Main points for Romania to be an attractive nearshoring country

In recent decades, the technology sector has been Romania's wonder child, maintaining steady growth supported largely by outsourcing companies. Located at the Eastern border of the European Union, only one hour ahead of Berlin and three hours flight from London, the country became a flourishing technology hub. 

Romania doesn't offer the lowest prices in the outsourcing business, but it is highly competitive when you take into account the level of technical proficiency and soft skills in the country, "superior to what is typically found in other outsourcing locations," according to IDC.

Young and motivated professionals with European values and mastery of not only English but German, French, and Italian as well, are a crucial part of Romania's appeal, according to the analyst house.

The fairly low salaries of the IT workers compared to the West, their skills and the country's location have helped outsourcing become Romania's second largest in terms of exports last year, surpassed only by transportation.

5 good reasons to nearshore to Eastern Europe:

The Talent Pool

Cultural Similarities

Time Zones

Low Attrition Rates

Data Protection (GDPR)!!!

The Romanian Advantage:

Impressive Language Skills

A highly Educated Workforce

Low Attrition Rates

Low-Cost CEE Destination

Cultural Compatibility

Excellent Technical Infrastructure and Government Support

Is India a choice anymore?

It is not only that the offshoring of jobs is reaching saturation point, but also that Western companies, after a decade of experience, are changing their attitude to the practice. KPMG, a global consulting firm, even announced “The Death of Outsourcing” in a research paper. After all, offshoring important tasks to an outside provider is quite a risky thing to do and carries significant hidden costs. Companies in services, as well as manufacturing, are now far more aware of the pitfalls. Until recently the most important reason for companies to send large chunks of important business functions abroad was to drive down costs. A decade ago wages in emerging markets were a tenth of their level in the rich world, an opportunity too good to miss. During the recession of 2008-09, says Cliff Justice, KPMG’s leading expert on outsourcing and offshoring, the race offshore accelerated, and more higher-value and complex work was sent overseas too.

But now many companies are finding that they lost their connection with important business functions, says Mr. Justice. At the same time, the cost advantage that drew firms offshore in the first place is disappearing. Salaries for software engineers are going up rapidly and inflation is high. For IBM, says Bundeep Rangar, chief executive of IndusView, an advisory firm, the total cost of its employees in India used to be about 80% less than in America; now the gap is 30-40% and narrowing fast.

Market & Location Advantage

One of the largest markets in Central and Eastern Europe (ranking 7th in the EU , with over 21 million inhabitants);

EU unique market gateway (access to approximately 500 million consumers);

Attractive location: situated at the turning point between the EU, the Balkans, and CIS countries, Romania is crossed by three important pan-European transportation corridors: corridor no. IV linking Western and Eastern Europe, corridor no. IX connecting Northern and Southern Europe and no. VII – Danube River, facilitating inland water transportation, at the same time connecting the Romanian Port of Constanta (the biggest Port to the Black Sea) to Northern Europe, through the Rhine.

Resources Advantage

Highly skilled labor force at competitive prices (solid knowledge in foreign languages, technology, IT, engineering, etc);

Rich natural resources, including surface and underground waters, fertile agricultural land, oil, and gas;

High tourism potential.

Political Advantage

Stability factor in the Area - NATO membership;

Stability Guarantee in South Eastern Europe;

EU membership.

Investor Relationship Advantage

Bilateral agreements between Romania and other countries on investments promotion and protection;

Bilateral diplomatic relations with 177 out of the 191 UN member states, plus the Holy See, the Sovereign Military Order of Malta, and the Palestinian National Authority;

Member of the UN and other international organizations, like OSCE, Council of Europe, and International Organization of La Francophonie;

Free trade agreements with EU, EFTA countries, and CEFTA countries;

WTO member since January 1995.

Economical Advantage

State aid schemes for encouraging investors to take upon Romania;

Major interest of Foreign Investors – leader destination for FDI in the region;

Sound fiscal policy (16% flat tax).

Social Advantage

Agreement between Government and major unions;

No major union movements;

Labor relations regulated by the Romanian Labor Code.

Legislative Advantage

Similar legal provisions as in the EU (Acquis Communautaire implementation);

Fiscal policy regulated by the Fiscal Code.

Other Advantages

Continuously improving infrastructure (Executive’s commitment to improving the highway infrastructure to EU standards);

Well-developed networks of mobile telecommunications in GSM systems;

Highly developed industrial infrastructure, including oil and petrochemicals;

Presence of branch offices and representatives of various well-known international banks;

Extensive maritime and river navigation facilities.