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29 September 2022
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% of 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 to expand to Romania and hire programmers from this and other countries in Eastern Europe. With our full-cycle IT recruitment services in Romania, clients receive top-notch technical talents along with continuous advice and support, a time-to-hire commitment, and guarantees:
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.
Events that Affected the IT Sector in Romania: 2020-2022
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. It’s essential to immerse into a global context to understand the recent changes in the local tech market. That implies touching upon topics of the pandemic, war, and worldwide talent scarcity.
COVID-19
Over the past years, IT companies around the world have been experiencing a dramatic labor shortage. According to Datapeople’s 2022 report, the number of IT jobs nearly doubled last year, while the average number of applicants shrunk by 25%. At the end of 2021, there were 918,000 unfilled IT vacancies in the U.S. market alone.
Increased demand for software developers is partly due to the digital transformation imposed by a pandemic. COVID-19 created a need for more employees in charge of building and maintaining digital infrastructures. On the other hand, the pandemic democratized remote work and the opportunity to live in a rural area while working for a Silicon Valley giant. This gave a 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 developed IT ecosystem.
War in Ukraine
2022 marked the start of a full-scale war in Ukraine, Romania’s neighbor. 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 that the global IT market is not ready to lose such 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.
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 €3.2 billion in 2022 and is placed 13th in Europe’s rating. 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. 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, 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 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. I can presume that by the end of 2022, approximately 160,000 software developers will be a part of 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. 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 this, the country is often named 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.
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!
At the start of our cooperation, our team provided the client with a new hire every week. In the following months, we accelerated recruitment with a powerful employer branding campaign. Alcor shot a video with a Hiring Manager of Sift, which encouraged candidates to choose Sift over other companies. 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.
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.
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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).