Indian call centre workers are paid 60% less than in the US

Smaller profits and an industry shakeout are inevitable, according to independent market analysts Datamonitor.

Multinationals and large Indian conglomerates will be much better placed than local entrepreneurs or smaller Indian businesses to survive the shake-up, it said.

"Once the big boys start moving in the smaller firms find it harder to compete," Datamonitor analyst Robin Goad told BBC News Online.

Domination

Many Western firms have shifted call centres and back-office processing units to India, tempted by cheap labour costs and a pool of trained workers.

Now the boom - which has created a $400m marketplace - is set to enter a period of consolidation as the extra demand for outsourcing workers begins to push up prices.

India's outsourcing market Projected expansion 2003: Contact centres - 250 Number of workers - 51,000 2007: Contact centres - 387 Number of workers - 121,000 Datamonitor projections

Many of the newcomers are large, foreign firms who use aggressive strategies to enter the market, including poaching workers at higher prices.

Big multinational consulting companies such as Accenture are beginning to set up their own India-based centres on behalf of Western customers.

That is driving down profit margins and squeezing smaller, stand-alone Indian firms, according to Datamonitor.

"If you're looking at it from the point of job creation, it doesn't really matter who owns the call centre, and higher wages will be good for the agents," Mr Goad said.

"But it's bad for entrepreneurs who have already - or want to - set up their own businesses," he explains.

Indian workers at contact centres earn an estimated $2,700 (�1,700) a year.

Their employers charge their corporate clients 60% less than equivalent companies in the West.