of locally owned and operated Albanian firms.

Many emerging economies, including many of Albania’s eastern Europe neighbours, have progressed from the provision of basic BPO or traditional call centre focused services to the provision of higher value technology and knowledge intensive services. In doing so, they have expanded the range of professional development opportunities in their local labour markets – while supporting the emergence of domestic spin-off enterprises.

The limited diversity of the service offering of the Albanian BPO sector hinted at a dysfunction when Risi first began looking at the sector in early 2016: it was almost entirely dependent on the Italian market, largely providing basic customer relationship management services such as telemarketing and customer care through call centres. Logically, Risi asked itself why Albania wasn’t following the path its neighbours had threaded, and what it could do to make it happen.

Risi support to the BPO sector: accelerating change

Despite employing around 30,000 young people, BPO was not recognised as a priority sector by public agencies and no other donors included it in their programmes. This provided an opportunity for Risi to act in a space that was not donor-crowded, and where attribution was possible.

Risi’s intervention focus was to improve coordination amongst key players, with a view to raising the profile of the BPO sector both domestically and internationally. This would then lead to new investment and job creation. The key intervention partners would be the newly formed Albanian BPO industry association, ABSA (Albanian Business Services Association), the local public sector investment promotion agency, AIDA (Albanian Investment Development Agency), as well as the Secretariat of the Investment Council, an advisory body supporting the Albanian Government to improve the investment climate.   

Risi provided technical assistance to ABSA and AIDA to support their efforts to promote new BPO investment in Albania by guiding firms to diversify their services and markets. This has included participation in international BPO industry events, fact-finding missions to neighbouring countries and engagement with the Government of Albania aimed at improving the local BPO operating environment.

So in conclusion: supporting new sectors to grow can lead to job creation

As of 2019, the intervention has contributed to the creation of over 600 new Full-Time Equivalent jobs (meaning many more people in employment) as a result of new contracts which Albanian BPO service providers were able to secure because of their membership of ABSA and exposure to information on opportunities in new markets. To put things into perspective, in the previous four years, the Albanian economy had created around 11,000 jobs in total. 

Also importantly, the intervention has increased the resilience of the sector for responding to international trends, as well as its capacity to advocate for a better regulatory environment.

The case study lays out the lessons that RisiAlbania has learned in the process of supporting service and client diversification in the BPO sector. It attempts to document the impact that a project that follows the MSD approach can have in supporting job creation.

Let us know what you think, and if you have other pieces that can help us learn from what works and doesn’t for job creation in projects that use systemic approach.

Additional Sources:

• Stimulating Investment and Job Creation in Business Process Outsourcing (BPO)
• “Systemic Change? What Are You Talking About?”
• David vs Goliath: The Advantage of Going Local in Tourism Promotion to Tackle Informality

Cover picture: Tim Gouw