Outsourcing to India, long dominated by software engineering and back-office work, is expanding in new terrain: special effects for movies.

India's rise comes at a difficult time for US special effects outfits, some of which have buckled as the 2008 LA writers strike cut productions and the financial crisis curtailed financing.

Executives in India say cost pressures are pushing studios to send more work to India, where special effects projects are up to 40 per cent cheaper than in the US.

To be sure, Indian companies are, for now, minor players. Hollywood's special effects industry is still dominated by US companies like Industrial Light & Magic. Production standards are generally lower in India, and many moviemakers still won't send creative work thousands of kilometres away.

But the distance between Hollywood and Bollywood is narrowing, and many say it's only a matter of time before the gap in skills, trust, and quality is closed. The domestic market is also maturing as Indian audiences develop a taste for high-tech Hindi flicks.

"Economic conditions are playing out favourably for us," said S. Nagarajan, the chief operating officer of Visual Computing Labs, based in Mumbai, the visual effects and animation unit of Tata Elxsi, one of India's most prominent studios. "People are more willing to experiment."

His company, one of 18 special effects studios that worked on "Spider-Man 3," has billed as much in the first three months of this year as it did in nine months last year, he said.

"In 2003 and 2004, when I would visit the US and meet with visual effects companies, I'd be told we can't outsource it. It requires creative control and you are too far away," said Pankaj Khandpur, the company's creative director. Now, he said, those naysayers are telling him, "'Hey, let's talk."'

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