The report made by the global management consulting organization A.T Kearney Global Services Location Index, in which the agency analyzed and ranked top 50 outsourcing destinations worldwide has brought some surprises in terms of location delivery preferences for provision of IT outsourcing services. While American and Asian clusters experienced no significant changes during last year with all traditional leaders, India, China and Malaysia retain their top positions, the biggest IT outsourcing spender in 2009 namely European continent experienced noticeable rearrangements in terms of location delivery preferences.

The results of A.T Kearney analysis indicated that leading nearshoring destinations in CEE region including Poland, the Czech Republic and Hungary have fallen significantly in location ranking because of increasing operating costs and wage inflation. While new regional leaders, in terms of financial attractiveness, people skills and business environment came to the scene.

The report data suggest that the best score in Central and Esatern European region earned recent EU entrants Romania and Bulgaria, while Russia and Ukraine were scored well on cost grounds. The criteria the agency cited were "salaries, infrastructure, taxes and financial attractiveness".

Although, the data from another research conducted by Deutsche Bank Research indicated that many of German, Swiss and Austrian vendors still outsource their IT activities to Poland, Czech, Slovak Republic and Hungary, the overall shift towards Eastern neighbors becomes increasingly evident. The first wave of popular nearshoring trend that was commonly associated with Central European states has begun to decline. With a lapse of time membership in EU minimized the cost advantage as countries experienced rise in labor wages and development costs.

Both, Romania and Bulgaria joined EU just in 2007 and represent fast-developing markets with IT industry growth stronger than average in the region. This trend is likely to continue as countries offer large talent pool, good quality services and competitive rates. However, in the long run the EU membership could minimize price advantage that countries offer today. According to Natasha Starkell, CEO of Goal Europe, the higher wages will push outsourcing further east.

Source: Levi9 Global Sourcing