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First it was India, now Eastern Europe is catching the eye of investment banks’ outsourcing specialists.

Morgan Stanley, for example, has an IT centre in Budapest which David Legg, managing director and head of offshore outsourcing at the bank, says complements its centre in Mumbai and helps maximise its access to global talent.

Will Eastern Europe account for a growing proportion of outsourcing in future? A recent report by KPMG suggests this may well be the case: the accounting and consulting firm found that almost a third of European IT managers consider their needs to have been served poorly by non-European (read Indian) suppliers.

Little surprise, therefore, that less than a third of Europe’s IT managers plan to outsource to Asian IT suppliers in future – despite the fact that Asia’s offerings are cheaper than those of its Eastern European competitors.

Crispin O’Brien, head of technology for KPMG, says Eastern Europe’s popularity is equally being driven by the urge not to put too many IT eggs into one geographical basket. And Legg tells us the region also scores points when it comes to proximity.

Combine this with the fact that pay in India is rising fast and may soon be on a par with that in Eastern Europe, and the latter has a lot going for it. Indian IT companies such as Tata have already set up shop there.