Software Development in Romania: Modern Market Prospects

Dmytro Ovcharenko CEO at Alcor

Ranking 2nd in CEE and 9th globally for ICT services exports—Romania is one of the leading tech powerhouses in Eastern Europe. While some companies scratch the surface with outsourcing, others take the plunge and set up their own software development center in Romania to fully leverage its dynamic tech ecosystem. But what exactly gives Romania a competitive edge in the region, and why should it be on your radar in 2025?  

I’m Dmytro Ovcharenko, CEO at Alcor. We’re a software R&D accelerator, helping tech product companies scale fast, building their teams from 0 to 100 Romanian software developers in a year. Our tech R&D center solution covers IT recruitment services, compliance, payroll, and more—no legal entity is needed. 

After reading this article, you’ll know the strategic importance of Romania as an expansion destination. You’ll also get a complete overview of what to expect when launching IT software development in Romania, including insights into its ICT sector and future projections. So, without further ado, let’s dive in! 

Romanian ICT Sector 

When you think about an offshoring destination for your global business expansion, Romania might not spring to your mind first. But the reality is that this gem actually ranks 4th in CEE for offshoring attractiveness!  

The ICT industry in Romania has seen impressive growth, expanding by around 8% annually from 2017 to 2021. Statista projects the sector to generate a revenue of $1.3 billion this year, with custom software development driving the charge. What’s even more exciting? The industry is on track to account for 10% of the country’s GDP in just 5 years.  

So, what’s pushing the Romanian IT sector forward? The combination of 

• government initiatives like the National Recovery and Resilience Plan, Digital Skills Framework, and National Artificial Intelligence Strategy that promote innovation and digital transformation; 
• development of internet connectivity—Romania currently ranks 6th among the fastest-growing countries for fixed broadband and 43rd for mobile internet speed. 

What’s more! Romania’s technical scene is thriving with approximately 48,405 companies, including 45,400+ with a focus on IT and nearly 3,000 on telecommunications. And let’s not forget about the 2,500+ startups that continue to fuel the country’s dynamic digital growth. 

Now, let’s take a closer look at the key contributors to the Romanian IT industry. 

Software Development in Romania: 2020-2024 Overview 

The software development sector continued to evolve despite the turbulence of the past few years and the impact of COVID-19, which exacerbated the labor shortage for IT companies. According to Datapeople’s 2022 report, technical job openings nearly doubled in 2021. This rise in demand for software developers fueled IT offshoring, as international tech businesses started to tap into less competitive markets with higher availability of skilled talent like Romania. As a result, in 2021, the IT industry in Romania accounted for a whopping 14.2% of the GDP. 

russia’s full-scale invasion of Ukraine also influenced the development of the IT market in Romania. Some programmers fled Ukraine, and Romania became one of their relocation zones. According to the Ukrainian business media and tech community, DOU, around 3% of Ukrainian software engineers and 121 tech companies have fueled IT in Romania since 2022. The IT&C sector added over $45 billion to the national GDP, further solidifying its role as a key pillar of the Romanian economy. 

Over the past years, the IT sector in Romania has seen a 78.8% increase in innovative projects, particularly in the domain of the future of programming, AI innovation, and cybersecurity, according to a McKinsey report. With up to 12% of tech companies’ budgets allocated to R&D, Romania ensures continuous innovation and long-term return on investment in software development. No wonder Romania ranks 6th in Eastern Europe for innovation capabilities.  

So, let’s explore Romania’s trailblazing tech areas in greater detail. 

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 380 startups, such as Finqware, Bankata, Pago, EBriza, Beez, and SeedBlink, which collectively raised over $103M in VC.  

Moreover, many companies are attracting the attention of foreign investors. In May 2024, FintechOS, a prominent Romanian company specializing in end-to-end financial product management platforms, secured a $60 million Series B+ funding round. Such success cases point to one underlying truth—Romania is increasingly becoming a hub for innovation and investment, offering excellent opportunities for tech businesses to grow and scale.  

