Romania’s IT sector becomes an international playground

Adding date: 29.03.2018 | Romania

Over the past ten years, Romania has achieved and maintained a leading position when it comes to the main outsourcing destinations in Eastern Europe, but also in the world, being prefered by many multinational organizations regarding project relocation or department settings in the region. With its strategic position within Europe and human capital with high qualifications and potential, Romania has gained an excellent reputation in the IT industry.  

This competitiveness arose as a result of the Romanian technical and proactive operational capabilities, which allow businesses that came here to have quick access to qualified personnel, technical experts, lower costs, flexibility, but also higher effectiveness and speed. It’s been more than a decade since Romania has been providing such services and its professional maturity is increasingly visible. 

ROMANIA’S IT SECTOR IN NUMBERS

Romania’s software industry overall is on a positive trend and is capable of providing more than 10% of GPD in the coming years, comparing to its current 6%. According to the latest ANIS (Employers’ Association of the Software and Services Industry) report on Software and IT industry in Romania, more than 70% of the industry is currently controlled by significant foreign investors, which gives Romania a considerable advantage when it comes to reliability of its labor market.

The KeysFin survey, an information services company, also explains the advantage of having big players in the Romanian IT market. According to the experts, the 17.000 start-ups existing in Romania see revenues of less than one million euro, while the largest foreign companies have turnovers of over 50 million euro each, improving the economic environment overall. Moreover, at the end of 2017, there were almost 20.000 active software companies, by 1.000 more compared to 2016, generating a profit of 571 million euros, twice as much as five years ago, according to statistics. 

In terms of geographical distribution, in 2017 there were 42% of companies operating in Bucharest, followed by North-West development region. But it seems like the second tier cities, such as Cluj, Timisoara, Iasi, Sibiu, and Brasov are also excellent destinations for companies around the world. And the best aspect is that they are willing to hire juniors with little or no experience for relatively high salaries and ensure training procedures. 

Most of the market size is owed to outsourcing activities. The main difference between Romania and Western Europe is that the living costs are low here, which make the salaries to be relatively small compared with other countries.

The entry of foreign investors has influenced the labor market massively in the IT sector. The top companies in this industry have absorbed more than 12.000 employees, which means 12% of the industry’s total personnel. In the IT and outsourcing industry, there are more than 60.000 people working, and the predictions for the next five years say that another 150.000 jobs will be created around the country.  

According to the recruiting agency Brainspotting, Romania has a significant advantage when it comes to its labor market. 98% of the Romanian developers speak English, and judging from their recent analysis, most Romanians speak at least three languages at different levels. French, Spanish, and German are spoken by 10% of developers, helping companies fill the language gaps. Productivity is also showing a positive trend in Romania, moving from almost 36.000 euro/employee in 2013 to 45.000 in 2017, and it is expected to reach 55.000 by 2020.

EDUCATION – THE FOUNDATION FOR ROMANIAN IT INDUSTRY

Education plays an essential role in preparing the playground for the foreign companies. Romania invests more and more in preparing the future generations of developers, making the higher system of education to adapt to new perspectives. Since 2015, there has been implemented a new strategy for tertiary education, aiming to improve the participation in schools, to develop and adopt high standards study programs that are relevant to the current labor market and can ensure the involvement of IT&C sector.  

As a result, IT&C companies have been actively cooperating with major universities, especially departments like Information Technology, Telecommunications, and Electronics or Automation and Computer Science, where they are running mentoring programs for the students. Starting with their first year of education, students can involve in those mentoring programs, which help them develop practical skills, along with their theoretical knowledge.

The top universities in Romania include five Polytechnic Universities, 59 domain-specific universities and 174 private colleges with technical specialties. This leads to a 70% of Romanian IT&C professionals with tertiary education, according to Brainspotting research. The strong pool of skilled talent is an essential mark of Romania’s great IT industry, and companies are always willing to hire resourceful, open-minded and creative individuals, specialized in a variety of technologies. There are more than 70.000 graduates each year, which gives companies the opportunity to expand their departments fast. 

Moreover, since 2001, the country’s universities have been every year in the top three in the IEEE Design Competition. On the other hand, Romania has more Informatics and Math Olympiad medals than any other European country and is placed the third globally after Russia and China. 

According to Transfer Pricing Services report, today’s students are better prepared compared to 20 years ago. University professors are involved in business, in R&D projects, start-ups, innovation labs, which give them a more accurate view of the current IT market. Companies have also identified the opportunity and created internship programs and summer camps to facilitate the employment process of the junior students.

ENTREPRENEURSHIP TREND RISES

The statistics also show that Romanian developers are becoming entrepreneurs, creating products aimed at a global market in the central tech hubs of the country mentioned before. Even if the Romanian start-ups don’t have substantial revenues for the Romanian economy, the fact that people are starting their own businesses in the IT industry shows a real development of the country.

Romanian tech start-ups increased substantially in the past year. In the first eight months of 2017, the funding for small IT companies raised to 38 million euros, while 2016 had only 11 million euros invested in this part of the industry. 

The primary factor that drove the technology start-ups boom in Romania is the high-speed Internet. According to the State of Internet report, Romania is the European Union leader with the best Internet speed, and the sixth in the world. This strong position stems from the fact that Romanian broadband was set directly with fiber, which gave Romanian a real step forward compared to the European peers that had to adjust their Internet network in time. 

Despite its slow start in the IT industry after the Revolution, the constant advancement and real desire for growth have given Romania the chance to enter the global IT&C sector, capitalizing on niche technologies and strengthening foreign relationships. Moreover, the market maturity is visible now in the technological field through the quality of outsourcing product provided, which mostly exceeded the clients’ expectations.

  • Author:
  • Loredana Niculae, CEO NNC Services Romania

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