AMSTERDAM, May 31: Central and Eastern Europe and North Africa are set to become the next favoured locations for outsourcing centres, especially for companies based in Europe, a survey said.

India is becoming too expensive and European firms want a closer cultural fit, a study by the EIU, a research and advisory firm, said on Wednesday.

Outsourcing, or off-shoring, refers to activities like back-office support, call centres and technical activities which companies move to lower-wage countries. Companies typically save 15 per cent on their costs, according to a separate survey from outsourcing advisory firm TPI.

“Demand is increasing for more complex capabilities and a closer linguistic and cultural fit with customers. That makes lower-cost European locations very competitive,” said senior EIU consultant Delia Meth-Cohn. Hewlett-Packard, one of the biggest IT services companies, has opened offices in eastern European cities Bucharest, Sofia and Bratislava where it expects staff to increase to 4,000 by the end of 2007 from 1,500.

“In Bucharest we plan to serve all European languages,” said Jan Zodak, who is in charge of HP’s services activities in Central and Eastern Europe, Middle East and Africa.

The global off-shoring market is worth between $40bn to $50 billion a year, and it is growing by around 30pc annually, the EIU survey found. It may be as much as $100bn by 2008, and has caused concern in some countries about jobs being moved abroad.—Reuters