After becoming an outsourcing destination for call centre jobs and business process outsourcing services, India is fast turning into a hub for high-end software products development as firms in developed markets start to outsource the activity to Indian companies.

Compared to low-end BPO and call centre jobs, products development is more lucrative and the growing trend is a recognition of superior skills of Indian software professionals, industry officials said.

"Products development outsourcing is very high up the value chain. It requires great amount of domain expertise as well as software architecture experience. Outsourcing of products development to India is here to stay," says V Vijay Babu, president & COO of Chennai-based iSoftTech Solutions.

iSoftTech, started in 2001 by venture capitalist Ray Stata, is one such firm concentrating on 'outsourced products development.' The firm recently developed 'Bloomba,' an e-mail search engine which is positioned against Microsoft's Outlook Express, for its US client Stata Labs.

There are similar start-up Indian software firms catering to the 'outsourced products development' segment.

"The outsourced product development market is providing India with a key avenue to move up the value chain and reduce reliance on cost advantage as the primary selling factor," adds Gowri Subramanian, CEO of Aspire Systems Pvt Ltd.

Aspire, which was set-up in 1996 as a Web-designing and e-commerce firm, moved into product development for US firms in 2002 seeing the opportunity.