Now they sport what they describe as the "largest call center facility in the southern Mediterranean region." They are located somewhere outside the main orbit of Cairo in a development zone called the Smart Village.

You come upon the Smart Village by driving along the heavily trafficked Ring Road. My sense of geography is not all it could be, but my impression is that it was reasonably close to the airport and the center of the city (reasonably close equals less than an hour of driving during daytime traffic). It's an industrial park that's been secured, gated, and dedicated to use by high technology companies and their government sponsors.

The Village was created by the Egyptian Ministry of Communications and Information Technology. (More about this Ministry - and the meeting we had with the Minister, Dr. Kamel, in a later post.) The Ministry is essentially an anchor tenant in this industrial park, providing the incentive (and I think the heavy lifting) for the security infrastructure such a zone needs. They check cars for bombs when you enter the complex.

Xceed's building at the complex was impressive. It was new, built from the start to house a multi-faceted call center operation. It looks, to American eyes, like any high-end state-of-the-art center in the US would look. Seats are well-equipped, comfortable, the calling zone is quiet and the agents look like they go about their work with professionalism.

The main offshore clients that Xceed services from that facility are Oracle and Microsoft (there are others, including GM, but those are the campaigns that I observed first hand). The calls they handle for both clients are high-end technical support calls coming from Europe in a wide variety of European languages.

Xceed takes a great deal of pride out of the fact that Microsoft is their key client. They should, because it's a great marketing tool for them. Bill Gates doesn't come to visit just any old call center, and he came to the Smart Village in early 2005. That's a powerful draw for an American or European company that's unsure about whether Egypt has what it takes to handle their sensitive customer cases.

But the way Microsoft handled the offshoring situation is different from what most companies do - it's actually a lot smarter than the typical offshoring situation, and a lesson for how to make it work well.

It's been said that 25% of all offshoring programs started by American companies are eventually repatriated. There are a lot of reasons for this high failure rate, but one thing strikes me: most of the companies that are shipping calls offshore are doing it because they're in search of a simple solution to a complex problem . . . they want to find a cost-cutting measure, and often offshoring brings them to what can plausibly be argued is the lowest cost provider of services. Sometimes that's India, the Phillippines, maybe it's a more exotic locale. But in the end, if you ship your calls offshore without deeply analyzing what you expect the outcome of those calls to be, you're only sending the problem farther away, removing it from your immediate oversight, and postponing the day of reckoning when you'll actually have to deal with the context of what's happening in the customer experience.

So how does Microsoft do it? They know that there are many different types of calls, coming in at different times, requiring a wide variety of skill sets to handle. One of those skills is language, but perhaps more important is the technical expertise to handle complicated software support. Did Microsoft offload their entire call handling structure to a single outsourcer in a single location? Not hardly. They took a segment of their customer geography (European customers) and a segment of their product support (a particular set of tools needing high end technical service) and gave it to Xceed to handle. Other outsourcers in other parts of the world handle other parts of Microsoft's business.

Very clever, that. Instead of setting the outsourcer up for failure - by making them responsible for the success of a broad spectrum of customer interactions in a loaded environment - they carefully matched the skill set required to the local call handling capability. Egypt has lots of languages; Xceed has some impressive figures on the number of language speakers available locally, and the number in the pipeline. (It's also easy to forget, as an American, that our educational system is woefully deficient in language learning.)

Cairo has 17 million people living locally. Finding, and training, tech support staff to handle a narrow and carefully tailored slice of Microsoft's business calls is an achievable goal. Xceed was set up by Microsoft with a clear definition of success, with clear criteria for what was to be achieved. Oracle had a somewhat similar approach: know what you want your outsourcer to do, know how they are going to do it, know what success will look like.

The Smart Village is vast, and the current crop of facilities barely make a dent in the available land and infrastructure they have available. I'm told they are planning to open another live site in 2008 to match their current capacity. Right now they have 800 seats that are devoted to offshore clients, and several hundred more devoted to Telecom Egypt's domestic call handling requirements. And the stat you've all been waiting for: their staff attrition rate is 12-15% a year.

Next: Talking to the Minister of IT ... Frank talk about infrastructure ... & Marketing Egypt as a brand.

Later this week: A visit to Raya's center ... Panel discussions & presentations at the conference ... Are Americans xenophobes? ... How site selection runs in decade-long cycles ... & Answers to the Questions I posed in Part 1.