In the view of most specialists on the phenomenon, the kinds of jobs that cannot be outsourced are slowly evaporating.

A few years ago, Airbus and Boeing were outsourcing work like digitising old hand drawings. But they have begun to rely on their Indian suppliers for even more complex work, hiring aerospace engineers from state-owned aviation companies and scholars from Indian engineering colleges. “In theory, we could place the work anywhere,” said Ian Q R Thomas, the president of Boeing India. “We’re here because we found a level of sophistication.”

Investment banks like Morgan Stanley are hiring Indians to analyse American stocks, jobs that commonly pay six-figure salaries on Wall Street.

The drug maker Eli Lilly recently handed over a molecule it discovered to an Indian company, which will be paid $500,000 to $1.5 million a year per scientist to ready the drug for commercial use — work that would be significantly more costly if carried out by Americans.

With multinationals employing tens of thousands of Indians, some are beginning to treat the country like a second headquarters, sending senior executives with global responsibilities to work there. For example, Cisco Systems, the leading maker of communications equipment, has decided that 20 per cent of its top talent should be in India within five years; it recently moved one of its highest-ranking executives, Wim Elfrink, to Bangalore, the centre of the Indian industry, as chief globalisation officer.

Accenture, the global consulting giant, has its worldwide head of business-process outsourcing in Bangalore; by December, it expects to have more employees in India than in the US.

This is not a zero-sum game, in which every job added in India comes at the expense of an American or European one. In many ways, the shift reflects a changing view at multinational companies as they find it easier to meet growing demand by taking advantage of the improved skills of newly educated people in the developing world. And some companies are returning certain jobs to the US, finding that the work in India and elsewhere is not up to snuff.

But there are trade-offs as well. As Indian back offices become more sophisticated, Western companies are finding that large parts of their work, even high-end tasks, can also be done from India. From the consumer perspective, India has emerged as a pool of 1.1 billion potential customers for companies seeking faster growth. And so many companies are shifting their energy to where they see their futures being written.

“India is at the epicentre of the flat world,” said Michael J Cannon-Brookes, vice president for business development in India and China at IBM, which has reduced its American work force by 31,000 since 1992 even as its Indian staff mushroomed to 52,000 from zero. “It’s one of the world’s two biggest pools of high-value skills, which we want to leverage both to help clients in the domestic marketplace and to help clients globally,” he said. “The two play off each other.”

The increasing interest of Western companies in rapidly developing countries like India, China and Brazil came to the fore last week. Reports emerged during a visit to New Delhi by Citigroup’s chairman, Charles O Prince III, that the company planned to eliminate or reassign at least 26,000 jobs, 8 per cent of its staff. It will move many jobs to less costly American cities, and others to India. The bank has 22,000 employees in India, who are not part of the cuts.

Still, specialists warned that a continued flow of work to India required drastic improvements in its educational system and basic facilities. Water and power shortages are endemic, and industry experts predict that India could lack 500,000 engineers by 2010. Yet the country has already tapped a deep well of English-speaking engineers, attracting more outsourced work than any other country.

At the forefront of the outsourcing business is Infosys Technologies, an Indian company that has pursued a strategy of re-investing the profits from low-skilled work into a vast upgrading of skills to prove itself to Western companies and fend off rivals from China, Eastern Europe and elsewhere. Infosys devotes $65 of every $1,000 in revenue to training. IBM, by contrast, spends just $6.56, according to a 2006 proxy statement.

High-end outsourcing is only half the reason that companies are investing so heavily in India, executives say. As India has become a more lucrative market in its own right, many Western companies are looking to take advantage of its vast potential market for growth.