Back in 2004, HCL BPO set up its center in Ireland, Western Europe in the cities of Belfast and Armagh. In July 2006, FirstSource set up its center in Belfast to be followed by another in Londonderry, Northern Ireland. TCS set up a center in Germany in 2005. After establishing a European footprint primarily to gain visibility and foothold in the market, Indian outsourcing vendors are now actively considering Eastern Europe to further delivery capabilities.

Countries in Eastern Europe on the outsourcing radar include: Czech Republic, Romania, Belarus, Bulgaria, Norway, Slovakia, Poland, and Hungary. With growth in overall outsourcing driven by lower costs and talent availability, Eastern Europe is emerging as a strong contender for outsourced jobs and is likely to employ over 100,000 people by 2008. Apart from offering similar cost benefits; these countries are gaining on two counts vis-à-vis India:

• Physical proximity and cultural affinity to Western Europe, which forms a bulk of their clientele
• Non-English language capabilities like French and German among several others that are difficult to find in India

Some of the European cities like Prague and Budapest are rapidly gaining traction as centers for outsourced bookkeeping, data management as well as research and development. Some of the major global/European companies outsourcing to Eastern Europe include:

Outsourcing revenues of Eastern Europe are estimated at over $2 billion in 2006 and are likely to grow faster than the remaining markets in the next five years.

Amongst Indian vendors, Infosys opened its Eastern European center in Brno in December 2004 and currently offers services in eleven languages. TCS, which has a presence in Hungary and Budapest is also expected to increase its strength in Eastern Europe.

The move of outsourcing vendors to Eastern Europe will gain ground as issues in the established destinations snowball. Problems like wage inflation, manpower attrition and quality concerns are forcing more vendors to look elsewhere within the precincts of 'low-cost, talent availability' model. Apart from these benefits, multiple languages and 'nearshore presence' are additional advantages that Eastern Europe offers.

Going forward, Indian vendors expanding within Europe are expected to look beyond Brno, Budapest and Prague, to lesser-known yet potentially attractive outsourcing destinations. Several mid-sized cities in Eastern Europe have access to large talent pools where the cost arbitrage factor is likely to be attractive for the next fifteen years. Having experienced the vicissitudes on the home front over the years, Indian outsourcing vendors will definitely be watchful before the 'Bangalores' of the region get saturated.

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