Competing for IT engineers in Romania

By bne IntelliNews March 24, 2015

Clare Nuttall in Bucharest -


As multinational IT firms expand in Romania, drawn by a combination of the large skilled workforce and relatively low costs, competition between local and international players for workers has grown increasingly intense.

In the last two decades, international giants including Microsoft, Oracle and HP have set up back office and development operations in Romania, where they now employ thousands if not tens of thousands of people. Microsoft, for example, entered the market in 1996 with just four employees, and now has over 600. Kostas Loukas, general manager of Microsoft Romania, says the company stands “for long-term investments in Romania”.

During the same period, homegrown companies, including software developers and providers of outsourcing services, also boomed. Bucharest-based Softwin, for example, developed the anti-virus software Bitdefender, which has since been spun off into a separate company and its products sold in countries worldwide.

Despite a slight slowdown in 2009, the sector continued to expand even through the recent crisis, and this has continued – the latest data from the Romanian Statistics Office shows IT services accelerating ahead of other business services in turnover terms during last two years.

Human capital

Industry players agree that the primary reason for Romania’s emergence as an IT hub is the availability of skilled workers. In the Central and Eastern European (CEE) region, Romania is second only to Poland in terms of population size, but it has the highest level of technology workers per capita in Europe. As of 2013, there were an estimated 65,000 employees at software and IT services companies, according to research by consultancy IDC commissioned by the Romanian Employers Association of the Software and Services Industry (ANIS).

This follows a long history in software research and development. Romania was one of the first countries to launch work on personal computers back in the 1950s. Also contributing to the high number of specialists, the sector is also less split by gender than in many other countries; in many IT departments around half the employees are female.

“Companies come here to find high calibre engineers for software development and R&D. We have the highest number of engineers per capita in the region, and an especially high number of software engineers. There is a lot of passion for this sector,” says ANIS’ vice president for outsourcing Sorin Gavanescu.

Laurentiu Popescu, country manager for IDC Romania, agrees: “Romania is the second largest country in CEE, which has a direct relation to the number of tech graduates. Human talent is important – the quality of software developers, skills, languages and proximity to Western Europe are all factors.”

Microsoft’s Loukas also cites that country’s “great human capital due to strong STEM [Science, Technology, Engineering and Mathematics] education and talented developer community, a multilingual population and an overall attractive market cost wise.”

“In terms of market attractiveness, the differentiators... are not just short term. Language skills are part of a cultural set-up which we expect to remain at the same level medium to long term. In addition to this, Romania has a great geographical position and a solid IT&C infrastructure that offer valuable advantages for doing business,” Loukas tells bne IntelliNews.

Language skills were also a factor for fellow multinational Oracle, which operates a major call centre staffed by local engineers. Active in Romania since 1992, Oracle opened its first services and technology centre in Bucharest in 2004, and now has more than 2,700 employees in the country, making it the largest US employer.

Gavanescu reports that several companies have chosen to relocate their operations from India to Romania – a decision based on the similar culture as well as a timezone that is only one hour ahead of Western Europe.

Costs for both labour and real estate are among the lowest in Europe, remaining below those in Poland and the Czech Republic, for example, even though wages have been steadily increasing in the sector. The government has also offered generous incentives to employers, including tax breaks for those that employ local graduates.


Romania is, however, more expensive than the countries on its eastern borders such as Bulgaria, Moldova and Ukraine, raising fears that a continuing upward trend in salaries could result in multinationals migrating eastward. In Moldova, USAID has been working with the government to promote the domestic IT sector in hopes of attracting international investors.

Cost, however, is only part of the story. “Romania is not a location for low cost roles,” says ANIS’ Gavanescu. “Companies come here when they want engineers to build complex architecture and carry out other high-level roles. If you just want support services to fix minor issues, you probably don’t come to Romania.”

Another concern about the future of the sector concerns the over-heating of the labour market as competition for workers increases. “The first reason for companies to come to Romania is the availability of IT skills. There used to be many people available, but so many companies are now active, there is a shortage of resources in the market,” says Calin Vaduva, CEO of Fortech, one of Romania’s largest software outsourcing companies.

The issue is particularly acute in the capital Bucharest, the first destination for international entrants to the market. “Bucharest has become overheated, so firms are looking for other options,” says IDC’s Popescu. “There is no big difference in cost between Bucharest and regional centres such as Cluj and Timisoara, as salaries are quite closely aligned, but there are a significant number of graduates outside the capital.”

At the start of Romania’s IT boom, while multinationals flooded into Bucharest, smaller local companies had room to grow in regional university towns where competition for workers was less intense, according to Vaduva. Fortech, for example, was founded in Cluj, where it now has almost 500 employees, and plans to expand this year to a second regional city in order to access new people.

Other cities including Brasov, Craiova, Iasi, Sibiu and Timisoara have also become centres for the IT industry, with a mix of local and international firms. More companies may now target these regional centres a competition for staff continues to grow. 

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