For several years, multinational companies have known the advantages of using India as a center for writing software: a supply of educated workers who can be hired for a fraction of the cost of their colleagues in the developed world and lower infrastructure expenses. Today, the increase in cross-border bandwidth capacity and the emergence of universal networking standards are opening up possibilities for moving many parts of a company’s business system—well beyond the writing of code—to India.

So-called remote services are becoming widespread in a variety of industries. By 2008, global remote-service operations may undertake activities accounting for half a trillion dollars around the world and representing every element of the value chain: upstream activities such as research and design, manufacturing-related activities such as procurement and logistics, front-end activities such as marketing and sales, and staff functions such as accounting, information technology, and human-resources management. Such operations could generate cost and other savings of about $400 billion, to be shared by the users and the providers as profits.

The big question is how to decide if remote services are appropriate for your particular company. The most important factors to consider are the cost base and the share of services...