India is fast becoming a global hub for back-office services as US and European companies increasingly shift their IT services, call-center operations, and other business processes to it, either by opening their own units there or by outsourcing processes to Indian service providers. What's fueling the stampede, of course, is the desire to gain access to the country's lower-cost, high-quality labor—in some technology areas, higher-quality labor—as well as global technological changes that make it possible to offshore white-collar activities that once had to stay close to home.

Infosys Technologies, one of India's premier technology services companies, is based in Bangalore, ground zero in the offshoring ferment. Founded in 1981, it helps Fortune 500 companies design, build, and maintain very large business software applications, such as an integrated merchandising solution and a Web-based broker trading platform, and also provides IT-consulting services. Infosys grew modestly during its first decade, finishing 1991 with revenues of $3.89 million. The liberalization of the Indian economy in 1991 spurred the growth of the company, which took the opportunity to globalize its operations. Its revenues exploded, to about $121 million by fiscal year 1998–99. Application-development costs in India were one-fifth of US levels, so Western customers...