BANGLADESH IS becoming the new India–of outsourcing, that is.

As wages and other costs in India continue to escalate at rates as high as 15% a year, more New York companies are going next door to Bangladesh…”Bangladesh is definitely emerging as the next center for outsourcing,” says Lilach Nachum, a professor at Baruch College’s Zicklin School of Business…

In Bangladesh, information technology staffers get $5 to $10 an hour, versus $10 to $20 in India. As a result, switching can reduce overhead by as much as half. Some Indian companies that get U.S. outsourcing business are moving their own work to Bangladesh, and their New York clients are happy to follow.

“India is almost oversaturated, but Bangladesh is up-and-coming,” observes Arman Rousta, co-founder and principal of Blueliner Marketing, a New York online marketing consultant with operations in Dhaka, the capital. “People there are hungry.”

Mr. Rousta was initially skeptical when a Bangladeshi-American employee suggested that Blueliner start outsourcing in Dhaka as well as India. But the executive reconsidered when costs began rising. The size of Blueliner’s Dhaka operation is now double that of its Indian one.

Though most of Blueliner’s outsourcing is IT for small and midsized businesses…several larger clients, including Citigroup, have had Web work done in Bangladesh.

This is an excerpt from the article “Outsourcing Moves to Bangladesh,” published in Crain’s New York Business, December 17, 2007. The Full article is available in newsstands from December 17 to the 23 and to members of Crain’s New York Business.com.