By 2005, TCS hopes to have 3,000 software engineers on the mainland - a sizeable chunk compared with the company's 20,000 consultants operating globally today.

The rationale is simple. Mainland programmers cost just a fraction of their global counterparts, yet produce work on par with their overseas peers. The lower wages translate into lower prices, allowing TCS to attract global clients such as companies under General Electric and AXA.

'Outsourcing projects to China is a price-competitive option, especially for the north Asia market,' TCS Asia-Pacific regional director Girija Pande said.

Last year, the company's mainland operations signed US$20 million in contracts, he said.

TCS is just one of a growing number of multinationals shifting service industry jobs to low-cost countries such as China. Joining TCS in the trend to move offshore are HSBC and NEC of Japan and possibly Dell Computer of the United States.

The migration follows a three-decade exodus of manufacturing jobs from developed countries to developing ones. China rose to prominence by manufacturing everything from textiles to home appliances to computers for export, earning it the moniker 'workshop of the world'.

But now the mainland is beginning to attract investment from global companies that increasingly see it as a base for services as well.

And the benefits could be huge. According to Forrester Research, an estimated 3.3 million US service industry jobs will move off American shores by 2015, representing US$136 billion in wages. Throw in jobs from other Group of Seven countries and the figures double.

'[Of those jobs] 20 to 30 per cent could easily go to China,' said John McCarthy, a group director of research at Forrester.

Low wages were just one factor driving the shift in service industry jobs, Forrester said in a recent report. Others include falling bandwidth prices, which allow firms to cheaply ship huge volumes of documents across the globe, and the growing popularity of Internet-based communications in the workplace.

This is creating opportunities for global companies to base operations for software development, call-service centres, back-office work and product development almost anywhere on the planet.

HSBC, for example, has moved 4,000 jobs to the mainland, Malaysia and India. Vinh Tran, a manager of external relations, said the decision was a matter of 'cost efficiency and operational efficiency as well'.

Offshore employees handle back-office functions such as cheque processing, customer calls and account maintenance. 'The staff left in Hong Kong can focus on customer services,' she said.

Ms Tran could not say how much money was saved by the move, citing the quiet period in the lead-up to the bank's earnings announcement.

According to Forrester, the cost of an entry-level mainland software programmer is 30 to 50 per cent less than one in the US or Japan. The savings are similar for customer-service employees, accountants and legal staff.

But attracting service industry jobs to the mainland will not be easy.

China faces formidable competition from India - which has a head start - as well as the Philippines and Russia. The mainland's biggest disadvantage is its weakness in the English language.

'Everybody is playing for second after India,' Mr McCarthy said. He said the country's strong English-language skills and emphasis on business quality and process discipline had made it a strong competitor for service industry jobs.

The Philippines, on the other hand, is also strong in English, and competes fiercely with India for call-centre work.

Atul Vashistha, chief executive of consultancy NeoIT, said: 'If you look at China today, there are a couple of areas where they are doing very well: embedded software and product development. It's areas where English skills are not really required.'

This year, NeoIT has helped 24 companies move back-office and information technology work overseas. But just one of those companies set up operations in China.

While mainland workers boast strong engineering skills, Mr Vashistha believed developing English-language skills would also help it win a greater share of the jobs. 'I believe the [2008] Olympics will play a strong role in exposing China to the world,' he said.

Still, China is grabbing a fair share of IT work. Oracle and BEA Systems are doing product development in China. 'What they've found is Chinese engineers are very productive,' Mr Vashistha said.

Some of the work is for the 'localisation of services' to support a multinational's operations on the mainland. But a good portion is for project work for clients outside the mainland.

Mr McCarthy noted that multi-nationals were handing off to China simple work such as base-level programming, while retaining complex tasks for their engineers at home. 'In the same way that you have a tiering of manufacturing according to complexity, you're going to have a tiering of services,' he said.

Mr Vashistha said China could begin to attract back-office work from Asian companies looking to cut costs. 'Any process that requires data entry' such as health care or insurance claims could be relocated, he said. 'All that kind of work can easily be offshored and easily take place in China.'

South Korean firms were likely candidates, but Japan in particular could benefit from offshoring as that country attempts to restructure its economy.

Last year, NEC bought a 6 per cent stake in software developer SinoCom. The money was used to hire more mainland engineers, and the investment allows NEC to capture business from Japanese companies which direct software work to China.

Dell Computer reportedly is considering closing a call-service centre in Japan and relocating it to northeast China, where there are a considerable number of native Japanese speakers.

But Dennis Smith, president of PacTac Advisors, said not to expect a flood of call-centre closures in Japan.

'It's very difficult for a country manager to get those jobs out of Japan,' he said. He said political resistance made it difficult to fire workers in Japan and shift the jobs to China.

What is more likely, Mr Smith said, is a Japanese company in expansion mode might consider setting up an additional call-service centre in China rather than at home.

Also, a call-service company operating from the mainland would have to focus on winning new business in Japan in order to skirt resistance to firing workers. 'A Chinese entrepreneur is the most likely person to set up a call-service centre to service Japan,' he said.

There has been a political backlash to the trend in the US as well. Lawmakers from several states in the US have proposed laws that would forbid companies from shifting government contract work offshore.

The outcry has echoes of Ross Perot, the 1992 US presidential candidate who warned of a 'great sucking sound' as manufacturing jobs left the US for Mexico.

A recent advertisement for clients in Call Centre Magazine exhorted: 'Let's keep call centre work in the USA.'

The ad was paid for by UNICOR/Federal Prison Industries. (Apparently, giving a job to an overseas worker is unpatriotic, but giving one to a criminal earning less than minimum wage is not).

Mr Vashistha said the backlash was because new jobs had yet to replace those lost. 'In the short term, [the offshoring trend is] creating imbalances between jobs lost and jobs created.' But new jobs would eventually fill the void left by lost service industry jobs, just as manufacturing jobs were replaced in earlier periods of US economic restructuring.

Also, Mr Vashistha said the uproar could be louder this time because - in the case of IT - it was well-paid jobs that required a high degree of skill that were leaving.

Still, the advantages to offshoring were undeniable, he said. 'It benefits both sides. It benefits consumers [in developed countries]. Prices are lower,' he said. Recipients of the jobs benefit from growing incomes and employment.

Mr McCarthy said the political fuss would die down just as it did after the 1992 presidential election. 'The reality was that it was a lot of rhetoric at the end of the day,' he said. 'The jobs are gone. You're not going to deny the savings.'