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How 2024 Looks for Software Development in Romania

Chief Business Development Officer at Alcor
How 2024 Looks for Software Development in Romania - Alcor BPO profile
13 October 2023
10 min

Today, Romania stands out as one of the top locations for running a tech business due to its impressive development pool, the lowest IT salaries in the CEE, and 0% income taxes. Romanian software developers are placed 23rd in a SkillValue rating and praised for their solid technical knowledge, good English proficiency, and communication skills.

 

At Alcor, we help IT product companies expand to Romania and hire programmers from this and other countries in Eastern Europe. With our R&D setup and IT recruitment services in Romania, clients receive top-notch technical talents, continuous advice and support, and a time-to-hire commitment. Here’s how our model works:

 

How 2024 Looks for Software Development in Romania - Alcor BPO

 

Before entering this market, tech executives should familiarize themselves with its peculiarities, risks, trends, and forecasts. Therefore, I’ll provide you with a comprehensive outlook on what to expect when starting IT software development in Romania.

 

Software Development in Romania: 2020-2023 Overview

 

Romania is among the top 20 countries in terms of software development, according to HackerRank. The local IT sector demonstrates an annual growth rate of 14.3% and brings about 6% of the country’s entire GDP. 

 

The Romanian IT industry keeps evolving in spite of the turbulence of the last couple of years. For one, the impact of COVID-19 has taken a toll on the labor shortage for IT companies. According to Datapeople’s 2022 report, IT jobs nearly doubled last year. On the other hand, an increased demand for software developers gave rise to IT offshoring as tech enterprises started discovering talent in previously untapped markets.

 

Eastern Europe and such countries as Romania, Poland, Ukraine, Slovakia, and Hungary became top destinations for sourcing candidates. It’s not a surprise since these locations offer a skilled workforce, excellent price-quality ratio, and a developed IT ecosystem.

 

The Russian full-scale invasion of Ukraine created more challenges for the software development industry. Despite all odds, the Ukrainian IT industry keeps working and even provided a record $2 billion in export revenues in the 1st quarter of 2022. That indicates the global IT market is not ready to lose a valuable tech hub with over 250,000 working developers. Nevertheless, some programmers left Ukraine, and Romania became one of the most popular relocation zones for them.

 

Romania has a thriving digital economy, substantial tech talent potential, and favorable taxation for IT businesses. According to a recent McKinsey report, Romania is making headway in the domain of the future of programming and AI innovation. The industry of software development in Romania also shows excellent results in cybersecurity, producing cutting-edge products, such as TypingDNA. McKinsey also highlights actions that will bring Romania to the next level — scaling funding, improving the talent pool, and aiming towards speed and simplicity. 

 

Let’s take a closer look at a few more particular areas of the IT sector in Romania.

 

Software Development in Romania: 2020-2023 Overview

 

Fintech Software Development

Romania has been at the forefront of fintech in Eastern Europe. On the way to digitalizing its banking, it has become a hub for 244 startups — Finqware, Bankata, Pago, EBriza, Beez, and SeedBlink, to name but a few. As a result, the number of professional programmers is increasing. 

 

Automotive Software Development

Romania has the 4th largest workforce in the European automotive industry, which indeed spurs innovation. Market revenue as of 2023 equals $35 billion. In addition to being home to equipment manufacturers Renault Dacia and Ford, Romanian tech talent has also appealed to other automotive tech companies, such as Bosch and Porsche Engineering. Thus, automotive software development is gaining ground and attracting more digital investment. 

 

IoT Software Development

The IoT market in Romania is expected to reach nearly $5.5 billion in 2023. The more significant market share is dominated by automotive IoT, growing by a CAGR rate of 14%, which will contribute to a $10.5 billion market volume by 2028. Moreover, there are 37 IoT software companies in Romania. Altogether, offshore software development in Romania in IoT is an excellent solution for American tech businesses. 

 

Embedded Software Development

The development of automotive tech, AI, and cybersecurity expertise in Romania goes hand in hand with its development of embedded software. In 2022, the size of this market has gone over $15 billion and is projected to grow further. This upward trend complements the skillset of Romanian developers, which includes data protection, C++ best practices, and memory-safe programming. In other words, it’s a go-to location for assembling a team with hands-on experience.

