The announcement goes against the current practice of western companies outsourcing back office jobs to developing countries because of the lower pay and the significant number of English-speaking workers.
Vodafone will create 750 call centre positions in Tasmania as part of the telco's renewed focus on customer service, said Vodafone Chief Executive Officer Bill Morrow.
With the move, Vodadone's Kingstone call centre in southern Tasmania would increase its total workforce to 1,500.
To help create more jobs in Tasmania, the federal government of Australia committed $4 million for the move and the state government would add another $850,000.
However, Vodafone would not shutter its India operations but instead leave the IT and administration functions in the South Asian country.
Prior to the expansion, construction jobs would also be created, said Prime Minister Julia Gillard who attended a Vodafone event in January.
"This is a vote of confidence in the abilities of local employees to provide the level of service required by Vodafone to meet its customer needs," The Herald Sun quoted Ms Gillard who visited Tasmania on Friday to attend a jobs expo at Glenorchy and tour fire-ravaged areas in Dunalley.
Besides its call centre in India and Australia, Vodafone has similar operations in Barcelona, Spain and Cairo, Egypt.