Published by: In co-operation with: With support from: ROMANIA OUTSOURCING DESTINATION GUIDE ITO & BPO MARKET EXAMPLES BY GERMAN OUTSOURCING CONTACTS ASSOCIATION TALENT KNOWLEDGE MOTIVATION PROXIMITY ROMANIAN ITO & BPO SERVICES www.outsourcing-destinations.org Outsourcing Destination Guide Romania With the Outsourcing Destination Guide Romania we inform about the capabilities and actors of the Romanian ITO and BPO industry. We inform about market, conditions and actors and show case unique solutions in- vented by Romanian service industry experts in the form of case studies and project reports. As a result we help decision makers to better understand the advantages and condi- tions in working with Romanian IT- and business services providers. 6 - Market Insights 18 - Industry Cluster & Associations 22 - Shared Service & BPO Centers 24 - Projects & Case Studies 50 - Profiles & Contacts Independent information guide by German Outsourcing Association in co-operation with ABSL, ANIS and ClujIT Industry associations and cluster Romania for free global distribution. Calea Victoriei Bukarest Picture: Mihai Petre Dacia Duster Picture: Edoardo Costa, Wiki, flickr Transfăgărășan, Carpathians Picture: Horia Varlan, Romania Financial Plaza Bucharest Picture: Mihai Petre THE ROMANIAN ITO & BPO INDUSTRY 6 - Outsourcing to Romania: Building a Compelling Case - by ANIS – As- sociation of the Software and Services Industry in Romania 12 - Romania – Benchmark, IT Centers (Cities) & its BPO Industry - by Tünde Székely, Publication Chair, General Council, German Outsourcing Association 6www.outsourcing-destinations.org THE ROMANIAN ITO & BPO INDUSTRY Outsourcing to Romania: Building a Compelling Case By ANIS – Association of the Software and Services Industry in Romania In 2012, after several quarters of Romanian companies directly or professionals and graduates. ongoing contraction of the GDP, indirectly involved in software Moreover, there is a sizable num- Romania’s economy managed to development, customization and ber of local companies that pro- grow by 0.7% compared to 2011, commercialization. Undeniably, vide exclusive custom software but still under the National Bank’s there is huge potential for IT soft- development for offshore/near- forecast of 1% growth for 2012. ware and services in Romania, as shore clients in the U.S., Western the penetration rate is still very Europe (France, Italy, Germany, The IT market in Romania grew low compared to similar econo- Benelux, United Kingdom), and, 4.3% year on year in 2012 to reach mies. more recently, the Middle East. a value of $2.92 billion. Hardware accounted for 70.3% of the total Despite several factors need- Romania currently has around 50 market, while software made up ing improvement to maintain offshore centers owned by large 14.8% and IT services 14.9%. IDC or increase the country’s attrac- international IT vendors. More expects IT spending in Romania tiveness for future foreign direct than half of these are business to grow at a CAGR (Compound- investments (FDI), outsourcing process outsourcing (BPO) cent- ed Annual Growth Rate) of 2.4% remains a very profitable busi- ers, 30% are IT services-related over the next five years to total ness in Romania. The country’s centers, and less than 20% are $3.37 billion in 2017. attractiveness as a sourcing loca- R&D facilities. tion is rooted in the lower costs With an expected CAGR of 3.3% of doing business when com- During the last five years, offshor- during the same period, the soft- pared to other countries in the ing in Romania has moved from ware market will expand more region, as well as in the large, basic near-shore provisions to and at a faster pace than the highly skilled pool of IT workers, services with high added value overall IT industry, thus repre- together with a strong aptitude (engineering and software de- senting a huge opportunity for for foreign languages among velopment). According to the Copyright @ All rights reserved. German Outsourcing Association 7 THE ROMANIAN ITO & BPO INDUSTRY Romanian Ministry of IT and accounted for over 62% of total 2011. In 2012, the Romanian Communications, the number of IT services exports in 2012. The IT sector employed more than employees currently working in other traditional outsourcing 60,000 professionals. The ma- outsourcing (local, offshore, and services, such as BPO, managed jority of them (more than 80%) near-shore) is around 50,000, services, research and develop- are technical specialists, such compared with the 15,000 re- ment services, and engineering as software engineers, analysts, corded in 2007. services together account for the developers, and project manag- remaining 38% of total IT servic- ers. Management and business The growth of the local software es exports. professionals represent less than market (for both packaged and 20% of the total. custom applications) has two Romania’s IT services offshore main sources of development. market reached approximately With more than 300,000 tertiary The first is, as