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Once again I get a proof that Eastern Europe is increasingly chosen as an alternative location to India, as Indian software development labor market continue to overheat.

Last week yet another company came to us to help find an outsourcing supplier in Eastern Europe. I suggested to look at the countries located outside of the EU, as the cost of setting up a software development center there is lower. 

My favourite picks include Ukraine and Belarus, but it would be unfair to leave aside Serbia and Croatia, which given the size of their population have large enough pool of resources to contain cost over the medium term. Moldova, despite its small size, might be an alternative too, although British-owned Endava dominates the competition for labor. A Polish technology group Red Sky has a development center in Chisinau.

Ukraine, Romania, Belarus and Russia still dominate the outsourcing landscape, as over 500 software development companies are based there, according to GoalEurope’ in-house research. Cost containment is easy to demonstrate with statistical data: In Ukraine Ciklum tracks the average salaries for .Net and Java developers on a quarterly basis. In September 2011 the average salaries increased by 2-4 per cent. This compares favourably to 12 per cent annual IT salary increase forecast by Aon Hewitt for India in 2011.

Such statistics has convinced our client to implement its Eastern European outsourcing strategy. And I hope it will convince many more to do the same.