But rather than being based in or near Bangalore, Mumbai or Chennai, the usual locations of the 80,000 IT jobs that have left the US in the past four years, the ship will be anchored five kilometres off Los Angeles. SeaCode Inc, based in San Diego, intends to have its ship in the water and its employees at their workstations by the end of the year. The two entrepreneurs would not reveal the cost of the venture nor the identity of their investors, other than to say the ship would cost between $US10 million and $US30 million ($12.8 million to $38.7 million).

Their project has attracted a frenzy of interest on internet tech sites like Slashdot, where the common refrain was that SeaCode would be running "a sweatship" of captive tech-heads working day and night. It was one of the first thoughts that occurred to Professor Omar El Sawi, of the University of Southern California's Marshall School of Business. "There are two scenarios to this," Professor El Sawi said. "One, what a great idea: it's like a free trade zone. Two, there's potential for a sweatshop there. It's almost like finding loopholes in the laws ..."

Mr Green dismissed the sweatshop comparison. "These will be highly skilled, highly educated people competing for these positions," he told the Herald. "They will be treated with dignity and professionalism. "We're a Californian company and we're going to manage this in the way that made America great. This is not going to be an under-the-covers, renegade operation."

But with their official location, 160 metres past the state line of territorial waters, the workers lose the legal protection of land-based employees. If they were onshore, Mr Cook admitted "they would have to be paid at the legal rate in the United States". But as offshore workers and residents, the 600 workers can be paid at a lower rate, while also saving SeaCode the $US800,000 cost of appropriate visas. Instead, they will be allowed to use the shore passes granted to any visiting seamen. Outsourced IT jobs typically pay a quarter to a third of their US equivalent. An Indian software engineer with six to eight years' experience can earn $US18,000 to $23,000 a year; the same US worker could expect a salary of $US70,000 to $US80,000.

The lost tech jobs are part of a larger exodus of white-collar employment out of the US. In 2002 Forrester Research estimated that 3.3 million US service industry jobs would move offshore by 2015. A report by the Information Technology Association of America says the savings from outsourced jobs will reach $US21 billion within the next three years. Mr Green said people tended to underestimate the cost of distant-shore outsourcing.

The belief "you could turn over everything to people who speak a different language on the other side of the world" was too good be true. Professor El Sawi said: "The benefit of face-to-face contact and proximity in development situations is very important."