"This is a new thing (for In- dian companies). It should open up new markets and growth opportunities," Peter Bendor Samuel, founder and chief executive of Everest Group, an outsourcing adviso- ry, said over the phone from Australia.

But he also said cost savings at onsite units may not be as tight. "On the cost side, it is much more difficult to main- tain it low onsite for (a) longer time. We should see how long (Indian) companies take to sustain and be successful."

Wipro Ltd and Genpact Ltd, India's largest back-office firm, have already won such onsite deals, he added.

"Don't worry about labour savings. I will put in six sigma and tools that I have built and make a difference to the cash flow (of the customer)," said Ashutosh Vaidya, head of Wipro's back-office arm.

Six sigma is a data-driven business management strategy that seeks to reduce produc- tion defects and improve busi- ness processes.

Few details are available of the onsite contracts won by In- dian back-office firms.

Wipro's back-office unit has won several multi-million dol- lar deals that are being serv- iced from centres in the US and Europe, Vaidya said, but declined to quantify the con- tribution from this.

Wipro's BPO arm contribut- ed 11% of its total information technology (IT) services reve- nue in fiscal 2010. The BPO works on different billing mod- els, including those based on the outcome or savings achieved through process effi- ciencies. It already employs 4,000 people overseas.

Indian BPOs have been building their overseas work- force in the past few years ei- ther by acquiring firms or set- ting up new centres.

Milind Godbole, vice-presi- dent at Aditya Birla Minacs Worldwide Ltd, the outsourc- ing arm of the Aditya Birla group, says process efficien- cies can save 20-30% in costs even if services are delivered onsite. "It is doing the same work much more smartly using the same resources," he said.

In December, Genpact launched a smart enterprise processes, or SEP, service for clients that leverages the proc- esses it has built over the years. In a presentation, it said this service can, for example, help reduce spending on pur- chases by $50-150 million (Rs233-700 crore) over three years for a $5 billion manufac- turing company and help in- crease margins by 1-3%.

"Our goal is to have a larger proportion of revenue coming from performance-, outcome- based deals," said Shantanu Ghosh, senior vice-president at Genpact. This model con- tributed 12-15% of its total rev- enue of $1.12 billion in 2009.

India's BPO industry is ex- pected to grow by 15-16% to $13.5-14 billion in 2010-11, ex- panding much faster than the 6% growth it registered in the previous fiscal.