Is India a choice anymore?

Romanian Environment.  

In recent decades, the IT sector has been Romania's wonder child, maintaining steady growth supported largely by outsourcing companies. Located at the Eastern border of the European Union, only one hour ahead of Berlin and three hours flight from London, the country became a flourishing technology hub. Both companies and developers are capitalizing on several government initiatives, and know how to work the system to the best effect.

Romania doesn't offer the lowest prices in the outsourcing business, but it is highly competitive when you take into account the level of technical proficiency and soft skills in the country, "superior to what is typically found in other outsourcing locations," according to IDC.

Young and motivated professionals with European values and mastery of not only English but German, French, and Italian as well, are a crucial part of Romania's appeal, according to the analyst house.

The fairly low salaries of the IT workers compared to the West, their skills and the country's location have helped outsourcing become Romania's second largest in terms of exports last year, surpassed only by transportation.

Cultural Considerations

Talented, highly skilled, and well-educated individuals.

A better understanding of Western European and North American culture than its main counterparts India, and China.

The country's time zone is close to major Western European.

One of the most attractive IT markets in Eastern Europe through:

• Low-cost sourcing location,
• Potential area for winning new business.
• Investments in R&D, BPO, or support centers have considerably increased in Romania in the last couple of years.
• Most IT&C jobs are based around Bucharest.

 

Effects

Reduced rate of the problems that can result from working with companies with different cultural backgrounds.

Companies in the United States are also looking for alternative outsourcing partners in the Eastern Bloc.

Romania is emerging as a promising alternative partner and supplier of IT-related services among others domains.

International players like Microsoft, IBM, SAP, HP, and others have created thousands of positions for new employees in Romania.

Is India a choice?

It is not only that the offshoring of jobs is reaching saturation point, but also that Western companies, after a decade of experience, are changing their attitude to the practice. KPMG, a global consulting firm, even announced “The Death of Outsourcing” in a research paper last year. After all, offshoring important tasks to an outside provider is quite a risky thing to do and carries significant hidden costs. Companies in services, as well as manufacturing, are now far more aware of the pitfalls. Until recently the most important reason for companies to send large chunks of important business functions abroad was to drive down costs. A decade ago wages in emerging markets were a tenth of their level in the rich world, an opportunity too good to miss. During the recession of 2008-09, says Cliff Justice, KPMG’s leading expert on outsourcing and offshoring, the race offshore accelerated, and more higher-value and complex work was sent overseas too.

But now many companies are finding that they lost their connection with important business functions, says Mr. Justice. At the same time, the cost advantage that drew firms offshore in the first place is disappearing. Salaries for software engineers are going up rapidly and inflation is high. For IBM, says Bundeep Rangar, chief executive of IndusView, an advisory firm, the total cost of its employees in India used to be about 80% less than in America; now the gap is 30-40% and narrowing fast.

Quality Vs Quantity - the benefits of near-shoring - Eastern Europe vs India

"Near-shoring - the business of moving production, research and business processes to countries that are quite cheap and very close, rather than very cheap and far away"

5 good reasons to nearshore to Eastern Europe:

• The Talent Pool
• Cultural Similarities
• Time Zones
• Low Attrition Rates
• Data Protection (GDPR)!

 

The Romanian Advantage:

• Impressive Language Skills
• A highly Educated Workforce
• Low Attrition Rates
• Low-Cost CEE Destination
• Cultural Compatibility
• Excellent Technical Infrastructure and Government Support

 

References

www.zdnet.com

AMCHAM

Rolf Jester - Gartner Vice President and Analyst

www.economist.com