Many organizations that choosing to move IT projects to lower-cost destinations are daunted by the task of determining which destination would best feet to host their operations. Recent report from research and analyst company Gartner looked at the credentials of 72 countries as offshore locations, and listed the top 30 destinations in 2008.

This year has seen India, China, Russia and Brazil continue to dominate as offshore leaders, but it has also marked the rise of new outsourcing destinations such as Egypt, Morocco, Panama and Thailand that replaced Northern Ireland, Sri Lanka, Turkey and Uruguay from their 2007 positions in the Top 30 list.

According to Ian Marriot, research vice president at Gartner, outsourcing destinations will be seeking to take advantage of the opportunities created by the increased focus that many organizations have on cost optimization, as a result of the current economic crisis.

Gartner used ten criteria that it determined important for organizations to consider when looking at a potential location for offshore or nearshore IT operations or business process services. They were: language, government support, labor pool, infrastructure, educational system, cost, political and economic environment, cultural compatibility, global and legal maturity, and data and intellectual property security and privacy.

Considering EMEA, locations such as Ireland, Israel, Northern Ireland and South Africa rated well for language skills, because of the quality and quantity of English-language speakers. However, other countries such as the Czech Republic, Slovakia, Hungary, Poland and Romania were also given credit for the availability of alternative languages that address the needs of an increasing number of continental European buyers.

Recent EU entrants Slovakia and Romania, together with Russia and Ukraine were scored well on cost grounds. Increasingly, companies are choosing offshore providers in Eastern Europe countries such as Ukraine, where language skills are better and outsourcing providers appear to have a more in-depth understanding of their clients than competitors farther east. Ukrainian offshore outsourcing companies have been providing software development services since early 1990s, one of them Mirasoft Group started to provide outsourcing software development services since 1989, and for today the company already exist more than 19 years.

And even Gartner reported that in EMEA the government support achieved low ratings and there are some challenges in cultural compatibility. It might be ameliorated rather soon due to start of Central and Eastern European Outsourcing Association (CEEOA). The association was launched to promote outsourcing providers in Eastern Europe, and intends to pool resources from associated bodies based in the Baltics, Ukraine, Hungary, Bulgaria and Romania, in an effort to increase the volume and quality of service delivery in particular states.

The main goal of CEEOA is to prove that although Eastern Europe is still charged more for IT outsourcing than Asia, the cost is counterbalanced by the high quality, innovation and ability to cater to local needs.

Gartner also found that external service providers (ESPs) have started to target places outside the ‘Top 30’ to get closer to mature countries, such as the Nordic regions and France that show increased interest in offshore. “Given the current financial turmoil, cost will remain an important factor. However having the right balance between lower cost and higher risks, and lower risks and higher costs will be critical in times of recession and uncertainty,” said Mr Marriott.