Most Indian IT firms, including TCS, Wipro, Infosys, Mindtree, Infotech and Sasken, which started their operations in the region with a small base, have expanded their base fast, both organically and inorganically.
Wipro, for instance, has about 300 people in Finland today. Wipro opened its first software development centre in Finland in 2002. In June last year, Wipro acquired Saraware Oy, a Finnish wireless design service company, for $35.2 million (around Rs 145 crore).
Similarly, communications software and solutions provider Sasken has established a base of over 300 people in Finland with the acquisition of Botnia Hightech, a provider of wireless R&D and testing services.
India's largest software exporter TCS has had integrated operations in Finland, Denmark and Sweden for over eight years. The company is determined to further integrate Estonia, Lithuania and Latvia into its global network delivery model.
"We initially chose the BSR for the huge telecom market it offers. Over a period of time, it has become obvious to us that this region is also an IT-savvy market," says Kavilesh Gupta, TCS country manager in Finland.
According to Gupta, the company's business has been growing faster than expected. "We are gearing up for this growth, by expanding across the BSR," he said.
Both TCS and Infosys are present in Sweden, Finland and Denmark, with an average of 50 people each, and they plan to expand rapidly.
The BSR is an investment network comprising Sweden, Finland, Denmark, Latvia, Lithuania and Estonia, all around the Baltic Sea, and the six countries are members of the European Union. The population of these countries together is about 25 million.
The main draw in these countries is the presence of over 8,500 small and medium IT consulting and designing firms.
These economies have shown robust growth and the World Economic Forum has rated Finland, Sweden and Denmark among the world's top five most competitive economies. Latvia, Estonia and Lithuania have been listed among Europe's fastest-growing economies.
Forbes has included all the six BSR countries in its list of top 12 most investor-friendly countries.
"This makes sense both in terms of the number of customers (in telecom, retail, banking) and the unique nearshore talent available to be tapped," said James Abraham, partner & managing director, Boston Consulting Group. "It also makes sense for IT firms to address the Russian market from this region since Russia's governance structure is a risk."
Gaurav Gupta, country head (India), Everest Group, said, "The Baltic countries offer certain skills which do not exist in other parts of the world. For example, our IT skills in mainframe somehow did not grow further. We are into newer technologies, whereas the BSR countries are quite strong in certain technology resources."
A delegation from the BSR, which was in Bangalore recently, said that following the companies which have established a presence in Baltic countries, several other Indian firms had showed a strong desire to establish a base there.
The group is talking to companies such as SLK Software, Sonata and Nous Infosystem to set up operations in the Baltics.
"Most companies in the ICT (information and communication technology) sector we are talking to have shown interest in establishing a presence in the BSR," said Leva Stukle, investment project manager, Investment and Development Agency of Latvia. "We appraised them of the availability of right skill sets and a strong local market powered by amazing growth in various sectors, including banking, finance, security and insurance."
Morten Duedhal, the head of business development with Copenhagen Capacity, who was also among the delegation, said the Baltic region offered the companies an environment with "practically no red-tape" and a "simple tax structure".
Besides, in most of the member countries an average person is at least a bachelor degree holder with knowledge of at least three foreign languages (Russian, German and French) apart from English.