Offshoring Evolves as Cost of Overseas Talent Rises: Fears about outsourcing have diminished.

NEW YORK -- The third wave of mortgage offshoring appears to have transformed the business into something unlike what it originally was in some striking ways.

Perhaps most notably: Although it continues to be known primarily for its staffing cost-effectiveness, prices being paid for talent are said to be rising.

Russ Watts, senior vice president of operations in First American's international services group, said offshoring has reached a point where "you start to hear things like wage and salary inflation being an issue ... in some cities" such as Bangalore and Mumbai in India.

This has resulted, in part, from notable growth in the number of companies in the business, Mr. Watts and some other market participants interviewed about mortgage offshoring for this article said.

"There's a ... price hike every year in India because ... it is almost fashionable for everybody to go and set up a shop there," said Arshad Masood, president of Visionet Systems, Cranbury, N.J.

Because of this increase in salaries and competition for talent, effective offshoring has become a matter of more than simply moving certain processes to a cheaper market, according to some market participants.

"Yes, you can get a labor arbitrage impact immediately [by offshoring]. However, in the long range ... that benefit [may] go away [due to rising salaries and attrition]," Mr. Masood said.