In a hushed dark room of connected computer terminals, artists put the final touches to the complex computer-generated avalanches which digitally transform a man’s face into vanishing particles of smoke. The spectacle will play out on a Hollywood screen. But the artists are sitting in Ghatkopar.

Mumbai has been one of the top names on Hollywood’s outsourcing list for a long time now, with films like Spiderman 3, Blood Diamond, Chronicles of Narnia, Click, Shrek 3 and One Night At The Museum being digitally created here. Major Hollywood studios like Warner Brothers, Walt Disney, Pixar, Sony and MGM have been outsourcing low-end work like clean-ups, tweening and modelling to digital studios across India. But now a new horizon has being touched with an Indian firm co-producing animated Hollywood movies.

Crest Animation Production, a subsidiary of Mumbai’s Crest Animation Studios, recently entered into a three-movie co-production deal with Hollywood film entertainment studio, Lionsgate. “The first of these films, Alpha and Omega is already under production on a budget of $25 million,” says Ken Katsumoto, who is producing the movie for Lionsgate. “It will be the first animated Hollywood movie to be created entirely by an Indian company.” The animation has been done in-house at Crest Animation Studios at Ghatkopar.

Tata Elxsi’s visual computing labs (VCL) in Mumbai, which created the Walt Disney Pictures-Yashraj Films co-production, Roadside Romeo last year and has also done digital work for the 2007 Spiderman 3, is also a big player, working on a number of Hollywood pictures. The firm has sewn up a major deal which it will announce soon.

There are dozens of other firms in the fray as well. While Mumbai-based Maya Entertainment did special effects for The Mummy and Stuart Little, the LA-based Rhythm & Hues Studios’ Mumbai facility has worked on Charlotte’s Web for Paramount and Garfield: A Tale Of Two Kitties for Fox. The latter also helped out with A Night At The Museum with Ben Stiller for Fox, Evan Almighty (the sequel to Bruce Almighty) for Universal and Happy Feet for Warner Brothers.

Outside Mumbai too, multiple design studios have cropped up in cities like Hyderabad, Thiruvananthapuram, Bangalore and Chennai. Toonz Animation India, based in Thiruvananthapuram, has worked on a full-fledged feature film called Tommy and Oscar, apart from completing work for Italian producer Rainbow Productions. The Chennai-based Pentamedia Graphics, a subsidiary of computer software company Pentafour, has handled the animated 3D film Sindbad: Beyond The Veils Of The Mists while Nipuna Services, a division of Satyam Computer Services, bagged a project worth US$ 8 million from 4K Animation GmbH, a German animation company. The latter is well known for its animatronics dog for Animal Planet’s series K9 to 11.

With Indian firms bagging coveted international awards like the Emmys, the story playing out in India’s $324-million animation industry gets better with each passing day.