Notwithstanding the protectionism and other hindrances, the current mood of optimism about the Indian business process outsourcing sector's growth prospects seems justified, according to the London-based magazine The Economist.

Quoting a survey done by investment bank Morgan Stanley among the chief information officers in top US firms, The Economist said only 14 per cent were engaged in BPO -- a proportion, which it said, might double in 2004.

Secondly, the range of work being done remotely is constantly expanding. The most publicised parts of outsourcing boom involve two very different activities -- writing computer software code and answering the telephone in call centres. But the applications are almost endless, The Economist said.

Transcriptions of medical records or remote diagnosis, desktop publishing, filing tax returns, processing insurance claims, updating annual audits, market research, engineering design work are some of it.

It quoted IT and outsourcing firm Mphasis' chief Jerry Rao as saying: "It is like peeling an onion."

Thirdly, much of the global market remains untapped. Rao, who is also the next chairman of software association Nasscom, says about 85 per cent of its members revenues were derived from the United States and Britain.

"More firms elsewhere will be seeking similar cost advantages," the magazine said.

The Economist said at least four categories of companies were scrambling to win their share of the growing outsourcing cake.

There are Indian firms like TCS, Infosys and Wipro which now aspire to be "full-service" providers to their customers, able to take on everything from writing software applications to managing the payroll.

There are specialist third-party outsourcing firms like OfficeTiger, Evalueserve, Daksh, EXL and WNS, once a unit of British Airways.

Bigger still are some of the captive units set up by MNCs such as GE Caps, American Express, HSBC, Citigroup and Standard Chartered.

There are also giant global professional services consultancies like IBM, Ernst & Young and Accenture taking on upstart competitors like Infosys and Wipro by offering services in their own backyard, The Economist said.

The magazine also mentioned some spoilers like protectionism, over-reaching and competition from China and Philippines, but said: "For the time being, however, there is little reason to doubt some of the rosy forecasts for the industry's growth."

Nasscom president Kiran Karnik stands by the Nasscom-McKinsey projections of a compounded annual growth rate of 34 per cent until 2008 by which time they would total $77 billion and contribute 30 per cent of the country's foreign exchange earnings.