But by the year 2011, ValueNotes, the Pune-based research company, says that a lack of accountants during the busy tax season could mean that the number of returns processed in India may grow to 1.6 million - an estimates it calls "conservative."

ValueNotes believes that there is potential for 22 million US returns to be processed in India by 2011, but reservations about 'offshoring' clients' returns will in reality limit the number.

“The whole outsourcing business requires quite a shift in thinking for the CPA firms, so comfort factor has to be really high in order to do that," noted Glen Keenan, President of Xpitax, an outsourcing firm for the accounting industry.

A shortage of CPAs in the United States has led to increased salaries and firms are discovering that offshored Returns are not only turned around faster, but are also 40% to 60% cheaper, the report found. This has led to the sending of other work offshore, such as bookkeeping, financial statements and analysis.

“The industry will quickly move beyond 1040s," observed ValueNotes CEO, Arun Jethmalani.

"Both the vendors and buyers are at an inflection point on the maturity graph, and we expect tax returns preparation will drive penetration into a wider range of offshored professional accounting services," he added.