Romanian IT&C Outsourcing Market

//Romanian IT&C Outsourcing Market
  • Romanian IT&C Outsourcing Market

When you think of Romania, not that most people think of it very often, the words Transylvania and probably Dracula come to mind. But the age of Bram Stoker has passed and nowadays Romania is also recognized for its IT&C industry, as an attractive location for outsourcing and software development. Eastern Europe as a whole is a very popular region for software development companies; for nearshoring, outsourcing or development centers.

Here’s an overview of the IT&C market in Romania.

Location

Let’s start with where.

There are two main reasons why location matters: travel and timezone.

Romania is in the European Union, so travel to other member countries is quite easy, without any bureaucratic hassle. The two main IT cities in Romania, Bucharest and Cluj-Napoca, have several daily flights to London and other major capitals. Clients can also drop by easily. With a layover, we’re also connected to major cities in the U.S.

As an Eastern European country, Romania overlaps, timezone wise, with most of Europe, the timezone differences being easy to cover.

As far as the United States are concerned, there’s a 7 hour time difference from the East Coast and a 10 hour time difference from the West Coast. Meetings can take place in the morning or evening to maintain an effective schedule, especially in augmented teams.

The official timezone is GMT+3 (due to daylight saving time).

IT Centers

Bucharest and Cluj-Napoca have a very large IT sector with tens of thousands of people working in IT companies. Besides these two cities, there is also a growing IT industry in Timişoara, Braşov, Sibiu and Iaşi.

Overall, there are currently around 110.000 people working in the IT&C industry in Romania, according to the data provided by a Brainspotting study. In 2011, there were only 58.000 people in the industry. This data is provided by a study conducted by Aries Transilvania, an IT&C organization.

The overall number of people working in IT is on the rise due to a growing number of companies and also due to company growth. Between 2011 and 2016, the number of IT companies increased from 9.823 to 14.339, while the number of startups almost doubled – there were 1.806 in 2011 and 3.795 in 2016. The Aries Transilvania study also found (2016 data) that, statistically, there are more companies registered in the software development field in Cluj-Napoca (63.1%) than in Bucharest (37.2%).

When it comes down to the people, Bucharest, the capital and the largest city, carries a significant part of the IT sector in Romania, with around 50.000 people working in the field, while Cluj-Napoca has more than 20.000 people working in the IT sector with a constant demand and thirst for growth. The rest are spread out through the other small cities.

Talent

Something has to fuel this industry and that, of course, is skilled talent. Companies are based on people and a skilled and experienced IT workforce is worth its weight in Bitcoin.

The IT sector is one of the highest paying in Romania so it’s no wonder that people flock to it. Skills take precedence so, while a lot of people are computer science graduates, there are also plenty of self taught individuals who migrate to the IT sector from other fields.

The vast majority come from universities, which are plenty. Overall in 2017 there were 34 universities with 170.000 students and 42.000 graduates in Bucharest, while in Cluj-Napoca there were 10 universities with around 80.000 students and 14.000 graduates.

60% of people working in the IT sector are IT graduates, 7% are still students and 16% have other degrees. While not all graduates are computer science majors, there are strong computer science universities and a lot of people change fields and move to the IT industry through internships or courses, in software development or testing.

The Brainspotting study about the talent map in the IT&C sector in Romania showed that there were about 8.500 IT graduates a year and around 1.800 telco graduates.

There are several large and reputable computer science universities like Babes-Bolyai University, Technical University of Cluj-Napoca, Politehnica University of Bucharest or University of Bucharest that try to keep up with the growing need for talent. A lot of companies offer internships and most students start working while they’re still in school, so by the time they officially graduate they already have some working experience.

Service providers, startups and development centers

There are three types of IT&C companies in Romania:

  • service providers: companies that offer IT&C services
  • startups: that are either homegrown, or are foreign but have been developed here
  • development centers: these usually represent large corporations that have offices / development centers in Romania to support their growth and clients.

These companies also create an IT mindset which brings a different kind of services. Software development providers in Romania are very different from those in Asia. Their technical background, their English level and their ability to relate to clients more are pillars that define a different kind of provider. There is also a lot of focus on building products, not just through outsourcing, but building independent products by startups and large companies as well, to target a different kind of market.

In A.T. Kearney’s Global Services Location Index™ Romania ranks 18th, but is 4th in Europe, behind Poland, Bulgaria and the Czech Republic. It’s an attractive location that offers a mix of affordable costs, pool of skilled folks and an attractive business environment. It also has one of the fastest internet speeds in the world.

Business models

The IT sector in Romania is largely focused on product building. The rent-a-dev times have long since passed and the current view on development, for most companies, is adding business value and expertise, not just code.

Good software development processes and a sound business model go a long way. Dedicated development teams or team augmentation are popular business models, where a company offers a wide range of skills and services through a single team that works directly for the end client. Long term partnerships also sustain this business model that is more suitable for these kinds of relationships that brings stability and consistency.

Culture

There are two types of culture I’d like to tackle: the Romanian culture and the IT culture mentioned earlier.

Firstly, Romanian culture is fairly westernized. By that I mean there are strong similarities to what we call western culture, similarities that lead to easier mutual understanding. English is a very common second language, not just through education, but also through culture assimilation. We have a sort of common ground with the majority of countries we work with. Besides English, German and French are also popular secondary or tertiary languages.

Secondly, the IT culture breeds innovation and that’s one of the factors behind the rising numbers of startups. That mindset is consistent among developers, which leads to a different kind of thinking in software development.

You’ll find less service providers types and more skilled partners who offer the right solution and have honest conversation about business, that provide business consultancy, not just write code per requests. Exploring new technologies, finding the best way and the easiest way, learning, attending conferences and developing their technical skills are some of the things that interest most software developers. You might even find a few programming gurus around.

Rates

Rates in Eastern Europe are between those in Latin America and Asia. Romanian rates are in the affordable sector, for American and European countries. Rates are lower than in Poland, but higher than in the Ukraine, between 20-50 EUR per hour, depending on skill type (testing, development, business analysis, arhitecture etc.) and skill level.

Good IT specialists are paid well, which means companies charge accordingly. Usually, companies looking to outsource projects or augment their teams remotely in Romania are looking for skilled professionals that can get things done, while cost is a secondary factor. If you’re looking at outsourcing in Asia, you’re definitely looking at cost first and foremost, but if you’re considering Eastern Europe, you’re most likely looking for a compromise between skill and cost.

As a location, Romania’s ideal for clients in the west and north of Europe, but also for U.S. clients who are looking for specific skills at a lower cost than Latin America.

*

Overall, the outsourcing market in Romania is mature and on the rise. There are sufficient positive factors in play to fuel its growth in the future: the financial attractiveness of the IT sector that brings in people from other fields, a constant flow of computer science graduates and the cultural accessibility and understanding that goes with it. Like in most countries in Eastern Europe, you will find people that will become an integral part of your business, that will work with you to build the right software product.

Asia takes the lead when it comes to cost, but in software development skill and added value take precedent and in Romania you will find both.

– Samuel Andras.

2018-07-30T12:55:49+00:00 July 30th, 2018|Categories: Community|Tags: , , , |