In order to accelerate growth and remain competitive in the industry, many companies choose to outsource part of their IT services to a reliable and trustworthy partner, often in a different country (nearshore outsourcing) or continent (offshore outsourcing).
Faster growth and cost control were the initial drivers for outsourcing software development. But in recent years, staying at the forefront of innovation and keeping up with the latest technology trends on the market has been a challenge that both large enterprises and startups have struggled with, soon learning how to use outsourcing partnerships in order to maximize business value, not only cost-per-head.
Why should you consider outsourcing your IT services, and more specifically why choose Romania as your preferred destination?
Read on in this blog article to learn why outsourcing IT services to Romania makes good business sense.
Romanian IT landscape growth
With a young, well trained and educated workforce, important logistical advantages and one of the largest markets in CEE, over the past decade Romania has emerged as an engineering hotspot for many global technology companies thanks to its flourishing tech hubs, multilingual, skilled software engineers, and an appealing value proposition for IT outsourcing (ITO) services.
The IT industry is one of the key components in the country’s economy, with long-term incentive programs supported by the Romanian government. Focused on mathematics and computer science, the academic environment enables the continuous growth of the IT talent pool, making Romania one of the top 20 software development countries in the world.
The numbers speak for themselves, so let’s look at some facts.
- According to a study published by the Romanian Employers Association in the Software Industry (ANIS), the Romanian IT market is expected to reach a volume of EUR 7.3 billion by 2022. With an annual growth rate of 14.3%, the IT industry in Romania now contributes 6% to the country’s GDP and is expected to reach 12% by 2025.
- Forecasted to reach an economic performance level of 5.5% by 2021, Romania has one of the largest tech workforces in Europe. The 2019 State of European Tech Report showed significant growth in the Romanian software engineering talent pool, up by approximately 2.52% compared to 2018. In terms of geography, 49% of the total number of 119,100 professional developers are based in Bucharest.
- Having at least 8 major regional IT hubs – Bucharest, Cluj Napoca, Timisoara, Craiova, Iasi, Sibiu, Brasov, and Oradea, the Romanian IT landscape is very dynamic, and has all the makings for an attractive outsourcing destination.
The next step would be to choose a reliable local software outsourcing partner to trust your IT services with.
Featured in the 2020 Global Outsourcing 100 list produced by IAOP, recognizing the best outsourcing providers in the world, as well as in FT1000 – Financial Times’ 2020 report for EU’s fastest-growing companies, Encora can be that engineering partner, adding measurable business value to your software projects.
Romania – a hot destination for nearshore outsourcing services
Romania has been labelled as an “outsourcing valley” by foreign investors, ranking 28th in the 2019 Global Services Location Index (GSLI). This is an index developed by A. T. Kearney that ranks the top 50 most attractive outsourcing destinations across four major criteria: financial attractiveness, people skills and availability, business environment, and digital resonance.
While not as big as Ukraine’s, Poland’s or the Czech Republic’s outsourcing volumes, but outranking these traditional outsourcing destinations by the value-for-money and better English language skills, Romania is seen among the top European software outsourcing destinations by most West European countries and the USA. The top three regions that are choosing Romania for nearshore outsourcing services are Germany, UK and Netherlands.
We’ve already analyzed in more depth the IT trends for outsourcing in our previous article but labour shortage is one of the main reasons why companies choose to outsource their IT services. In fact, the German Handelsblatt Today publication added more clarity on this topic: “At the moment, nobody expects demand and supply on the German market for IT specialists to converge in the near future. And so those companies are at an advantage that has already made a name for themselves as attractive employers in foreign markets. Some start-up companies have outsourced the development process for their software to subsidiaries in Romania. This could also be a viable option for industrial groups.”
With its 19.5 million inhabitants, Romania is the 7th largest EU member by population. According to the annual report of the Romanian Business Service Leaders’ Association (ABSL), Romania’s outsourcing sector currently employs 1.5% of the country’s population and generates EUR 4 billion in yearly revenue.
