Currently, with the changing European economic landscape, CEE countries have emerged as one of the world's most attractive FDI destinations. Companies venturing out of India are currently trying to explore the less-familiar Central and Eastern European markets. These countries, namely Poland, the Czech Republic, Slovakia and Hungary, recently joined the EU and often called the "New Europe", offer Indian firms a stable operating environment in a strategic location, an educated workforce, great cost advantages, and a more secure legal framework.

"The first wave of Corporate India's foray abroad focused on the nearby Asian markets, and the relatively-open Anglo-Saxon economies. However, with Indian companies seeking new growth opportunities, the time is ripe to adopt a portfolio approach - and to weigh the relative costs and benefits of perhaps less-than-obvious destinations," states Maciej Jeziorski, Research Analyst from Frost & Sullivan. "In this context, for many companies, and particular industries (e.g. BPOs and certain manufacturing industries), Central and Eastern Europe, with its relatively affluent markets, solid talent pools, and generally low-risk business environment is a strong investment candidate."

Western multinationals began to notice the sourcing and market potential of the CEE region twenty years ago. As a result, a transition process from then till now has ensured macroeconomic stability, hearty growth, and rising standards of living, all of which is raising interest levels, and thus investments. The EU is steadily pushing eastward. For many investors the primary reason to locate in the CEE region is the newly granted freedom to move people, capital, goods and services to and from the rest of the EU.

In addition, "New Europe's" membership with NATO and OECD has bolstered levels of political and economic stability in the region's overall business environment. Since the EU enlargement, FDI inflow has and will continue to rise. In 2007, Poland, the Czech Republic, Slovakia and Hungary alone attracted USD 35.5 billion in FDI. In the contact of the global financial slowdown since mid-2007, this is much more significant. Another bonus is that membership to the EU has directed large amounts of intra-EU funding to the CEE countries. For example, more than a third of the EU's budget goes towards its Structural and Cohesion Funds.

Indian companies interested in serving the European market have to decide where to operate, whether directly from India, or, instead, closer to the end-market. The region's strategic location is critical in such considerations.

Another benefit is the total cost of employment per worker in the EU's Central and Eastern countries roughly one-third of that in Western Europe. Although these differences are expected to shrink, for the moment cutting costs with labor is important to many Indian companies.

Along with the labour costs, CEE countries are experiencing large labour productivity advantages. For instance, the four 'major' CEE countries have been maintaining annual productivity growth rates of 4-6% since 2000. This rate is far quicker than Western Europe.

In terms of their population's education the CEE countries are ahead of the West. On average, the "New EU" produces 60 degree-recipients per 1000 inhabitants each year - compared with 51 in the EU-15. Not only this, but many in the CEE-10 are proficient in other European languages besides English, as well as being able to quickly interpret the implicit signals and end- objectives of their clients in other European countries. All of these skills are important for consideration for the near-shoring businesses.

CEE countries also offer moderate and simple taxes. With the exception of Poland and Hungary, most countries in this region have already implemented flat tax rates.