In the late 1990s, application service providers were supposed to replace existing business applications by hosting them remotely and delivering them over the Internet. By 2001, the vast majority of these service providers had disappeared amid the implosion of the dot-com bubble. Four years later, however, a growing number of providers are proving that hosting contact centers can be a profitable service. The new generation of hosted call centers provides the multimedia customer service channels that organizations need in today?s emerging all-IP environment. They also avoid typical outsourcing problems. This article outlines costs and problems of outsourcing such tasks, then describe the solutions that these emerging service providers offer.