There has been a lot of fanfare lately of contact center work being brought back to the U.S. from other countries, most notably India. Yet unless the additional demand is managed effectively, the result could be higher costs, less service, and more automation and fewer jobs.

The key reason for this return is the apparent inability of offshore agents to provide high quality customer-satisfying-and-retaining service that trumps cost arbitrage. The market for qualified affordable offshore English-speaking labor that are willing to work in contact centers appears to be shrinking, leading to rising compensation, turnover, and overall operations costs.

India's workforce are leaving the contact centers and entering higher-level BPO and IT fields that are better paid, have more sociable hours i.e. daytime rather than night shifts, and are more prestigious. Consequently contact centers have had to drill deeper into the labor force, yet many of the individuals hired may not have as solid English language skills and are less able to relate to those of American, British, Canadian and other cultures i.e. cultural affinity as their predecessors.

The Philippines is at risk of risk of contact center saturation because its labor market is much smaller. The nation's appeal is based on low costs coupled with a more customer-service-oriented culture and a greater exposure to and affinity with Americans compared with India thanks to a long and recent history with the U.S. Yet even there at a certain point firms will have to draw from less qualified labor pools that will result in customer service issues.

A few words on cultural affinity are in order. It is not, as others may perceive, about nationality or race. It is instead about understanding and empathizing with others derived from shared experiences. You can't gain this from watching TV or training videos, or linguistic classes, a la Henry Higgins in Pygmalion/My Fair Lady which some Indian outsourcing firms have attempted to resolve this issue. You can only obtain this insight by living amongst others and immersing yourself in that culture. That is why many immigrants to the U.S. face difficulties returning home even for visits: they have become 'Americanized'.

There is another side of the issue and that is American customer service is often not exactly worth having a flag-waving parade about. There are many horror stories about customers' experiences with poorly selected, educated, trained, and motivated U.S. contact center agents. U.S. contact centers suffer from high turnover, much more than one would expect in a difficult economy because they are not often managed and supervised effectively.

The saving grace for the American industry is that lower-cost self-service has not become as popular as projected thanks to poor IVR DTMF implementations and expensive and slow speech recognition technology development and deployment.

Self-service deployments will grow, though thanks to new tools and processes like outbound notifications, standardized language libraries, speech becoming parts of UC solutions, and to value-rich and affordable speech outsourcing. And when the choice is between dumb machines and well...the machines win because they cost less to operate.

Organizations are, in response to these issues, turning in greater numbers to 'homeshoring' i.e. home-based agents to the point where this option to traditional contact centers is reaching a critical mass. So much so that CB Richard Ellis, which has long been a contact center site selection leader now offers homeshoring labor market analysis: if you can't beat'em...

Homeshoring represents the best alternative to managing contact demand because it enables higher quality, more productive service by attracting better-performing agents while lowering costs by slicing facility expenses. The net benefits range from $10,000 to $20,000 per agent/year. Homeshoring also part of the environmental, energy, and traffic solutions by eliminating commuting. All the key issues with homeshoring: voice/data connections, security, monitoring, supervision, training and staff communications have been sufficiently resolved to remove them as barriers.

There will still be offshoring, though at lower levels because many firms are satisfied with its cost/quality equation. There will also be if fewer live agents because self-service cannot replace people where high thought and touch are needed; some of those individuals will be traditional centers mainly because some organizations don't want or see the need to change.

Yet a growing percentage of agents will be at home, because there is no place like it to supply quality, cost-effective customer care and sales.