Many software companies are now looking to countries outside Western Europe and the USA for development resources. This is mainly due to lower costs. Scarce progamming skills is also a factor.
Our company Redland Software Limited operates from the wonderful Romanian city of Timisoara. Timisoara has two universities with IT / Computing departments. Also, several large companies have software departments there including Siemens, Alcatel and Solectron.
We initially started with Visual Basic and PHP development, but since then have evolved to using Microsoft .Net and Java.
Setting-up a company in a foreign country is not easy, particularly if you do not have the huge resources of a company like Alcatel or Siemens. There are many factors to take into account including the culture, the legal system, the language, travel there, the communications infrastructure etc. I worked through every one of these (and other) items and some of the issues are still on-going.