Overview of the software development market in Romania
Nowadays, economic turbulence, rising costs, and a talent shortage are the main hurdles for IT companies that are participating in the race to success.
In fact, about 87% of tech executives see the talent gap as their main challenge, while claiming to spend over 61 days to hire an in-house programmer and a minimum of $20,000 on recruitment expenses. Thus, to keep their businesses competitive and refrain from unwanted measures like hiring freezes, many decision-makers opt for IT offshoring to Romania.
In this article, Dmytro Ovcharenko, CEO at IT recruitment company Alcor, will share key insights into this tech market and explain why hiring Romanian developers is a winning solution for western product companies.
Romanian IT market overview
About 10 years ago, after the successful accession to the EU, Romania embarked on the path towards growing the IT nation. The manyfold governmental initiatives, reforms, business incentives, and promotion of digital transformation have made Romania one of the strongest players in the Eastern European IT arena and a leading outsourcing destination worldwide. According to the Global Innovation Index 2022, Romania is now in the top 50 countries.
The rapid development of the Romanian IT sector is hard to ignore. It grows by approximately 14,3% annually, contributing 7% of the country's GDP. The current value of the IT market in Romania constitutes about $9billion and is expected to reach $12,05 billion by 2025, according to the Software and Services Industry Employers’ Association (ANIS). The same positive trend is taking place with the value of ICT service exports, which now exceed the $6billion mark. The market's largest segment is IT outsourcing, with a projected market volume of $344million in 2023.
There are about 21,800 companies operating in the Romanian tech market, over 1,500 of which are startups, scale-ups, incubators, and accelerators. Among local success stories are such start-up companies as UiPath, FintechOS, 123FormBuilder, Elrond, and TypingDNA.The rapid development of the startup scene in Romania can be tracked in the Startup Ecosystem Report, where it climbed four spots, ranking 39th in the world.
Benefits of software development in Romania
If you are thinking of opting for offshore software development, but you are not quite sure whether Romania is your best option, consider the following benefits of this destination.
Impressive number of IT talents
Romania boasts one of the largest tech talent pools in Eastern Europe. With a population of 19 million, this country has more tech professionals per capita than the USA, China, and India. According to LinkedIn statistics, there are over 190,000 ICT professionals in Romania, with more than 50 per cent of them being software developers. What else makes this IT market stand out is its high proportion of female tech experts. The Eurostat research claims that approximately 26% of the country’s talent pool is made up of women. Therefore, Romania possesses the second-largest number of female coders among the EU countries (after Bulgaria).
When opting for IT outsourcing in Romania, you can be sure of getting well-versed software developers, both in terms of hard and soft skills. Let’s have a closer look at the factors that make up their broad expertise:
- High-quality STEM education
Romania has a long-lasting educational tradition with a particular focus on mathematics and computer sciences. There are about 41 private and 8 public universities in the country that offer all-around STEM programs, bringing up over 8,000 IT graduates each year. Among the best technical institutions are the Polytechnic University of Bucharest, the Polytechnic University of Timisoara, and the Babes-Bolyai University in Cluj-Napoca.
The Romanian government sees the IT industry as one of the driving forces behind robust economic development and digital transformation. To encourage the younger generation to get a STEM education, Romanian officials have been integrating various mentoring programs to provide students with up-to-date competences and practical knowledge. As a result, more than 76 per cent of Romanian developers have a university degree.
- Diverse tech skills
- Soft skills and mentality
It’s not only impressive hard skills that you can benefit from when working with Romanian software engineers. These IT professionals are good communicators and team players who are always ready to walk the extra mile to achieve the best possible results. In addition, Romanian developers share western values and business ethics. Therefore, it won’t take them too long to adapt to the new place and become an inalienable part of your company.
- Multilingual abilities
Another interesting fact about Romanian software developers is their multilingual abilities. Apart from their mother tongue, programmers from Romania have a good command of the English language, as the EF English Proficiency Index ranks them 17th in the world. Other foreign languages which are kept in their arsenal are either French, Spanish, or German. This, in turn, makes the cooperation between the western IT companies and their developer teams in Romania smooth as butter.
What else sparks interest in the Romanian IT market is its business conditions. Romania is recognized as one of the most favorable destinations for offshoring software development. For instance, in the 2021 Kearney Global Services Location Index, Romania takes the 32nd spot, while the global Doing Business research ranks it 55th out of 190 countries.
One of the core factors that makes Romania a go-to location among foreign tech companies is its incentives & perks. Enterprises that have R&D centers in this country are exempt from paying income tax for 10 years. Meanwhile, software developers and employees of these centers also pay 0% income tax. Another vital advantage of this offshoring destination is GDPR compliance. It serves as a shield, protecting the sensitive data of companies that decide to develop their software in Romania. That’s why so many big-name tech enterprises like Google, Microsoft, Oracle, IBM, and Adobe have already opened their R&D offices in this Eastern European location.
If outsourcing to Romania, foreign IT companies can benefit from its strategic location. This country is situated at the crossroads of Eastern, Central, and South-eastern Europe.
Hence, it will take you just a couple of hours by plane to get from Romania to the major European tech hubs. This is especially relevant for those executives who see significant importance in regular face-to-face meetings and want to keep control over the development process.
A fully remote work is also achievable with a Romanian team of developers, as this destination is in the GMT+2 time zone. It means that there is no time difference with most European countries. This allows fruitful cooperation between in-house and offshore teams.
But what about American IT companies? Well, the time difference and distance between the two countries is quite drastic. However, you can turn this disadvantage into a vantage. By assembling a team of dedicated, independent, responsible, and self-driven developers, you will not only ensure the uninterrupted functioning of your business but also save a decent sum on labor expenses. Keep reading this article to find out the difference between American and Romanian developer salaries.
