When you hear the words "outsourcing to India", what springs to mind? Customerservice grunts answering queries in call centres from prepared scripts, perhaps?

Number-crunchers processing digits in a data farm? Lowlevel programmers knitting bits of software?

Here are a few alternative visions. MBA graduates scrutinising earnings reports and regulatory filings in a Bangalore research laboratory, and publishing buy/sell notes. MSc holders in Chennai analysing the debt profiles of global borrowers and writing research about their creditworthiness.

Doctors of mathematics in a Mumbai trading room shifting billions of dollars between stocks, bonds, currencies and derivatives, going head to head with the guys and girls in New York, London, Tokyo and Singapore.

Instead of relying on countries such as India just to cut wage costs, the world's smartest companies are likely to start tapping Asia for brainpower.

Since global investment banks claim to be stuffed with people skilled at divining how to make companies as efficient as possible, they should be leading the charge to hire knowledge workers in locations other than the world's main financial centres.

"Globalisation means that banks will increasingly be looking to places like India for future hiring, " says Steve Major, global head of fixedincome strategy at HSBC in London. "If your strategy is just to focus on cost, you're doomed to failure. You have to look at deepening the talent pool first, getting the quality employees."

Entry-level jobs in bank research departments have been the first to drift to India.

As regulators cracked down on allegations of bias in recent years, research lost its subsidies from investment banking. Banks responded by slashing the volume of analysis, and cleaving the cheaper business of building spreadsheets from the more costly one of writing reports and marketing trading ideas.

"The analytical need to keep the roles whole clashed with an operational need, " says Darren Sharma, founder of Frontline Analysts in Bangalore. "We're essentially tribal. Customers weren't keen on receiving market views from a place that wasn't on their mental map."

That resistance is slowly fading, he says. Frontline has a team of three senior analysts assessing the creditworthiness of financial services companies for WestLB, Germany's third- biggest state-owned bank and Sharma's former employer, where he spent five years as a London-based credit strategist.

He's in negotiations to build a second team for WGZ Bank Group, a central and wholesale bank for 240 of Germany's cooperative lenders.

JPMorgan Chase has more than 80 analysts in India, while Merrill Lynch and Morgan Stanley each employ more than 50 there. Goldman Sachs Group's Bangalore office will soon reach 1,500 employees, overtaking its Tokyo office as the firm's thirdlargest.

That shift has been driven by cost. The average 2005 Wall Street salary was almost $290,000, according to a report this month from New York State Comptroller Alan Hevesi. That's about 6.6 times more than the nation's average per-capita income of $43,740, based on World Bank data.

Apply that multiple to India's average income of $720, and you get to an annual salary of a bit more than $4,700. Even at three or four times that level for qualified banking staff in India, the cost attractions are clear.

"Research has now become a cost which cannot be subsidised by the banking business, " says Krishnan Sakotai of Karvy Global Services in Hyderabad, India. "On the other hand, there are some firms who are also outsourcing research in order to gain competitive advantage, something beyond just cost." Sakotai runs a team of about 33 people selling research to banks and brokerages.

Most of the hiring so far has been for junior workers in low-level jobs. Frontline's Sharma says that has led to disenchantment among highly-qualified Indian employees frustrated at the lack of opportunity for promotion. "You have to recruit commensurate to the job offered, " he says.

For now, senior analyst positions in India are more likely to be in bond research than in stock analysis, Sharma says.

"Fixed income never had data-crunchers versus opinion-formers, " he says. "Equity analysts aren't always opinion owners, whereas all fixedincome analysts publish."

Once you have a research team in India, it might make sense to open a trading floor.

Deutsche Bank, Germany's biggest bank, is hiring staff in Mumbai for its Global Markets Centre, according to Ma Foi Management Consultants, which says claims to be India's largest human-resources service provider.

The jobs on offer include creating hedging strategies for the bank's energy customers, advising insurers and pension funds on multi-asset investments, and coming up with borrowing strategies for Latin American clients.

"The teams in GMC will be front-office teams acting as virtual extensions of the trading desks in London, New York, Singapore, " the email says.

India has a couple of key advantages over China in the race to become the West's offshore intellectual workforce.

Language barriers are lower, and there's a diaspora of Indian managers already running business units all around the world.

Most of the US and European literature on the growth of financial services in Asia focuses on whether the locals will lock up their domestic markets before Western firms can establish a beach-head to market insurance and banking and credit cards to the 2.4 billion inhabitants of China and India.

"A threat may come from the use of local expertise to establish a separate rival indigenous financial services industry that shifts the balance of global services toward Asia, " said the City of London, a local government body, in a report this month on how India and China might affect London's financial district.

Maybe that emphasis is wrong. Instead of focusing on what we might or might not be able to do to 'them', we should be worrying about what 'they' might do to us.

In Kessler's 2004 article, he takes comfort in how US companies are "moving low-margin, low-paying jobs overseas, but, fortunately, are left with high-margin, high-paying intellectual property jobs".

Anyone who believes the US and Europe have some kind of monopoly on intellect is cruising for a bruising.