With his track record as a member of the political arm of a banned terrorist organisation, Mian Shahzib is unlikely to ever be given a visa to enter Britain.

But that does not stop the jovial 33-year-old from giving British children religious instruction every day from the comfort of his home in Pakistan.

He spends hours each night sitting under a fluorescent light in the courtyard of a small mosque in Lahore, peering into a laptop as children first from the Middle East, then Europe and North America spend half an hour after school talking to him over a faltering Skype line. "Put on your cap and wash your hands," he told a 12-year-old boy sitting in a large office chair in his parents' home in Edinburgh.

After checking the boy had memorised various prayers to get him through the day, including a special blessing for exiting and entering the toilet, he got down to business, helping the boy read aloud the classical Arabic of a few verses of the Qur'an.

The fact that a hardcore Islamist and long-term follower of the UN-proscribed Jamaat-ud-Dawa (JuD) has daily access to children in the west is likely to fuel concerns about religious radicals spreading their message.

Shahzib's website, Easy Qur'an Memorising, makes no mention of his history and is one of hundreds of such online companies, some of which advertise on satellite channels broadcasting to the Pakistani diaspora. They are part of a little-known outsourcing boom fuelled by parents of Pakistani origin turning to Qur'an teachers in Pakistan. "It's just like a call centre where you are saving a lot of money by getting someone overseas to do it much more cheaply," said Fawad Rana, a property developer in Solihull who has used Qur'an teachers for his two sons for the past three years.

Rana makes an online payment of £30 a month to Faiz-e-Quran, one of the larger online religious education companies, which gets his children three half-hour sessions a week.

"And there's the convenience factor – the last thing kids want to do is spend half an hour travelling to the nearest mosque and then not even getting 10 minutes of one-on-one tuition," he said.

Although Faiz-e-Quran say it takes care to scrutinise and monitor all the teachers it employs, the industry is increasingly dominated by one-man operations. After several years working on his business, Shahzib now has about a dozen students aged 12 to 18 scattered all over the world. It's a long way from his past role as an activist with JuD, a Pakistani Islamist organisation known for its holy war against Indian rule in the contested region of Kashmir.

The organisation is on the UN's list of sanctioned organisations because of its alleged association with al-Qaida and is considered a front for Lashkar-e-Taiba, the group behind the 2008 terrorist attacks on Mumbai.

As a young man, Shahzib helped prepare young JuD militants before they crossed the line of control that marks the unrecognised border between Pakistani and Indian-held Kashmir. His job was to motivate them with religious teachings and to fill their heads with tales of Indian soldiers raping Muslim women. He was briefly arrested after falling out with his old mentor, Hafiz Saeed, the JuD leader, who lives openly in Lahore but who is subject to a US reward of $10m (£6.36m) for information leading to his arrest. Shahzib believes Saeed has bent to demands from Pakistan's security establishment to rein in militancy in Kashmir.

"I told him to his face that he had betrayed the jihad," he said. These days he still follows the "philosophy" of JuD, even if he is not an active member.

He supports the fight against foreign forces in Afghanistan. But he does not think the struggle should be taken to the streets of Britain. "It is completely wrong to attack soldiers in Britain," he said. "If a young man in the UK wants to support jihad I support that, but come to Afghanistan to fight, not the UK."

The Guardian was told of other online tutors with radical backgrounds or who are members of extreme or sectarian organisations, but it is impossible to know how widespread the phenomenon is in a completely unregulated industry.

Sultan Chaudri, the owner of Faiz-e-Quran, said his company is at pains to scrutinise all 13 teachers who work for him to ensure radicals are not employed. "All the problems we are seeing in Pakistan and Afghanistan is because these young children get sent to madrasas where no one knows what sort of education they are getting or what kind of indoctrination is taking place."

When Chaudri, a retired colonel, started his business four years ago his marketing team had to assure parents that there would be no such risk with online teaching.

"They used to say we are not going to get education from a maulvi [Islamic scholar] in Pakistan because he is going to teach bad things to my child," he said. "Parents realise now that there is no risk because they can see the lessons right in front of their own eyes."

Inspired by a call-centre model of global outsourcing, Chaudri's staff work in shifts from an office in Lahore.

In a country plagued by power shortages his office uses three generators and subscribes to four different internet providers managed by a duty IT supervisor. Five clocks show the time in all the areas where his 200 students live.

Outsourced Qur'an teaching started about six years ago and there are now a handful of big players. Although there are no reliable figures on how many children around the world are being taught by Pakistan-based teachers everyone seems to think it is growing fast.

"We were recommended it by a cousin in America, and we've passed it on to lots of our friends," said Rana. "When we first found out we just thought, wow, what a wonderful service they are providing."

According to Chaudri, the business is fragmenting, with teachers striking off on their own to establish "one computer academies", often poaching customers from companies such as Faiz-e-Quran.

"They are so dishonest," he said. "In the last four years I have seen so many teachers that have run away with so many students."

For young men who have only had a religious training and often struggle to find regular employment, the prospect of earning decent wages teaching Qur'an reading online is extremely attractive.

Chaudri does not allow his staff to use a webcam when teaching. Instead, the teachers in Lahore simply share a page of text from the Qur'an which the student, who will rarely be able to understand the Arabic words, then attempts to read.

"It is not good to let them see into the houses," he said. "I have seen that after 10 days the teachers will fall in love with the lady of the house, or the daughter of the house; they will send letters saying 'I love you very much.'"

Also, he wants to spare his clients from having to look at the unkempt religious young men who work for him. "They don't take care of their beard. They are not very pleasant to look at."