 

My team and I see that the recruitment requests from global IT product companies have switched in the same direction. Now they are willing to hire programmers from other European countries, including Romania. By opening IT vacancies for developers in Romania, Western IT companies have an opportunity to work with a “merged” and diverse talent pool, recover from the COVID-19 crisis, and overcome the scarcity of tech specialists.

 

 

The Future of Software Development in Romania

 

The market of software development in Romania, measured by revenue, is $3.4 million in 2023 and is placed 12th in Europe’s rating. By 2028, the IT sector revenue is expected to reach $4.8 million. As you can see from the graphic below, it goes hand in hand with industry revenue growth in the EU. Although the year 2020 and COVID-19 hit the country hard, the industry of IT in Romania has a good chance of recovery in the post-pandemic reality. This will be possible thanks to internal reforms (digital transformation, infrastructure modernization) and some external aspects.

 

Romanian startup boom

A promising and lively startup ecosystem provided a significant boost to the IT sector in Romania. Software development startups had 60 investment rounds in the first half of 2021 alone, with a worth of over $92.6 million in total. As of now, the Romanian startup scene is characterized by:

 

  • 1,500+ startups, business angels, VCs, and PEs
  • 100+ incubators and accelerators
  • 100+ active investors network

 

Moreover, there are many successful startup stories, such as UiPath, which became the first to obtain unicorn status. Their accomplishment provided an incentive for many other local startups, such as 123FormBuilder, FintechOS, and Elrond, to seek funding. In 2023, there are more growing Romanian software development companies to watch, such as YLOAD, Hubgets, Vatis Tech, and others. This trend is going to continue with more and more emerging startups on the local scene.

 

The rise of foreign investments

Over the last decade, foreign capital flows have actively contributed to the country’s economic growth and IT industry in particular. For instance, the Romanian software development industry has shown a rise in foreign direct investments. As of May 2023, the monthly figures are three times higher than in October 2022, and the number is growing.

 

Speaking about foreign companies, Microsoft is among the top investors in the local market. The enterprise has had a representative unit in Romania since 1996 and employs around 1,700 people in Bucharest and Timisoara. Other major investors who established a presence in the country are Amazon, Oracle, and Google. Some reports suggest that investing in the Romanian technical sector is one of the most profitable and strategic moves for U.S. companies. Therefore, I’m certain to see even more international giants on the Romanian market.

 

Let’s look at the reasons behind that and examine the advantages of assembling your own dedicated development team in Romania.

 

Reasons to Go for Software Development in Romania

 

Rich talent pool

First of all, Romania is considered an appealing location for offshore software development due to the vast tech talent pool that increases by 10,000 engineering graduates annually. In 2020, there were around 140,000 IT specialists. In  2023, more than 200,0000 software developers make up the second-largest tech market in Central and Eastern Europe.

 

Superb IT expertise

Remarkably, the Romanian IT industry stands out not only for the number of active software engineers but also for their deep technical expertise, making custom software development in Romania more attractive. In addition, local IT professionals have access to top tech universities in the EU, as well as 27 Romanian universities with prominent engineering, programming, and cybersecurity programs.

 

Developed tech hubs

The educational system is not the only source of exceptional IT skills. Thanks to the rise of tech hubs in Bucharest, Cluj-Napoca, and Iasi, Romanian developers have a chance to get valuable practical knowledge. Those are the locations of international IT giants and their R&D centers. In these cities, entrepreneurs, researchers, freelancers, and startup founders meet to start new projects and generate ideas.

 

Affordable salary rates

It’s incredible that IT product companies can leverage all the advantages of software outsourcing in Romania while reducing business expenses. This is possible due to the lowest IT salaries in the CEE region. For instance, the annual salary rate of an iOS developer in Romania is $25,500, while in Poland, Hungary, Czechia, and Ukraine such a specialist receives on average $43,500 – $46,000 of gross income. Salary differences become even more tangible when compared to US compensation. The average salary rate of a Middle iOS developer in the United States spans between $116,500 and $136,000 per year.

