Romania has become the top choice for tech businesses due to its skilled programmers, low software developer salaries, and 16% corporate income tax. Romanian software developers rank 23rd in SkillValue, known for their technical expertise, English proficiency, and communication skills. Yet to ensure a successful entry into the Romanian IT software development market, it’s crucial for tech executives to understand its unique aspects and trends. So, here’s a comprehensive overview to help you navigate this market effectively.
Romanian IT Market Overview
The software development market in Romania reached €3.2 billion in revenue in 2022, ranking 13th in Europe. Despite the challenges faced in 2020 due to the impact of COVID-19, the Romanian IT industry is poised for recovery in the post-pandemic era. This recovery can be attributed to internal reforms such as digital transformation and infrastructure modernization, as well as external factors.
Booming startup ecosystem
Romania, though relatively new to the Eastern European IT sector, has swiftly established itself as a vibrant and rapidly evolving market for startups. In the Startup Ecosystem Report of 2022, Romania climbed four spots to secure the 39th position, showcasing its remarkable progress since 2020. With over 1,500 startup companies, scale-ups, venture capitalists (VCs), and private equity firms (PEs), as well as around 100 incubators and accelerators, the country boasts a thriving startup scene. Moreover, it has witnessed 60 rounds of startup investments. Noteworthy among Romania’s local success stories are innovative startups like UiPath, FintechOS, Elrond, 123FormBuilder, and TypingDNA.
The increase in foreign investments
Foreign investments have also played a crucial role in the growth of Romania’s IT industry over the past decade. Major global players like Microsoft, Amazon, Oracle, and Google have recognized the potential of the Romanian market and established a presence in the country. For instance, Microsoft has been operating in Romania since 1996 and employs approximately 1,700 people in Bucharest and Timisoara. Reports indicate that investing in the Romanian technical sector has proven to be a profitable and strategic move for many U.S. companies. This trend is expected to attract even more international giants to the Romanian market, further bolstering its growth and potential.
7 Driving Factors of the Romanian IT Industry
- Vast talent pool
Romania boasts a rich talent pool, making it an attractive destination for offshore software development. With approximately 10,000 engineering graduates entering the market each year, the country’s tech workforce is continuously expanding. Thus, according to the Emerging Europe repot, number of people employed in ICT in 2023 equals 202,500.
- High education level
Notably, Romanian IT professionals are renowned for their exceptional expertise. They have access to esteemed tech universities in the European Union, as well as 27 local universities offering top-notch engineering, programming, and cybersecurity programs. Some of the most popular ones are Politehnica University of Bucharest, Technical University of Cluj-Napoca, Babes-Bolyai University, and others.
- Thriving IT hubs
The emergence of tech hubs in Bucharest, Cluj-Napoca, and Iasi further enhances Romania’s software development capabilities. These cities host international IT giants and their research and development centers, creating opportunities for collaboration and knowledge sharing among entrepreneurs, researchers, freelancers, and startup founders.
- Moderate salary rates
One of the key advantages of doing software development to Romania is the affordability of talent. Local IT salaries are 4-5 times lower than in the USA, allowing IT product companies to reduce their business expenses significantly. For example, the annual salary rate for an iOS developer in Romania is $25,500, compared to $116,000 – $136 in the US.
- Business-friendly environment
While Romania may not be considered a typical tax haven, it offers attractive tax incentives. With a 1% micro-company tax for qualifying small businesses, a 16% corporate income tax, and a low 10% personal income tax, it presents favorable options. IT companies also contribute 37.25% towards social security, with the employer’s share at 2.25%.
- Good foreign language skills
Moreover, Romania boasts a high level of English proficiency among its workforce. Ranked 17th out of 112 countries in the EF English Proficiency Index, the country’s overall English-speaking ability is considered high. This linguistic advantage facilitates smooth communication between in-house and offshore teams. Additionally, many Romanians are proficient in other popular languages such as French, Hungarian, and Italian.
- Favorable geography
Geographically, Romania’s proximity to Western and Nordic Europe is advantageous for business operations. With a flight duration of only 2-4 hours, personal meetings with the software development team in Romania can be easily arranged. The minor time difference also enables seamless coordination between European and Romanian teams. While the time zone difference is more significant with the United States (7-10 hours), Romanian developers typically adapt well, allowing businesses to operate round-the-clock.
Want to Build Your Software Development Team in Romania? Choose a Reliable IT Recruitment Partner
If you aim to capitalize on the advantages of software development in Romania, it is wise to consider building your own IT team. However, navigating the unfamiliar market can be challenging. That’s where the expertise of an experienced recruitment agency comes in. Partnering with a reliable partner will not only offer you streamlined IT recruitment but also ensure a seamless experience as you assemble your team and tap into the potential of the Romanian market.
Our company Alcor BPO is an international recruitment services provider that focuses on IT recruitment in Romania, Poland, and other Eastern European countries and can help you with everything from tech recruitment to legal & compliance support.
At Alcor, our team of 40 IT researchers and recruiters specializes in sourcing Senior/Lead Romanian developers for our clients. We prioritize a thorough evaluation of each candidate, ensuring that we present you with CVs of highly compatible software engineers, saving you valuable time in the hiring process. To expedite IT recruitment, we employ various metrics to assess performance and streamline the selection process. With unwavering confidence in our capabilities, we make steadfast promises: recruiting 5 developers in the initial month, expanding to 20 within 3 months, and surpassing 100 developers within a year. Trust Alcor to connect you with top-tier talent for your software development needs in Romania!