Romania for IT Nearshoring in 2024

Eager to nearshore to Romania? No wonder: thanks to an 86% increase in the number of projects funded with foreign direct investment, it’s in the top 15 of attractive European investment destinations. You can’t pass by this piece if you consider whether to hire Romanian developers or not. 

I’m Diana Lepadat, Alcor’s Recruitment Lead with 9 years of experience in recruitment and extensive knowledge of the Romanian IT market. Our solution covers full-cycle Tech Recruitment + Employer of Record services across Eastern Europe and Latin America. 

Today, I’ll let you in on the latest tech stats about the Romanian IT market, investment, and talent. Plus, you’ll access exclusive information — salaries and a comparison of this location with other Eastern European countries. Ready?

Romania IT Market & Business Landscape

The Romanian ICT market is expanding steadily with an annual rate of 3.7%. By 2026, its value will surpass $9 billion. As for Romanian IT services, the market volume will amount to nearly $1,8 million by 2029. It’s not surprising then that Romania’s IT industry contributes 6% to the country’s GDP, while its software development made it to the top 20 in terms of software development. 

Furthermore, technology is a primary driver for investment in Romania. This Eastern European country obtained $238 million of VC funding in October 2022, showing more than $20 million in yearly growth. The final number reached nearly $390 million, and 2023 brought over $330 million of VC funding. Large companies enjoy a 9% profit from the IT services sector, and businesses with foreign capital make up 73%. So, who has already started nearshoring software development to Romania and reaps the benefits of a stable and secure market?

Who Nearshores to Romania

• Accenture has been operating in Romania since 2006 and now employs over 4,000 of the country’s software development professionals with offices in Bucharest, Brașov, Cluj, Timișoara, Târgu Mureș, and Iași. 
• Adobe Romania is acclaimed as the largest R&D center in the EMEA area, employing IT professionals specializing in cloud computing, big data, and graphic design since 2006. 
• Amazon’s first R&D site in Iași opened in 2005. In April 2023, the company launched a new corporate office with a capacity of over 2,000 employees to continue its development of cutting-edge tech. 
• Microsoft has been in the country for 26 years and actively fosters its tech ecosystem. The tech giant supports the academy via the Bursele ANIS program, offering Cybersecurity and Big Data scholarships and encouraging innovation.

Why Nearshore Software Development to Romania

Skilled & Abundant Talent Pool

Romania leads in Europe and closes the top 6 in the world with the highest number of certified IT specialists per 1,000 citizens. In 2024, this number surpasses 202,000 competitive software engineers skilled in Java, JavaScript, C#, and Python, as well as in such front-end frameworks as React and Angular. Romanian coders’ English proficiency is excellent, placing it in the global top 15. Plus, their work ethics and values closely resemble Western culture. Finally, businesses interested in IT nearshoring to Romania may rejoice: thanks to 5 high-level technical universities and 59 domain-oriented institutions, the Romanian talent pool grows by 7,000 new ICT specialists yearly. 

Money-Saving Cost Difference

Companies that nearshore IT services to Romania can save up from 30% to 45% costs on salaries due to the difference between Romanian and US remuneration. Numbers speak louder than words, so look at the gross annual wages for senior programmers in both countries.

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Bustling Tech Infrastructure

The Romanian tech and startup ecosystem is on the up, closing our comprehensive list of advantages. Dealroom states that the software development ecosystem funding had expanded by six between 2017 and 2023. The business climate shines bright from the hubs in Bucharest and Cluj-Napoca. The ITA counted 7,930 IT companies, while the Vestbee report underlined 1,662 startups thriving in over 100 incubators and accelerators. Unicorns? Three of them — UiPath,  eMAG, and MultiverseX. Romanian top sectors include IT&C, media, fintech, and gaming. On top of that, the country holds the 8th spot among Eastern European startup ecosystems and proudly stands out in the global top 50.

Romania vs. Other Eastern European IT Destinations

Romania vs. Poland

Poland is Romania’s main competitor in the EE IT development market. Its talent pool of 525,000 software developers is two times larger, and it boasts 60,000+ IT businesses and 6 IT hubs. Polish devs are proficient in back-end programming languages (Java, Python, PHP, C#), as well as in JavaScript, Ruby, and Shell, while the level of English proficiency in Poland ranks two places higher than in Romania. The critical difference in favor of nearshore outsourcing in Romania concerns taxes. While Poland imposes 19% of corporate and personal income tax (CIT, PIT), its neighbor offers 1%-16% revenue-dependent CIT and 10% PIT. 

Romania vs. Ukraine

Ukraine also offers a bigger talent pool of 363,000 IT specialists and 300 higher education institutions compared to the Romanian 100, and it boasts a larger IT export market. Regarding programming languages, it shares the key development technologies, such as JavaScript, Java, C#, Python, and PHP. At the same time, Romanian coders are more proficient in English, while its tech ecosystem has almost 8,000 tech companies in comparison to 5,600 businesses in Ukraine. 