mentioned, the $485 million in 2012 (excluding education graduates per year, establishment of new offshore/ the export of pure licenses) and of which nearly 4,000 are pure nearshore centers in Romania by is expected to accelerate its im- computing graduates, Romania foreign companies seeking new petus in the next years. The struc- seems to have secured its pool opportunities to bring down ture of the offshore/nearshore of candidates in the information costs, and the second is the rise market in Romania is the follow- and communications technol- of local companies more involved ing: IT services (custom applica- ogy sector. As revealed by the in creating their own intellectual tion development/CAD, support, latest IDC-ANIS survey, most of property and successful branded and testing services) account for Romania’s software companies applications. 62%, BPO services for 29%, and increased their number of em- R&D (engineering services) for ployees over the past three years Several factors have contributed the remaining 9%. and are looking to expand fur- to Romania’s appeal as a sourc- ther in the coming three-year ing location. However, it is worth period. mentioning at this point that the Romania’s Competi- main competitive advantages tive Assessment Demand for IT professionals is offered by Romania are still the now greater than ever, generat- lower costs of doing business From human resources to tech- ing marked salary increases and compared to other countries in nology adoption, Romania is well difficulty in recruitment for cer- the region such Slovenia and positioned to compete interna- tain and senior positions. During Croatia, a highly skilled and large tionally in the information tech- the last few years, staff turno- pool of human resources, and nology market. In the following, ver rates at local organizations the market size. we are looking closer at Roma- have decreased substantially as nia’s key competitive strengths, a result of improving salaries, In terms of export revenue struc- the country’s direct competitors, better working conditions, and ture, the overwhelming major- comparative overview of Roma- the emergence of strong teams ity of IT services revenue comes nia vis-à-vis these countries. within companies, among other from customization services (in- factors. cluding custom application de- Romania has the largest pool of velopment services and applica- human capital in Southeastern The latest IDC-ANIS survey tion customization) and support Europe (SEE), with a total labor among local software companies services. These two categories force of more than 9 million in revealed that Romania’s most 8 Copyright @ All rights reserved. German Outsourcing Association THE ROMANIAN ITO & BPO INDUSTRY threatening competitors when nia compares to the four above- state of the economy and thus it comes to attracting offshore/ mentioned countries. the effect of the aforementioned nearshore investments are Rus- political and regulatory factors. sia (26% of respondents), Ukraine To varying degrees, economic Strong macroeconomic indica- (23% of respondents), Bulgaria and political factors influence the tors suggest a favorable climate (17% of respondents), and Po- cost of running a business in a for foreign investment. land (16% of respondents). In the given country. Indicators such as following, we analyse how Roma- GDP and FDI reflect the current Comparison of Economic and Political Factors, 2011 Measurement Romania Bulgaria Russia Ukraine Poland Political Stability (country risk) 67.5 67.1 73.4 64.8 73.9 Investment into Education - US$M 9%* 10.7%* 18.2%* 17.4%* 12.4%* Corruption Perception Index (CPI) 3.6 3.3 2.4 2.3 5.5 Employee Visa Waiver Schemes No No No No No GDP per capita (US$) 8,862 7,131 12,948 3,618 13,451 FDI (US$M) 1,390 973 -19,738 8,340 12,927 Unemployment rate 7.40% 11.10% 6.50% 7.50% 9.70% Piracy rates 63% 64% 63% 84% 53& Note: *estimate ; Data Source: PRS Group, Forfas, Transparency International, National Finance Departments, IDC, 2012 ; Table Source: Software and IT Services in Romania, ANIS, 2013 Over the last decade, the costs Based on the table above, Roma- improving the overall economic of doing business in CEE have nia presents a mixed picture: The conditions to increase the GDP risen significantly, in line with country is relatively politically per capita. the growth experienced in the stable, enjoys a rather low un- five economies. Despite the re- employment rate, and provides a Poland and Russia are by far cent economic turbulence in the decent level of intellectual prop- the most advanced countries in region, the countries have con- erty rights. However, significant terms of ICT adoption, each with tinued on growth trajectories, improvements are needed in ICT spending of around $500 per reflected in the GDP per capita in terms of investing more into the capita. When looking at IT and all five. educational system, attracting communications spending com- more foreign investment, and bined, Romania outpaces only Copyright @ All rights reserved.