In the first post from our new ‘Location Location’ series, we look at why Romania should be considered a prime destination for outsourcing.
“When people hear of Romania, they often think of it as a poor country or the land of Dracula and vampires,” says Grégoire Vigroux, Vice-President, Marketing and Corporate Communications Europe at TELUS International. “However, the reality of Romania is very different. It is, in fact, a beautiful country full of interesting business opportunities and part of the so-called ‘New Europe’. As a nation that embraces modernisation and globalisation, Romania is a shining example of what we understand through future and business opportunities. That’s why I like to call Romania the ‘New Outsourcing Valley of Europe’.”
While it might be in Vigroux’s interest to make such claims, there is an impressive number of large global corporations outsourcing their operations to Romania for these very reasons. You just need to glance at the list of over 265 companies that are doing so – Bosch, HP, Amazon, GoPro, IBM, Oracle and Huawei among them – to understand the opportunities that exist there.
Industry figures make for positive reading too. According to the latest data from the Association of Business Service Leaders (ABSL) in Romania, there are currently around 125,000 employees working in the outsourcing sector, which represents approximately 1.5 percent of Romania’s working population, while the industry generates an estimated turnover of €4 billion each year. The majority of foreign companies outsourcing to Romania are French, German and North American, while the most popular Romanian cities they choose to outsource from are Bucharest, Cluj-Napoca, Iași and Timișoara.
So why Romania? According to Vigroux, its biggest differentiator lies in the population’s language capability. Being the only country in Eastern Europe that officially speaks a Latin language lends itself to having a proficiency in other Romance languages – French, Spanish, Portuguese and Italian – while some highlight a decision to subtitle rather than dub foreign TV shows and films during the Communist period and beyond as having played its part too.
Either way, the country has language skills down to a fine art, and it’s not only the Romance languages in which Romanians show proficiency. Research from ABSL and the European Commission shows that an impressive 90 percent of those aged between 18 and 30 years old speak English, a figure that is still on the rise. Meanwhile, 26 percent of that demographic speak French – the highest percentage for a European country excluding France, Switzerland and Belgium – 17 percent speak Spanish, 8 percent German and 5 percent Italian.
“Romania really stands out from the crowd when it comes to language capabilities because it is an ideal multilingual destination for any big Western European or North American company,” explains Vigroux. “Instead of using a contact centre based in India for English, a contact centre based in Morocco for French, a contact centre based in Turkey for German, Romania offers what we call ‘the one-stop shop delivery model’. This refers to all types of customer interactions combined together in multiple languages so that our clients have one single provider.”
Romania’s tech-savvy workforce is another attractive proposition that has prompted many global tech companies to establish operations in the country. They include the likes of Microsoft, Oracle, Wipro, S&T, WNS, Intel and, more recently, Fitbit. In 2017, the wearables maker opened its largest European research and development centre in Bucharest following its acquisition of Romanian smartwatch manufacturer Vector Watch.
Speaking at the time to The Guardian, co-founder and Chief Executive James Park said: “The tech talent here is amazing. Romania and other countries in Central and Eastern Europe have great existing talent, and also great universities.” Meanwhile, Fitbit’s other co-founder, Eric Friedman, told the FT: “What I find most impressive and reassuring is the active number of young tech entrepreneurs, kids in their early 20s, who have the imagination and power to challenge a global startup ecosystem.”
Romania is also known for its impressive internet speed and it regularly ranks among the top three European countries in the annual State of the Internet connectivity report by American group Akama. Additionally, in 2017, Romania was ranked in the top 10 countries worldwide for the average mobile internet connection speed.
Despite a growing economy, there are still plenty of cost-savings to be gained by outsourcing to Romania. Salaries in the country, while rising, remain affordable by western European standards. Rental costs in Bucharest are estimated to be around half the level of those in Berlin, while Romania enjoys the fourth lowest gas prices and the sixth lowest electricity prices in the EU. Romania’s geographic position relative to the world’s major Western business hubs also makes it a much more appealing option than popular outsourcing destinations in Asia.
According to Bogdan Florea, founder and CEO of Bucharest-based Connections Consult, companies from North America, Australia and Asia can make significant savings by outsourcing operations to Romania. As reported in Business Review, Florea stated: “Outsourcing to Romania saves up to 25 percent from the allotted budget of a local team and, as a personal estimate, attracting more customers on ITO from the three areas, may bring tens, even hundreds of millions of euro to the Romanian economy.”
A Recommended Investment
In a 2018 survey carried out by ABSL among 50 of its member companies, 96 percent consider Romania to be a good place to invest and would recommend it to other potential investors. Additionally, AT Kearny’s Global Services Location Index ranks Romania in the top 20 countries worldwide and in the top five in Europe for outsourcing, while a study from Cushman & Wakefield places Romania in first position in a list of mature outsourcing markets.
While Romania is not without its challenges, and despite some of the legacies left from the Communist period, the country has emerged as a highly attractive option for companies seeking the kind of higher-level work and skilled labour force that many traditional players in outsourcing have not been able to deliver. Access to EU markets, glowing testimonials from companies already based there, as well as high rankings in language and IT proficiency will further enhance Romania’s reputation as an international hub for outsourcing and help secure its name as the ‘New Outsourcing Valley of Europe’.
Now that you have the facts, why not talk to Voxpro – powered by TELUS International about how we can help you set up operations in Romania. Take a tour of the TELUS International Europe offices in Bucharest and, while you’re here, check out Andreea’s ten-year journey with TELUS International Europe in Romania and beyond.