Romania vs. Czech Republic

The Czech software development talent pool includes 221,000 software engineers and leads in Swift. Other programming languages —  Python, Java, JavaScript, C# — match the Romanian ones. On the flip side, the Czech Republic imposes a 19% CIT and a 15%-23% revenue-dependent PIT, while its devs rank 11 positions lower in English proficiency than Romania.

Romania vs. Bulgaria

Bulgarian software development follows Romanian footsteps, especially regarding the most popular development technologies, such as C#, JavaScript, Java, and Python. Bulgarian programmers come right after Romania in English proficiency, while the corporate and personal income tax reaches only 10%. On the other hand, the Bulgarian talent pool is 50% smaller, with 108,000 software developers available for hiring. 

Romania vs. Slovakia

Slovak developers, albeit numbering 53,000, are globally recognized for their skills in Python, PHP, Microsoft ASP.NET, Node.js, and top-20 English proficiency. The number of IT companies almost matches that of the Romanian market — 7,700 vs. 7,930. One thing to note, though, is that despite a 200% R&D expenses deduction from the tax base, the corporate income tax in Slovakia reaches 21%.

Proficiency of Romanian Software Development Companies

According to the data from The Recursive, Romania is enjoying an upward trend in all its IT subsectors, especially in custom software development (470 businesses and counting), wireless telecommunications, and IT consulting. 

The dynamics of Romanian tech firms confirm the trend: over a third (35%) broadened their scope of products, processes, and services. That is in line with the EU software development dynamics, as well as Romania’s digital advancement of 65%, which is close to the EU’s average of 70%. The country also keeps up with European Big Data/AI and virtual reality tendencies. Where does this Eastern European gem outpace Europe? In IoT. Romanian businesses use the Internet of Things in development to an 11% larger degree than noted across the EU. 

While nearshoring to Romania offers a lot, you should take into consideration…

Challenges & Risks of Nearshoring to Romania

Changing Legislation

Many tech businesses nearshore software development to Romania due to its favorable tax policies. As of June 2023, Romania offers a 0% profit tax on R&D and innovation-related activities for the first 10 years of operation, making it an attractive destination for tech companies.

On the other hand, we recommend regularly checking for legislative updates, as Romania frequently amends its tax regulations. For instance, in 2024, Romania implemented several modifications to its Fiscal Code. Therefore, if you plan to conduct IT business in Romania, it is crucial to stay informed about the recent micro-enterprise taxation rules, the RO e-invoice system, and certain updates to the local VAT rates. In this regard, for more accurate information, we recommend consulting with a legal professional. 

At Alcor, we handle legal matters in addition to hiring top-notch tech specialists. Ledger, a French cryptocurrency company, received our full legal package. The client’s key concern lied in ensuring 100% legal compliance when expanding to Eastern Europe. Not only did our 10 IT researchers and recruiters hire 20 QA Engineers requested by Ledger, but Alcor’s legal team took care of tax processing, documentation, SLAs, and IT security. As a result, Ledger’s business operations abide by both French and Eastern European legislation. 

Unsuitable Approach

Businesses should choose a viable model and a trusted partner for successful nearshoring in Romania. IT outsourcing fits short-term projects, especially if you can compromise the team’s loyalty, management, and development code quality, not to mention buy-out fees. Regarding more serious projects, I’d advise hiring in-house programmers. Thanks to EoR services, you can do this without opening a legal entity in a foreign country or else, opt for IT recruitment. 

Finding a perfect match with a software development recruitment provider is one of the biggest challenges. In a nutshell, ensure they have recruitment experience in the tech sphere, follow explicit pricing models, consistently meet hiring deadlines, and promise timely communication. 

Alcor retained 100% of its clients in 2023. Drop your request; we’ll take care of the rest! CONTACT US

Better than IT Nearshoring to Romania

At Alcor, we’re ready to back up your scaling plans with our 360-degree solution of Tech Recruitment and Employer of Record. It’s more than only IT recruitment in Romania! Why so? 

We manage full-cycle tech recruitment, as well as payroll and taxes, while you approve of candidates and don’t even have to open a legal entity. One dedicated partner instead of several local agencies — isn’t that revolutionary? Alcor goes the extra mile: if your sights are set on launching your own branch abroad, we’ll help you establish an R&D center abroad. Yes, office lease and equipment procurement covered. Our clients – Grammarly, Dotmatics, Sift, and more – have all been “wowed”!

We provide solid guarantees: 5 developers within one month, 20 within three months, and up to 100 in a year. Hiring with us is worth it in cost & retention: Alcor operates without buy-out fees, and 98% of our candidates pass the probation period and stay on! Interested? Send us a line!