The Bangalores of Europe
Eastern Europe emerging as outsourcing centre

The United States may turn to India to fill its call-center jobs and the like. But Western Europe is turning more frequently these days to its own backyard, transforming a few urban centers of the former Communist bloc into the Bangalores of Europe.

Countries in Central and Eastern Europe are offering outsourcing avenues for white collar jobs like bookkeeping, data crunching and even research and development, as the region is moving more quickly to integrate itself economically with its more affluent neighbors to the west, reflecting an economic advance that is reducing the high unemployment that plagued these countries for years after the fall of the Berlin Wall and the collapse of the Soviet empire.

Eastern Europe, with an outsourcing business estimated at a little more $2 billion this year, represents just a fraction of the global outsourcing market, estimated this year at nearly $386 billion. But analysts expect growth in Eastern Europe to outstrip the rest of the market over the next four years, expanding by close to 30 percent by 2010, compared to 25 percent growth for the global market.

The reasons for Central Europe's new attractiveness for outsourcing are not limited to promising talent at cheap prices. Central and Eastern European countries also remain some of the world's great untapped markets for services and consumer goods.

But there is no doubt that low wages in the region have their appeal to western companies. Employees in Hungary and the Czech Republic earn a quarter of what employees in Western Europe make; Slovakia's pay runs only one-fifth as much, according to the European statistical agency Eurostat.

If that does not make the area attractive enough, governments also offer incentives, from simplified tax structures to subsidies for new office construction.

Unlike other regions that compete for outsourcing, like India or the Philippines, where English is the sole operating language, employees in Accenture's central European business speak a variety of languages, giving clients access to people who speak English, French, German, Russian, and a host of local languages.

Other than the multi-lingual talent base, another key factor is a stable political and economic environment as many of these countries are members of European Union and NATO.

Source : International Herald Tribune