AI and ML Software Development 

Romania is making waves in AI and ML as well. This year, 16,000+ talented engineers skilled in AI and ML technologies are set to drive the country’s AI market to $740 million, with projections soaring to $2.5 billion by 2030. One of the key drivers of this expected growth is Romania’s ambitious plan to launch its first AI research institute, along with a massive $5 billion investment strategy approved for 2024-2027. And, of course, let’s not forget about Romania’s AI startups that raised $68 million in 2024. 

Automotive Software Development

Romania has the 4th largest workforce in the European automotive industry, which indeed spurs innovation. In 2024, Romania’s automobile market grew by 8%, positioning the country as one of the most promising hubs in the European automotive industry. And the momentum isn’t slowing down—vehicle registrations are expected to soar to nearly 1 million units by 2028, up from 690,000 in 2023, with a steady CAGR of 6.1%.  

Beyond hosting major manufacturers like Renault Dacia and Ford, Romania’s skilled tech talent has also drawn industry giants such as Bosch and Porsche Engineering. As a result, automotive software development is gaining traction, fueling even greater digital investment. 

IoT Software Development

The IoT market in Romania is expected to reach nearly $2.4 billion by 2025. The more significant market share is dominated by automotive IoT, growing by a CAGR rate of 11,5%, which will continue expanding to $681.4 million in 2025. 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 2024, the size of this market has gone over $20.7 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. 

The Future of Software Development in Romania

The software development market in Romania is poised for continuous growth, with its market potential set to reach $506.7 million in 2025. Particular attention is drawn to the National Artificial Intelligence Strategy 2024-2027 and an ambitious goal to digitalize the public sector. By 2027, approximately $5.35 billion will be invested in building a robust digital ecosystem and advancing AI systems across both public and private sectors.  

The rise of foreign investments

Speaking of investment, over the last decade, foreign capital flows have actively contributed to the country’s economic growth and tech industry in particular. For instance, the Romanian software development industry has shown a rise in foreign direct investments, growing 3.3% year-on-year and reaching $6.3 billion in just 12 months. 

But who are those major investors, and which IT sectors in Romania do they consider the most promising?

Software development

• Microsoft: One of the top investors in the local market, the tech giant chose offshore software development in Romania as their best strategy. The enterprise has had a representative unit in Romania since 1996 and employs around 1,700 people in Bucharest and Timisoara. 
• Amazon: Present in the Romanian market for over 15 years, Amazon has invested more than $103 million in its local tech business operations. Additionally, over the past three years, the company has opened three new R&D centers, boosting local development and innovation. 
• Google: With a software development center in Bucharest, this tech leader makes a viable contribution to the Romanian ICT market. By actively collaborating with the government, Google plans to invest up to $2 billion in building a data center in the country and fostering the development of the local innovation sector. 

Telecom 

• Orange: This leading European telecommunications operator has invested a whopping $4,95 billion in the local network over the past 27 years. Aiming to develop cybersecurity and ensure public access to communication, the company’s annual investments reach approximately $220 million.
• Vodafone: The major telecommunications company is making a solid footprint in the Romanian ICT market. The company will build a cloud platform for the Romanian government under the a $100 million contract. Vodafone is also set to acquire Telecom Romania Mobile jointly with Digi Communications to further enhance connectivity in the country.

Automotive & IoT 

• Bosch: With its own engineering center in Cluj-Napoca, Bosch has invested over $55 million in innovation and development. Additionally, the company has signed financing contracts with Continental and NXP Semiconductors Romania for substantial investments in microelectronics.  

Romanian startup boom

A promising and lively startup ecosystem provided a significant boost to the Romanian IT sector. Romania ranks as the 25th most popular country in the world and the 10th in Europe for launching a startup.  

In 2023, the largest funding rounds included approximately $94 million for Z3 and $50 million for MaintainX, while in 2024, Romanian startups collectively announced around $162 million in funding. With VC investments skyrocketing from $111.9 million in 2022 to $279 million in 2023, along with the 2024 figures, Romania is on track for yet another investment boom in 2025. 

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 2025, there will be more growing Romanian software development companies to watch, such as Veridian, Youni Choice, SOLO, and others. This trend is going to continue with more and more emerging startups on the local scene. 

