Software Outsourcing: Romania

Jun 03, 2008

Being one of the most popular trends in modern market, IT offshoring and software development outsourcing helps businesses to benefit from high quality services, with minimum cost and time spending, also cutting down a very large part of the project management efforts.

Traditionally, Eastern Europe is renowned for a high level of education, and reduced labor costs. During the past decade, outsourcing companies from this area have become highly appreciated providers of offshore software development services.

According to recent studies, that evaluate Romania's economical evolution during the recent years and after the integration in the European Union, the IT sector is one of the fastest growing industries in Romania. This country possesses a significant potential for export of information technologies, especially in the field of software development and IT offshore outsourcing.

With over 100 universities, the country annually produces 30,000 engineering graduates of which 8,000 earn degrees in IT. Romanian student teams won first place at the International Olympiad of Informatics in 2003 in the US and were third in the world at the International Mathematical Olympiad in Mexico in 2005. However, mathematical and programming skills are typically strong in all CEE countries.

What really sets Romanians apart from other countries in the race for attracting offshore outsourcing contractors is their language skills. The Romanian language belongs to the Latin language group, making it easy for Romanians to pick up French, Italian, or Spanish. In addition, they held first place in the Certificate of Proficiency in English exam at Cambridge University, according to a 2003 Pierre Audoin Consulting report. This is why Romania is the only country in the world that can provide outsourcing services, especially call centers agents, in 22 to 25 different foreign languages at expert level without any additional training investments. Driven by the struggle to shake off the political corruption and being confronted for a long while with a scarcity in proper jobs, Romanian youth has channeled itself to those kind of activities that brought them recognition and compensations. These are the motives why most skilled and foreign language trained Romanians are driven to market places like Rent a Coder, Elance Online, or eWork. For years, Romanians have been among the top three most active nations at this international crossing, according to Rent a Coder Founder and CEO Ian Ippolito. In November 2005 Romanians accounted for 18 percent of the marketplace transaction volume, followed by Indians and Americans with 17 percent and 16 percent respectively. The CEO declared that “Some buyers have told me that they prefer Romanian coders because their experience was that Romanians were harder working, more reliable with deadlines, and didn’t pester them with requests for payment before the job was completed.”

However, with a population of only 23 million it is hardly understandable how Romanians are so efficient at what they do, compared with megaliths like Russia or India. Primarily, because of the difficult past of the country, the nowadays youth is relying mostly on talent. If the past was so gloomy, the present and future look better and better after the 2007 EU integration. Romania is also a NATO member and this year's Bucharest summit has brought offshore outsourcing clients attention upon the developing nation.

Important companies such as Siemens, Alcatel, and Motorola have set up research and development, software development, or manufacturing facilities in Romania. Siemens is the leading foreign employer with over 2,000 in the local workforce. Oracle maintains its European development and call centers there; its call center in Bucharest provides support in 13 European languages.

IT export became an important part of the economy, currently involving nearly 17,000 people. In 2005 the export of software and IT services reached $250-280 million, estimates Florin Vrejoiu, Executive VP of the Romanian Association for Electronic and Software Industries, an association which includes about 300 member companies. The exports are especially centered on R&D outsourcing, mechanical engineering outsourcing and security and embedded software development, like Softwin, a company renowned for the anti-virus tool BitDefender. Microsoft acquired intellectual property rights for RAV AntiVirus from GeCad, another successful maker of anti-virus software, in 2003, which reflects the increasing interest of foreigners in local companies and their products.

Outsourcing Journal states that Romania attracts Western clients due to the high level of technical and language skills of IT workers, its well-developed (albeit fragmented) IT industry, and availability of a vast IT labor pool, largely untapped by IT outsourcing companies. This is industry is by far the fastest growing in the Romanian economy. IT attracts foreign investors and is experiencing a wave of acquisitions of local companies by foreign investors. Evolutionary transformations, such as further growth and acquisitions as well as a reduction in the level of industry's fragmentation, can be expected.

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