Outsourcing in Romania or Morocco? What would your company choose?
April 1, 2015
By Gregoire Vigroux
In the past few weeks we started a series of posts focused on Romania and the major factors making it a preferred outsourcing destination for European companies. In this post we’ll again be talking about Romania, but we’ll be comparing it to Morocco. Why?
North Africa is usually seen as the classic destination for near shore outsourcing especially for French companies. Morocco in particular has been a top outsourcing destination choice of French decision makers. The country began to gain popularity in the early 2000s due to its proximity to the hexagon and competitive costs of the local workforce.
Many French contractors started to outsource to Morocco and other Maghreb countries (Algeria, Libya, Mauritania, Morocco and Tunisia) for two main reasons: an abundant local labor and infrastructure welcoming new players for outsourcing. Only recently, however, French companies more and more turn to Romania, a European Union member state, with capital Bucharest, a flourishing outsourcing hub, in just less than 3 hours flight from Paris.
Romania ahead of Morocco in the 2014 A.T. Kearney Global Services Location Index
The A.T. Kearney ranking measures the outsourcing attractiveness of countries based on three criteria: financial attractiveness, people skills and availability, and business environment. The 2014 Global Index gives Romania the 18th position, while for Morocco 34th.
With 5.45 points in the ranking Romania is ahead of Morocco (5.25 points) even though labor costs there are a little cheaper than in Romania. According to the Romanian INSEE, the average gross wage in a contact center is around 600 to 700 EUR per month, while in Morocco it is between 400 and 500 EUR.
For the business environment criteria (measuring political and economic stability), however, Romania has a competitive advantage against Morocco. In November 2014, Klaus Johannis (national-liberal center-right party) won the president elections in Romania. This election is considered as a new source of stability for the country since the new government is committed to a broad political appeal to foreign investment, especially in the field of outsourcing. Member of the European Union since January 1st, 2007, Romania also enjoys a strong positive economic growth: 3.5% in 2013, 2.2% in 2014 and an estimated 2.5% in 2015, according to Coface, a provider of integrated credit risk management services in Romania.
People skills and capabilities
In terms of labor pool qualification and abundance Romania again beats Morocco. According to the Romanian Ministry of Education, more than 300,000 graduates entering the labor market every year are with foreign language and IT education. Nearly 60,000 engineers will graduate in 2015 and more than half are based in Bucharest. Most of these graduates are bilingual or trilingual and have completed part or all of their courses in a foreign language, English or French, in most cases.
Romania a preferred outsourcing destination
Over the past decade some of the world’s leading outsourcing players started operations in Romania. In 2015, just a dozen of them employed more than 50 000 people (ABSL). Among the major players are leading multinationals such as Hewlett Packard, Oracle, Genpact, Microsoft, Wipro, WNS and TELUS. According to KPMG, nearly 40% of the staff of these companies speak French.
Stay tuned for the upcoming posts revealing Romania’s outsourcing attractiveness!
Gregoire Vigroux is Marketing Director for TELUS International Europe
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