Office Depot is in the process of shutting down nearly all its internally operated call centers and shifting the load to outsourcers - in particular, outsourcers who use home-based agents.

The office supply retailer has been exploring the "virtual call center" model for more than three years, and today relies on about 1,400 remote agents employed by its outsourcing partners. "We will grow to double that by the end of this year," Julian Carter, director of operations at Office Depot in Delray Beach, Fla., said in a teleconference last week.

Virtual call centers are gaining popularity as companies look for alternatives to running a traditional, in-house call center or using an offshore outsourcer. Using outsourced work-at-home agents doesn't offer the same cost-savings potential associated with offshore outsourcing, but experts say it eliminates some concerns about cultural differences when using offshore providers.

Office Depot is shifting to the virtual model by partnering with call center outsourcing companies that use home-based agents, including WillowCSN. Based in Miramar, Fla., Willow employs 2,000 home-based agents in 12 states. This month, it's been recruiting another 400 agents, said Basil Bennett, Willow's president and CEO, in the teleconference.

Willow's competition includes other specialists such as Alpine Access, Working Solutions and West Corporation. Research firm Gartner predicts that by next year10% of call centers will use outsourced work-at-home agents from firms such as these to supplement their customer service operations.

Outsourcers aren't the only route to establishing virtual call centers, however. Some companies choose to adopt the model on their own, such as JetBlue Airways.

Since its inception five years ago, the airline has run its reservations department using home-based agents. Today JetBlue employs 900 reservation agents working from home in the Salt Lake City area.

G.R. Badger, a supervisor at JetBlue, joined Carter, Bennett and IDC analyst Merle Sandler in the teleconference, which focused on the emerging virtual call center industry. It was moderated by Jack Heacock, vice president of the Telework Coalition.

One advantage of using home-based agents is staff retention, Badger said. Turnover rates at JetBlue are exceptionally low at 4% annually. Agents enjoy the flexibility of working from home, and it shows in their performance, he said. "When agents are happy, revenue is going to go up," Badger said.

Attrition improvements are huge, Carter agreed. Before moving to a virtual model, Office Depot typically saw 60% turnover of its call center agents in a year. Going virtual immediately cut attrition rates in half, and they dropped to the 20% range within the first year, he said. Today attrition rates are in the teens, Carter said.

Attendance also is up. "On the productivity side, the biggest thing we see is a reduction in absenteeism," Carter said. He estimates the company has cut costs between 30% and 40% per call by outsourcing, which eliminates many operational costs for Office Depot and lets the company take advantage of a variable pricing model based on call volume.

"It's a good alternative to completely going offshore," Carter said.

As a whole, the telecommuting industry has gone through some ups and downs over the last decade. The number of telecommuters in the U.S. peaked in 1998 and then declined through 2002, Sandler said. It's just beginning to recover, she said.