In recent years site selectors, consultants, outsourcers and economic development agencies have been touting India and the Philippines as low-cost and high-labor-availability alternatives to the US, UK and Canada.

But the terrible events of last year have made many companies leery about locating to India (which has had military clashes with nuclear-armed Pakistan); and to the Philippines, where terrorists allegedly linked to Al-Qaida kidnapped and murdered Americans.

There is also growing concern about dialect and quality from offshore locations that risk turning off customers.

Site selection experts report that American call centers are taking a new look at near-shore locations that promise lower costs than the US, good service, faster and more convenient access and fewer security risks. These locations include Canada, the Caribbean (Jamaica, Barbados, St. Lucia, and Trinidad and Tobago); and Latin America.

Many of these countries, notably Canada, Mexico and Chile, also have strong domestic economies and provide markets for American goods and services that need call centers to support and sell to them.

But site selectors are weighing the near-shore locations' benefits against their higher costs, fewer qualified workers, and poorer education levels compared with offshore locations.

King White, vice president of Trammell Crow Call Center Services (Dallas, TX), says many outsourcers are still going offshore. But the leading players and Fortune 500 in-house operations are looking at near-shore as backups.

"That attests to a corporate caution about going and outsourcing offshore," says White. "But there is also a growing resistance to send inbound calls to India due to dialect and quality control."

The Near-Shore Advantage

Geography, and ease and safety of travel, have always been an important benefit to near-shore locations.

Flights to Canadian, Caribbean or Central American cities require two to four hours, versus 18 to 20 hours for a transpacific flight. There are many and often direct flights from several US cities to these near-shore communities. Some Canadian locations are an easy drive, train or fast-ferry ride from US metro areas.

But the post-9/11 security and travel issues give a more important benefit to locating call centers near-shore. John Boyd, site selection consultant with The Boyd Company (Princeton, NJ), says additional security checks and security breaches increase air travel time and hassles.

Canada and the Caribbean are politically stable. In the wake of 9/11, the US Administration has sought and obtained cooperation from Canada and Mexico to prevent infiltration by terrorists. The US regards near-shore nations (especially Canada) under its security umbrella.

Some of the Central and South American countries that were wracked 10 to 20 years ago by political turmoil, Chile, El Salvador and Panama, have stabilized and are actively seeking foreign investments.

But observers note that, given the current political climate, even the minor issues of near-shore locations, like the comparatively benign specter of Quebec separatism, have gained significance.

"The mere mention of separatism is all that it takes to drop a place like Quebec from consideration," says Brian French, managing director of NAI TeleCenter Services (Mississauga, Ontario). He adds that Quebec, despite aggressive marketing and generous incentives, is underrepresented in call center workstations for its population compared with the rest of Canada.

Near-shore locations offer workers at wages lower than the US' though not as low as India's. According to Trammell Crow, typical hourly wages in US dollars are $2.50-$3 in Jamaica and $5-$7 in Canada compared to $7.50-$14 in the US. In contrast, India's typical hourly wages in US dollars are just $1-$2.

But many call centers may receive better value for the higher pay. Canada and Caribbean countries, say observers, offer a superior customer service culture and a greater cultural affinity to Americans. Many parts of Canada and the Caribbean depend on tourism, mostly from Americans.

As regards to cost, education, living standards, infrastructure, stability and call center sophistication, Canada is most like the US; the Caribbean is most like India and the Philippines.

But Alton Martin, president of Customer Operations Performance Center (COPC; Amherst, NY; www.copc.com), a performance standards, testing and consulting firm, says that comparatively few Caribbean workers have college educations. The Philippines and India, by contrast, boast 100% college-educated agent teams.

Site selectors say the Caribbean countries are suitable for low-end call centers such as airline reservations, credit card sales, collections and order taking. The Caribbean's low wages and loyal workforces offer a compelling economic case to call centers in these spaces. In the US, these centers tend to experience high agent turnover.

But, say market watchers, the tradeoffs are power facilities, telecom networks and offices that are more expensive, or built to inferior standards, than those in the US.

Trinidad and Tobago has a large ethnic Indian population, with many of the same cultural traits as Indians, including poor empathy with customers, add observers. As it lies just off the coast of Venezuela, the nation also has many Spanish speakers, enabling a call center to serve Latin American countries.

"Trinidad and Tobago agents have good sales skills, but less empathy with customers than those in the other parts of the Caribbean," says Philip Cohen, a teleservices consultant based in Skelleftea, Sweden. "The country now has a critical mass of call center expertise, with nine call centers operating in 2001."

Canada's Unique Locations Play

Canada supports the same range of call centers as the US: basic inbound and outbound; high-end multimedia voice; on-line financial services; and tech support. That's a greater spread than offered by other near-shore and offshore locations.

Canada also has a large multilingual population, centered chiefly in cities such as Montreal, Toronto, and Vancouver. Canada can therefore serve customers in most parts of the world, unlike the Caribbean, India and the Philippines.

But Canada also offers lower business costs than the US with more available labor.

NAI's French reports that only 1.5% of Canada's labor force works in call centers, which is half the 3% level site selectors claim will saturate a community for call centers. He reviewed a study that indicates that 5% of the US labor pool is working in call centers.

Canada's unemployment rate continues to be higher than the American rate: 7.5% compared to 5.9%. But the US jobless totals are higher because the US has nearly ten times the population of Canada.

Being next door to the US, and drenched in US media, Canadians know more about Americans than the residents of any other country.