Drawn by innovation and vast opportunities, more and more US tech companies are choosing Romania for tech development. But what are the real reasons and advantages behind 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 offshoring and nearshoring software development due to its vast tech talent pool. The number of developers has grown from 202K in 2023 to 250K+ software developers in 2024. This number will only continue to soar in 2025, as the Romanian Repatriot Program has already brought 82K tech-trained skilled individuals back home and plans to keep doing so. 

Superb tech expertise

Remarkably, the Romanian IT sector 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. 

According to the Emerging Europe Future of IT Report, Romanian tech professionals rank 1st in the International Mathematics Olympiad and #3 in Central and Eastern Europe for tech skills and competitiveness. Romanian developers are also known for their high-quality tech education. Among the country’s top engineering universities, Babes-Bolyai University in Cluj and the Polytechnic University of Timisoara lead the rankings. Alongside other tech universities, they produce around 10,000 ICT specialists annually. 

Developed tech hubs

The educational system is not the only source of exceptional tech skills. Thanks to the rise of tech hubs in Bucharest, Cluj-Napoca, and Iasi, Romanian developers have a chance to get valuable practical knowledge. The country’s center point for software development is Bucharest, which has 63% of the nationwide revenue, the highest concentration of tech talent, and the R&D centers of giants like Microsoft, Amazon, Oracle, and Google. In this and other Romanian tech hubs, entrepreneurs, researchers, freelancers, and startup founders meet to start new projects and generate ideas. 

Affordable salary rates

Incredibly, tech product companies can leverage all the advantages of software outsourcing in Romania while reducing expenses.   

In 2023 and 2024, the reduction of tax incentives in the tech industry led to unchanged salary levels for software developers. For instance, the annual salary of a senior AI engineer in Romania amounts to $78,000, while DevOps developers earn about $81,500 per year. This is 40% lower than in the US, where the average salary of a senior AI developer reaches $132,000, and DevOps developers earn around $138,000 annually. What a lucrative deal! 

Favorable environment for tech business

Another reason why tech entrepreneurs choose Romania is government-backed economic stability combined with business-friendly taxes. 

The government actively supports the growth of small businesses and startups, allocating $430 million from the National Recovery and Resilience Plan for private equity funds. In turn, FIX Cluj, the country’s largest incubator program, offers up to $54,000 in funding for young entrepreneurs. 

Personal income tax in Romania is only 10%, which is lower than in neighboring Poland and Ukraine.  Plus, tech companies with R&D branches are exempted from income taxes for 10 years. The country is often called a “tax haven” because of Romania’s taxation for IT.

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 #12 out of 116 countries. Its overall English-speaking ability is graded as high, with a score of 593. Year by year, Romanians improve their English knowledge so communication between in-house and offshore dedicated teams in Romania 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 more prominent with the US (7-10 hours), local developers usually adjust to it easily. That helps enterprises run their software development center in Romania round-the-clock. 

Set Up Your Own Tech Development Center in Romania 

To take full advantage of the benefits of software development in Romania in 2025, building your own R&D center is exactly what your tech business needs. Alcor’s 360-degree solution accelerates your expansion, providing you with: 

• Comprehensive EOR services: Alcor expertly handles all aspects of developers’ employment, from onboarding and payroll processing to compliance and benefits management, freeing you to focus on scaling your business. 
• Top-notch talent recruitment: We specialize in securing the top 10% of tech professionals in EE and LATAM, with 80% of candidates advancing to the interview stage. Additionally, 15% of roles are filled after reviewing the first CV, while a remarkable 98% of our hires pass probation. 
• Holistic back-office support: From negotiating office leases to purchasing the necessary hardware, Alcor ensures a seamless operational setup. 

Many companies, including People.ai, Ledger, and BigCommerce, have already embraced this solution. Just look at the case of Sift—when they approached us to build their own R&D center, we kicked off with a WOW results delivery: hiring a Senior Product Designer on the first try. In just seven days, we filled two more engineering roles and, within a year, built a team of 30+ developers. We took it a step further, ensuring full compliance with EU and US laws, managing taxes and contracts, and ensuring IP protection—giving Sift everything needed to scale successfully. 

Sounds like an exciting offer, doesn’t it? Hop on board and get ready for a swift and stress-free expansion!