Additionally, the 5% year over year increase in local investments makes Romania not only a regional tech hub for nearshore outsourcing but also for successful IT startups. There are 501 startups, 12 accelerators, and 52 startup events every year. As a Romanian software services provider, Encora Engineering, our engineering outsourcing unit, is also an active participant in these events. In the 2019 edition of the Central European Startup Awards, Encora Engineering was voted the “Best software development partner” in Romania.
What are the benefits of outsourcing software development to Romania?
Experienced IT professionals. When it comes to ITO, Romania is first in Europe and sixth in the world, in terms of the number of certified IT specialists. One can find virtually any technology skill in Romania, from the web, cloud and mobile technologies, to embedded and even legacy technologies. The “most sought-after” skills are: .Net, Java, C++, PHP, Javascript, Python, Angular, React, SQL, and Oracle. More specialized skills such as R, Unity, Solidity, Go, Scala, Swift, Ruby, or many others, are also well represented, so there is plenty of talent to choose from.
Multilingual skills. Romanians are known internationally for their ability to learn and speak foreign languages, and IT specialists make no exception to this rule. The latest research in the field shows that 1 in 5 Romanians can speak multiple languages, primarily English, followed by French, Spanish, Italian, and German.
Ideal geographical location, safe and easy access. Since joining the EU in 2007, travelling to Romania from any other EU country is very easy and straightforward as it does not require any visa. Several international airports and the growing number of flights to and from Romania enable access to the country. Any West European destination is only 1-2 hours away, whereas a flight to the US will take up to 8 hours. Romania’s broadband internet ranks fourth in the world in terms of average download speed.
Market size and political stability. In terms of size, Romania is the 9th largest EU member and 41st in the world. Its 22nd position in the 2020 Global Peace Index makes Romania one of the safest countries to invest in. As a NATO member, it is politically and economically stable, with its RON currency tightly coupled with the EURO. In 2019, the World Economic Forum ranked Romania as the 51st most competitive country in the world.
Timezones compatibility. Romania is ideally located in the GMT+2 time zone, which enables easy collaboration and communication with all European companies in real-time, as well as with Israel. It is easy to ensure a minimum of 2-3 hours of overlap with USA timezones, with Eastern Time being the more convenient, for maximum overlap.
Legally friendly. As an EU member since 2007, the Romanian business environment is regulated by EU laws, making legal compliance an easy process, including GDPR. Additionally, over the past years, to encourage the growth of the IT industry, the Romanian government has been offering fixed, low corporate tax and exempting the software professionals employed by Romanian IT companies from paying the 16% income tax. This measure has truly been a game-changer for the Romanian IT market.
How can Encora help you?
What should you expect from Encora as your Romanian software outsourcing partner?
Our promise is to deliver innovation and creativity through cutting-edge technology and reliable engineering services that will accelerate your product development and solution delivery while enhancing your technical capabilities and business growth.
As a technology services and consulting firm, we combine business knowledge and digital culture expertise, acceleration platforms, and software engineering services with data and AI-enabled process optimization to accelerate data-driven digital transformation in Insurance, Banking, IT, Telecom, Life Sciences, and beyond. We are problem-solvers so we look forward to hearing more about your business challenges.
Get in touch with our engineering experts for a consultation.
Resources:
- https://outsourcing-today.ro/?p=2592
- https://www.absl.ro/download/155/2020/7499/absl-2019-business-services-sector.pdf
- https://2019.stateofeuropeantech.com/chapter/key-findings/
- https://outsourcing-today.ro/?p=1013
- https://www.romania-insider.com/romania-it-market-volume-2019
- https://www.romanianstartups.com/statistics/
- https://www.absl.ro/invest-in-romania/
- https://www.romania-insider.com/romania-cheapest-fast-internet-december-2019
- https://www.n-ix.com/it-outsourcing-destinations-eastern-europe-market-report/
- https://blog.hackerrank.com/which-country-would-win-in-the-programming-olympics/
- https://anis.ro/resurse/
- http://visionofhumanity.org/app/uploads/2020/06/GPI_2020_web.pdf
- http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
