The increasing costs for U.K. companies that provide and use Indian offshore information technology services could drive businesses to cheaper locations, such as Eastern Europe, according to a new report.

It is stated in the report by Pierre Audoin Consultants (PAC) that Romania and other Eastern European countries are virtually ignored by U.K. companies but are prominently the first outsourcing choice for the rest of Western Europe.

It is shown in the report, the lower cost of using and providing IT services in Romania is not only the reason for Romania to come up in outsourcing industry but the country being home to well educated and highly skilled workers who have a better understanding of Western European culture than Asian counterparts has helped Romania brim up.

Even the organization in the US have started considering Eastern Europe as a resource for outsourcing, which includes sending tasks like data center or payroll operations to other companies.

Pete Foster, a research director at PAC, says that the United Kingdom’s use of India is largely driven by historical and cultural links to the country, but companies may be forced to look elsewhere, as skills and resources become scarcer and costs start to rise.

Cost has become a great competitive feature and India seems to be loosing the battle by getting more expensive day by day. Europe represents a good opportunity and a new area to find resources but is virtually ignored by U.K.

There is the opportunity for service providers to improve their competitive edge–by obtaining resources and companies in Romania more cheaply than in India–and for users to buy comparable levels of IT service at a much lower cost.

The report reveals that the midrange price for offshore software development in Romania is about $160 per person, per day, and that the cost of employing a recently qualified graduate from an approved specialist university is approximately $6,500 a year. Experienced project managers can also be recruited for between $21,500 and $32,000 a year.

Hence, if not dealt properly, India may come in problem in future as Romania would keep on providing services at lower cost.

Source:www.business-standard.com

For Mexican companies, India seems to be the favoured outsourcing destination. A Mexican delegation, comprising leading executives, is visiting India next week (from September 9-12), to look at joint ventures to set up call centres in India to cater to their home market.

A business meeting, organised by the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Associated Chamber of commerce and Industry (Assocham), will see interaction between Indian and Mexican delegates from sectors like information technology, food, health, tourism and textiles.

While Atento Mexico, a Mexican call centre is on the lookout for an Indian partner who can offer call centre services in Spanish or English for local or offshore clients, Has-it, S.C., is interested in outsourcing software as well as agriculture technology to India. Another company is looking at outsourcing infrastructure management to India.

Of the 57 entrepreneurs visiting India, 13 have expressed their desire to collaborate with Indian companies in business process outsourcing.

According to the National Association of Software and Services Compaies (NASSCOM) , the IT-BPO sector is expected to grow around 28 per cent in 2007-08 and generate direct employment of around 1.6 million.

Factors like abundant talent, sustained cost competitiveness, rapid growth in key business infrastructure and enabling policy and regulatory environment have contributed in making India an attractive offshore destination.