Now for the call centre in your living room

Caroline Smith switches off her computer terminal after a five-hour shift taking telesales calls and walks over to the kitchen to make a cup of tea. Welcome to the brave new world of the virtual call centre.

Until two months ago she was wired up to an office computer and telephone system along with a million other call centre workers around the country. But unlike the thousands who have seen their jobs go East this year, Ms Smith, 24, has found her job move somewhat closer to home since September - her living room. Advocates believe this idea - which is at an infant stage in the UK - could provide an economic alternative to a mass overseas exodus of these types of jobs.

According to Amicus, the white-collar trade union, more than 200,000 British jobs will be lost by 2010 as companies seek to cut costs by taking advantage of lower wage rates in countries such as India. The sudden flight triggered protests by trade unions and prompted a high-profile committee of MPs to launch a parliamentary inquiry.

One company, Amicus Outsourcing - no relation to the union - is seeking to capitalise on the hostility to outsourcing with an offer to take on the work and deliver the jobs to Britons working at home. It has two dozen people trialling the project but believes it can roll out the idea to accommodate any level of demand.

Geoff Thompson, the managing director of the Jarrow-based company, said he could match the estimated £8 to £10 an hour that it cost a British company to have a seat in an Indian call centre. "I think it is a great pity that the individuals making these decisions [to outsource to India] have not thought through the alternatives that technology can provide," he said.

"By moving seats to India they are simply moving the costs in terms of the trauma of making large numbers of people redundant, and in write-offs on the technology they have invested in the UK."

Scotts of Stow, a home products mail order retailer that is one of two companies involved in the trial, said it had noticed no change in performance.

Mike Smith, its finance director, said: "I think it's an exciting idea because it is very difficult to get qualified staff in a call centre and it does mean jobs stay in this country rather than going overseas."

Amicus installs the computer, phone system and the broadband connection that allows people like Ms Smith to take phone calls and be logged on to the computer at the same time. The technology - known as voice over IP - is provided by Avaya, a US IT giant, which connects into the system at the Jarrow call centre.

Martin Wicks, a UK-based director, said advances in technology had lessened the need to relocate overseas. "One of the arguments for going overseas is to remove costs but that's quite short-sighted as it won't be long before costs start increasing there," he said. "If we are innovative in our technology we negate the reason to go overseas in the first place."

He said technology allowed managers at a central office to monitor what their remote assistants were doing in real time. Advocates believe this will answer doubts that management gurus have expressed over the feasibility of running a call centre of, say, some 1,000 people remotely.

But Ben Willmott, the employee relations adviser at the Chartered Institute of Personnel and Development, said the jury was still out on the concept. He said there were a number of management obstacles to running an efficient operation. "There are obvious challenges to managing a remote call centre," he said. "People working from home can feel isolated, particularly where the job they are doing is mundane and repetitive, where it is easy to become demotivated and your morale can plummet."

He said it would be hard to monitor workers' performance and ensure they hit targets other than by monitoring their output from afar. "Getting the best out of people with a Big Brother approach would be challenging," he said.

There were also practical considerations such as whether people had enough space in their home.

Martin Hill-Wilson, the strategy director at Datapoint, a company with two decades of experience in call centres, said he doubted virtual call centres would take off. "The question is whether homeworking is a viable alternative to the offshore model and I don't really think it is an alternative and that all comes to economics." He said 60 per cent of the cost was wage costs with an average salary of £13,000, some 16 per cent technology investment and the balance was a mix of overhead costs. He doubted it was possible to compete with India where an average salary of between £2,700 and £3,300 meant wage costs were just 20 per cent.

He said if there was a future for virtual call centres it lay with specialist staff. He said voice recognition technology allowed the bulk of calls to be processed by customers using a telephone keypad to go through the options. "The vast majority of calls are of low complexity and don't require human intervention," he said. "The human communication channel would then be specialist channel with calls going to people who might be working anywhere. I can imagine a future in which you have a need for 200 agents, build a cell centre with a capacity for 100 and the home-based, but you rotate them so that sometimes they are at home and sometimes in the office for team-building," he said.

One company that has adopted the virtual call centre model since its was set up a decade ago is Travel Counsellors. It started in 1993 with a network of personal counsellors who worked from home, and in 1997 set up a virtual call centre to handle sales. Homeworkers are linked to the central computer and phone system in real time and are rostered in shifts, as they would do in a centre.

Enquiries are generated from advertising on Teletext and are automatically forwarded to workers with knowledge of the chosen destination. "[This] allows the customer to speak with an expert on their chosen destination," a spokeswoman said.

Amicus's Mr Thompson said obstacles to the creation of virtual call centres could be overcome. "I feel like a bit of a voice in the wilderness."