 

 

Favorable environment for IT business

Another reason why IT entrepreneurs choose Romania for running tech businesses is government-backed economic stability combined with an attractive tax relief scheme. The government decided to reduce the tax burden on both IT employers and employees and fully exempted software developers from payroll income taxes. In turn, R&D companies are exempted from income taxes for 10 years of activity. Because of Romania’s taxation for IT, the country is often called a “tax haven”.

 

High level of English proficiency

Mastery of the English language is another aspect that makes Romania a suitable location for hiring developers. According to the EF English Proficiency Index, Romania is placed №15 out of 112 countries. Its overall English-speaking ability is graded as high with a score of 598. Year by year, Romanians improve their English knowledge so communication between in-house and offshore teams becomes smoother. Other popular languages among Romanians are French, Hungarian, and Italian.

 

Suitable time zone

Last but not least, Romania is only 2-4 hours away by plane from Western & Nordic Europe. Geographic proximity enables business owners to arrange personal meetings with a software development team in Romania if needed. Moreover, the minor time difference makes it easy for European teams to coordinate with Romanian colleagues. Although the time zone difference is bigger with the US (7-10 hours), Romanian developers usually adjust to it easily. That helps enterprises to run their business round-the-clock.

How 2024 Looks for Software Development in Romania - Alcor BPO

 

 

Consider Alcor BPO Your Trusted Partner for
Hiring Software Developers in Romania

 

Assembling your own IT team is a good idea if you want to enjoy all the above-mentioned benefits of software development in Romania yourself. To do this, you may need a hand from an experienced recruitment agency. A reliable partner will provide you with streamlined IT recruitment and ensure a seamless experience in the unfamiliar market.

 

That’s exactly what Alcor BPO did for Sift. It is a US-based technology company that develops a product to prevent digital fraud via machine learning and artificial intelligence (AI). Sift decided to start their own R&D branch in Eastern Europe and reached out to us for smooth talent acquisition. 10 of our IT researchers and 3 IT recruiters handled recruitment process outsourcing and closed such positions as Senior Product Designer, Infrastructure Engineer, Ruby Developer, DevOps, and others. The most important position was Head of R&D, which we managed to fill from the second resume! What made recruitment even easier and faster for Sift was how Alcor managed operational services, including legal & compliance assistance, tax management, labor and contract law assistance, IP rights protection, and equipment procurement. As a result, the client’s team in Eastern Europe grew by 30+ software developers within a year!

 

 

Having 40 tech recruiters on board and more than 10 years of market experience, we are ready to assemble your own offshore development team in the countries of Eastern Europe. Before the start of the recruitment process, we always present concise data about the number of available specialists and their average pay scales. Alcor’s customers count on our support since we navigate them through the country and adjust their vacancies to the local tech market. Then the client receives weekly reports on the number of processed CVs and conducted interviews. 

 

How 2024 Looks for Software Development in Romania - Alcor BPO

 

We’re confident in what we do and provide firm guarantees: we vow to hire 5 developers within the first month, 20 developers in 3 months, and 100+ in a year! Such enterprises as People.ai, Ledger, BigCommerce, and Dotmatics have already benefited from delegating their recruitment to us.

5/5 - (2 votes)

FAQ:

🇷🇴 1. Is Romania a good country to invest in?

According to recent studies, investing in the Romanian IT industry is one of the most strategic moves for U.S. tech companies. Microsoft, Amazon, Oracle, and Google have already established their R&D branches here. These companies now enjoy such benefits as a rich talent pool, superb IT expertise, affordable salary rates, favorable business climate, etc.

🇷🇴 2. What’s the future of software development in Romania?

In 2023 the market size of the tech industry in Romania, measured by revenue, is $3.4 million and expected to grow in the upcoming years. There will be more IT giants entering the Romanian market, as well as startups that will attract foreign investments. These aspects are likely to give a significant boost to the local IT sector.

🇷🇴 3. How can I hire skilled software developers in Romania?

IT companies can attain the best talents by cooperating with a reliable recruitment provider. With 10 years of experience and 40 tech recruiters on board, Alcor is ready to support your ambitious growth plan!

Contact Us

Contact us to receive a free analysis of your positions!

It includes the salary ranges and availability of the requested developers in Poland, Romania, and other countries in EE (as well as time-to-hire metrics and other KPIs for your case).

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