What makes Romania a preferred outsourcing destination?
March 19, 2015
By Grégoire Vigroux
Romania has an ever increasing reputation as an attractive outsourcing destination. Indeed, the 2014 A.T. Kearney index ranked Romania 5th among the most attractive outsourcing destinations in Europe. Also, according to the Times Outsourcing Business supplement 2012, Romania occupies 6th position globally in the top 10 emerging outsourcing destinations. Also, a 2014 study by KPMG ranked Romania as the fastest growing market in the European Union in terms of IT outsourcing services.
Thanks to Romania’s abundance of professionally very well prepared, multilingual and highly skilled labor pool, and cultural proximity to Western Europe the country has been climbing in the ranking among the most preferred outsourcing hubs for European and North American companies.
If the title caught your interest you are probably not only curious to know what characterizes Romania as a top outsourcing destination, but you are probably also on the look for a new outsourcing opportunity for your company. If you are reading the article for the second reason we know that choosing your outsourcing service provider is a key decision considering present moderate economic growth and it is a matter of complex decision matrix.
To simplify your decision making process a bit, in the next couple of weeks in a series of blog posts we’ll be shedding some light on the major factors that make Romania a top outsourcing destination choice for business process outsourcing (BPO) and Information Technology Outsourcing (ITO).
Romania is named by investors an outsourcing valley for BPO, ITO, software development and research programs, knowledge process outsourcing operations, as well as for shared service centers. But why? Here’s a short summary of the major factors contributing to Romania’s outsourcing attractiveness:
– Geographical (1-2 hour flights) and cultural (business ethics) proximity to Western Europe facilitating close relationship between client and vendor compared to offshore locations
– Strong aptitude for multilingual skills
– Knowledgeable and experienced IT workforce
– Academic readiness to back high demand in talent pool continuity
– The right price-quality ratio
– EU member state, which simplifies legal and financial issues
– Political and economic stability
As a flourishing technology hub, the country is becoming a leader in ITO. As per data from ANIS, Association of the Software and Services Industry in Romania, the country currently has around 50 offshore centers owned by large international IT vendors. More than half of these are BPO centers, 30% are IT services-related centers, and less than 20% are R&D facilities.
The labor force employed in the outsourcing sector has been increasing over the years, from 15, 000 employees recorded in 2007 to over 50, 000 employees currently working in the outsourcing industry, as per data from the Romanian Ministry of IT and Communications.
The right price-quality ratio
Even though Romania does not offer lowest prices when it comes to outsourcing services, the labor force’s multilingual, technical and soft skills proficiency actually make the cost very competitive compared to the quality of the outsourcing services in India, for example.
Alina Plaia, VP at Luxoft, comments in an interview for ZDNet, a news portal for IT professionals, that the cost of outsourcing to Romania compared to India is justified due to the seniority of Romanian staff and the level of execution. She adds: “The new age of outsourcing is more about innovation and outsourcing certain capabilities rather than merely doing things cheaply. More and more tasks are being outsourced because they cannot be done in house, not only for the economic reasons. Therefore, the cost-related question is often irrelevant.”
Large multilingual and IT experienced talent pool
The country’s sizable and multilingual labor force and student body are among the main lures for international companies to outsource in Romania. The diverse linguistic profile make it especially attractive for BPO operations that require interaction with customers, while the large pool of IT professionals ensures best-in-class ITO operations.
Romanians are known internationally for their strong aptitude for speaking European languages; primarily English, followed by French, Italian, Spanish and German. In the past 10 years, around 20 multilingual major call centers and BPO organizations have come to operate in Romania, finding here a large multilingual pool which they have drawn upon to serve millions of customers across Europe and the USA.
According to the study “Software & IT Services in Romania – A Study on the Development of the Industry of Software and IT Services in Romania in 2013”, commissioned by ANIS in Romania and developed by IDC (International Data Corporation), 95.4% (more than 1.74 million) of the students were studying English in 2011. German was studied by 8.6% of the students (156,236), while French was studied by over 1.55 million (85.0%) students in 2011, which is more than any other country in CEE (Central Eastern Europe).
The same study also reports Romania to have the largest pool of human capital in Southeastern Europe (SEE), with a total labor force of more than 9 million in 2011. In 2012, the Romanian IT sector employed more than 60,000 professionals. The majority of them (more than 80%) are technical specialists, such as software engineers, analysts, developers, and project managers.
Indeed, when it comes to ITO, Romania is 1st in Europe and 6th in the world, in terms of number of certified IT specialists. There’s a pool of about 100,000 people in various IT-oriented profiles, 42,000 highly qualified IT specialists. The successful presence of global high tech companies including Microsoft, IBM, P&G, HP, Oracle, Wipro, S&T, Accenture, WNS, Intel, as well as Luxoft, Ubisoft and Amazon confirm Romania’s ITO experience and potential.
A preferred outsourcing hub
Romania holds its position as a home to more offshore and nearshore centers than any other SEE country thanks to offering a perfect balance between cost and quality, a flourishing technology hub and abundance of professional and multilingual labor pool.
Gregoire Vigroux is Marketing Director for TELUS International Europe
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