In 2004, the broad public perception among American consumers was that although outsourcing enabled organizations to keep costs down, it also resulted in worse customer service. The problem with this way of thinking was that it equated unsuccessful approaches to outsourcing – particularly with regard to offshoring – with the overall practice of outsourcing.

The biggest issue in 2006 isn't whether outsourcing is inherently good or bad. The challenge is how to make outsourcing worthwhile. In its 2006 North American Contact Center Outsourcing Market Report, West Orange, NJ-based DMG Consulting outlines how American and Canadian outsourcers in particular are meeting this challenge. As Donna Fluss, principal with DMG Consulting puts it, "Under the right circumstances, outsourcing can be positive."

Companies generally try to achieve two goals when they outsource some or all of their call center operations: to lower costs and to serve customers better than if they were to perform these functions on their own. During an economic downturn, the primary aim of call center outsourcing is to save money, especially if lower costs represent the difference between a company that stays in business and one that doesn't.

"It's generally less expensive to outsource than to build in-house," says Gary Pudles, president and CEO of the Princeton, NJ-based AnswerNet Network, a group of service bureaus. Indeed, as Fluss observes, outsourcing can enable companies to lower costs by as much as 60%.

But the decision to outsource should not be a knee-jerk response to a recession; nor is outsourcing enough to guarantee that a company will lower its costs. Fluss warns that when companies manage outsourcing efforts poorly, the risks are considerable: negative reputations, lost customers and decreased loyalty among the customers who remain. These outcomes, which Fluss says lead to "lost revenues and increased costs," are the opposite of what companies hope to achieve through outsourcing.