Romania, Top EU Software Outsourcing Destination
Updated: Oct 22, 2019
The software development industry in Romania is booming. Year on year since 2012, the Romanian software outsourcing industry has experienced 15% to 20% growth. Moreover, this growth shows no signs of slowing. Presently, IT service exports account for 75.6% of overall IT sector turnover, with this accounting for 6% of Romania's annual GDP.
A Short History of Software Development in Romania
The story of Romania’s modern IT tech boom starts in 1990. In 1990, Romania held its first free elections since the start of communist rule in 1948. The country then invested heavily in education.
Already considered some of the best in Europe, Romanian universities quickly become renowned for achievements in the fields of medicine and technology. As early as 1994, Romania, therefore, witnessed the emergence of an IT market, which has since grown by 40%-60% per year.
The Romanian Software Development Market
By 2005, outsourced software development in Romania was already generating $3 billion in annual revenue. This was due to Romania being appreciated as a popular alternative outsourcing destination to India and China. Today, software development outsourcing accounts for 6% of Romania's total GDP. However, software outsourcing is expected to amount for at least 12% of GDP by 2025.
The success of Romania as a tech start-up and software development destination rests largely with geography and economics.
- 75% of Romanian IT exports and software development services are to fellow EU member states. Specifically, EU clients who reduce risk by working with comparably regulated companies in the EU common market.
- Romania encourages continued growth in the software development sector, by leveling zero income tax on IT professionals and software developers.
- An English fluency rate of 60% and strict intellectual property laws, see Romania appeal to U.S. companies. (Presently, U.S. clients account for 22% of Romania’s IT and software and service exports)
Romania Today Controls 5% of the Offshore Software Development Market
Romania today is the world’s third-largest software exporter after India and China. More importantly, growth in Romania’s IT software development and outsourcing sector shows no signs of slowing.
Leading software companies like Intel and Sun Microsystems are currently investing more in R&D in Romania. In part, this is thanks to several tax incentives and government construction of special IT technology parks. However, Romania is also widely appreciated as the place in the EU, for top-level, yet affordable IT and programming talent.