By  for Central European Processing Eastern Europe is building up a head of steam as a software outsourcing powerhouse, as companies focus more on cost-effectiveness and proximity, rather than just low cost.

Eastern Europe is becoming an increasingly attractive option for companies looking to outsource software. The region now provides five of the top 20 countries listed on AT Kearney's 2016 Global Services Location Index.

Although Eastern Europe doesn't offer costs that are as low as those found in India or China, the top two outsourcing destinations, it can argue that it provides better product quality, a proximity to Western Europe, cultural affinity, a better business environment, and high-level skills.

Based on labor costs alone, companies outsourcing software to the region manage to save up to 50 percent, compared with 75 percent in India, AT Kearney principal Johan Gott told ZDNet.

Poland is first among the Eastern European nations, ranking 10th for employment costs. Bulgaria and Romania follow in 12th and 13th places, with Latvia also making the list in 18th spot.

With more and more IT companies expanding or opening offices in the country, Romania has to come up with solutions.This year, Russia ranks 17th, up four places from last year, as a result of the depreciation of the rouble against the US dollar and the euro, a change that makes software development in the country more affordable than a couple of years ago. Against that advantage, Russia still has to deal with "political and economic risk in face of international conflicts and sanctions", according to the report.

AT Kearney monitors 55 countries across three major categories: financial attractiveness, people skills and availability, and business environment.

In another study, Tholons 2016 Top 100 Outsourcing Destinations, many cities from the region put in a good showing. Poland comes out top with Krakow in 9th place, Warsaw in 25th, and Wroclaw 58th, followed by Russia with Saint Petersburg at 37th, Nizhniy Novgorod at 60th, and Moscow 64th. The Romania capital Bucharest also figures, in 41st spot, together with Bulgarian capital Sofia in 52nd.

Read the whole article on ZDNet.

Apr 27, 2016 By Ivo Radulovski