IT power-houses in Romania
The persistent movement towards digital transformation in combination with growing numbers of both local and international tech businesses in the Romanian market have been propelling the development of multiple IT hubs. Here is the list of top 5 centres for software development you can choose from when assembling your future tech team.
The capital of Romania and largest IT powerhouse is definitely worth your attention. Bucharest is considered the 16th largest tech centre in Europe and the 4th in the CEE region, after Warsaw, Budapest, and Vienna. This booming IT hub is home to over 53,000 software developers and employs over 100,000 ICT professionals. Its robust tech and business infrastructure, as well as convenient location make Bucharest a real magnet for multiple IT enterprises and startups. No wonder why it is placed in the top 20 tech hubs for VC investments in Europe by Tech Nation. Microsoft, Google, Amazon, Dell, Oracle, Adobe, Huawei, and Electronic Arts are just a few examples of globally renowned companies that picked this Romanian IT center for software development and team expansion.
Sometimes called the Silicon Valley of Eastern Europe, Cluj-Napoca is another major tech hub in Romania. It boasts a talent pool of over 15,000 software developers and hosts around 1,300 IT businesses. The business infrastructure and startup ecosystem in Cluj-Napoca are developing at an unprecedented pace, becoming a potent cluster of technological advancement and innovation. In 2021, its startups attracted over $11.3m in investment, which proves that more and more foreign investors and businesses see huge potential in Cluj-Napoca. Here you can find the R&D offices of such giants as Microsoft, Siemens, Accenture, Endava, and Emerson.
Being the second-largest city in Romania, Iasi is a real technological miracle. Once a run-down post-industrial center, Iasi has been expeditiously transforming into a potent IT hub with A-class office buildings and modern infrastructure. Atomico included this Romanian city in the top 20 fastest growing tech powerhouses in Europe. Employing over 21,000 people in IT and having great potential, Iasi attracts international companies all over the world, including Amazon, Oracle, and Accenture. Recently, another tech giant Binance announced its plans to expand to this Romanian IT powerhouse.
An emerging tech hub Timisoara is one more destination to consider. Located in the western part of Romania, it takes just a couple of hours to fly from Timisoara to major European cities. That’s why this IT center is viewed as an ideal place for western companies to assemble development teams. It’s not a surprise why Timisoara has been booming with foreign investment for the last several years. Other factors that give Timisoara a competitive advantage over other Romanian IT hubs are its high talent availability, lower developer rates, and good internet speed.
And lastly, a hidden gem of Romania — Brasov. Even though this city is taking its first steps towards becoming a strong tech hub in Romania, it has much to offer. A solid pool of IT experts, low labor costs, and available coworking and office premises are just a few reasons for going with this offshoring destination.
Romania vs America: Comparison of developer salaries
The Romanian IT market has one feature that is rare to find in popular outsourcing locations: an optimal price-to-quality ratio. You see, when choosing a destination for offshoring, many IT companies get lured by low-cost services, overlooking the level of developers’ qualification and cultural aspect. As a result, they often end up with a poor-quality product which needs additional time and financial resources to be rebuilt. Romania, for its part, offers IT specialists who possess advanced coding skills, superb soft skills, western-oriented mentality, and high English proficiency. And all of this for a price that is 2-3 times lower than in the USA. Let’s have a look at a few examples to see the difference.
For instance, the annual salary of a Back End Software Developer in the US usually ranges from $100K to $150K, depending on their expertise level. The same specialist in Romania receives about $21K-$72K. Front End Software Developers in America earn about $80K-$145K annually, whereas in Romania the same tech experts get $20K-$70K. If you decided to build an application for a smartphone, you would have to pay about $140,000 for a senior Mobile Developer in your immediate area. A Romanian developer, in turn, would cost you less than $70,000 per year. When it comes to popular technologies like Golang, for example, a senior-level specialist in the US would charge over $165,000 per annum. A Romanian Go developer of the same expertise level would cost you no more than $68,000 per annum.
Hire a team of skilled Romanian developers via an IT recruitment agency
Let’s be real: expansion to new markets is not a walk in the park. Even though a selected offshoring location can have all possible and impossible benefits, you can still face multiple issues on the way be it protracted recruitment, legal matters, or anything else. Thus, to take the most out of this business move and at the same time avoid any hardships, consider the cooperation with a professional IT recruitment company like Alcor.
We are in the Eastern European tech market for over 10 years, building teams of software developers for American and European product companies. Alcor’s 40+ IT researchers & recruiters provide a full-cycle IT hiring. They take care of each stage of this process from creating a striking EVP and sourcing our 600,000-candidate base to conducting job interviews and making an offer.
Alcor’s team can make any staffing goal a reality which is reflected in our guarantees. On average it takes us 8 CVs to get to one accepted offer, while 98% of all candidates successfully pass the probation period. We also vouch to hire 20 developers in three months and provide each client with a 3 month candidate warranty.
To make the entire process of setting up a dev team in Romania pain-free, we assign one account manager to each client who deals with any arising issues. Alcor’s solution also includes other BPO coverage like legal compliance and payroll and procurement management, which we perform on client’s request.
Romania is your answer to the talent shortage and increasing costs. This Eastern European location has much to offer: a huge pool of educated and skilled programmers, moderate salary rates and taxes, pleasant conditions for expanding tech businesses, and a variety of IT hubs, etc. As practice shows, the best way to feel the full potential of these offshoring benefits is by partnering with a local IT recruitment agency.