As an IT outsourcing company, Digital Divide Data started ahead of the curve in Cambodia 15 years ago with a social impact model that provides jobs and training. The Post’s Kali Kotoski spoke with Jeremy Hockenstein, the company’s co-founder and CEO, to see how it has progressed and created a global model.
Why did you decide to launch Digital Divide Data in Cambodia 15 years ago?
Like many, I came here in 2000, and I saw a lot of English schools and internet cafes and young people learning IT skills. But when I asked them what kind of jobs were available for them, they said there weren’t any. So I thought that donor money was being wasted on training them. But more importantly, it was getting people’s hopes up when they didn’t have any real opportunities.
Also, in that time, there was the promise that globalisation would bring opportunities, but it hadn’t come into reality yet. We saw how big of an industry IT outsourcing had become in India. And while we knew we couldn’t do call centres here because the English language skills were not developed, we knew people could type. So we hired some Cambodian managers and sent them to India for training and officially opened in July 2001.
How did the business grow from there?
Well, a year and a half later we opened in Laos, and then five years ago in Kenya. And now two years ago in the US. Our model has remained been pretty much the same. We hire high school graduates who have a lot of potential but don’t have the opportunity to go to university. We give them training for a couple months and then we employ them in our work study program for about four years were they work 36 hours a week and then get scholarships to go university. So they get access to higher education and work experience. DDD has had over 1,100 graduates.
How sustainable is your business model?
Our economic model is that we now have over $12 million in earned revenue from clients who pay us for the work we do. And right now our biggest project in Cambodia is for a company called Pixelz, a Danish firm that we do Photoshop work for their fashion products and e-commerce. Our business breaks even on the earned revenue and then we use donor funding to support the scholarships to university.
What is impact outsourcing?
It is the idea that you can have social impact with outsourcing work. There has already been a movement around social impact investing, but this is social impact through outsourcing work. There are hundreds of billions of dollars of outsourcing work shifting around the world which can be done remotely. But still, most of that goes to a few cities in India, Philippines and China. For poorer countries it is an alternative to things like World Bank development aid.
Why did the company expand into Africa?
Five years ago, the Rockefeller Foundation asked if we would go to Africa after looking at the success we had here. At first we said no because we were concentrated on the Cambodian and Laos operations. But then we looked at the market in Kenya and saw that the English levels of the students we hire were much higher than we thought.
So we opened in Nairobi and the Rockefeller Foundation gave us part of a $100 million grant for what is called Digital Jobs Africa. We call this movement impact outsourcing and now bring Kenyans into Cambodia to get training.
Have you seen a shift towards Cambodia for IT work and outsourcing in recent years?
We are seeing that there is more of an industry here now, both on the outsourcing work we do and the higher level IT programming and app development. So now we have much more of an IT sector than 15 years ago. However, I think we are just at the beginning of an IT boom and are finally gaining momentum.
What does Cambodia need to do to attract more IT jobs?
There are a number of tax issues that should be addressed to attract more IT companies. But what I think Cambodia needs to learn from – and what they should replicate – is what India and the Philippines have done by focusing on some tax issues, especially VAT, to attract investment to Cambodia. They just need to make the country more attractive for investors to catalyse the industry.
This interview has been edited for length and clarity