In depth article in BusinessWeek

In depth article on outsourcing in BusinessWeek, discusses the rise of outsourcing in Central and Eastern Europe in countries such as Poland, Bulgaria, Czech Republic and Romania. It also presents the origin of outsourcing in CET, where companies came first for manufacturing plants and found an impressive quality for engineers. Marxist regimes supported excellent universities and technical schools, which are still churning out top-notch graduates in engineering, mathematics, and computing. According to IBM, Hungary, Poland, and the Czech Republic ranked among the top 10 global destinations for research and development jobs in the first half of 2005.



Companies prefer Eastern Europe also due to the strong language skills.It’s cheaper to do such work in India: a worker in Budapest ranges from about $950 to $1400 a month, four times the Indian pay scale but it would be very difficult to find French-speaking Indians to do the job. And clients just want their work handled by someone who is in the same time zone. “The nice thing about Hungary and Romania is that they are a two- or three-hour flight from anywhere in Europe,” says Patrick Cogny, President and CEO of Genpact Europe. Proximity is key, says David Morgenstern, a managing director at Sunnyvale (Calif.) supply-chain specialist Ariba Inc. “Even if China is 5% cheaper,” he says, “that sways the argument back to sourcing in Central Europe.”



More companies are also realizing that Central and Eastern Europe are competitive with Asia on price. An engineer in Bulgaria costs his employer less than his counterpart in China and India, according to data assembled by Ariba. And the competition for top talent is not as intense as in some of Asia’s boomtowns.



What ultimately sets Central Europe apart from the rest of the continent, though, is the ambition of the younger generation. Poles work an average of 1,984 hours a year, well above the 1,777 hours clocked by U.S. workers on average and far more than the 1,362 hours Germans work, according to the OECD.



Complete article here.