The per capita GDP of USA is 47,284 USD. That of India is 3500 USD or about 1/14th of of USA. Obviously, it has a bearing on what our companies earn per employees. E.g. the per employee earning for Citibank and the BPO in India that works for it are vastly different. It therefore stands reason that the BPO cannot afford to invest as much in its infrastructure as the American bank. These companies must therefore be looking for IT infrastructure that are far less expensive.
To start with, software now forms a larger and larger part of the IT budget and it can therefore also be the part that offers the greatest amount of cost savings. Open source software is increasing becoming a very credible alternative.
Secondly, not just the BPO, but most companies in India usually have to go through a large number of small value transactions. While, this means that there can be little compromise on provisioning for capacity, the hardware used to build the IT infrastructure can be less specialised and more generic and therefore lower in cost.