IT Business in Romania: Building a Thriving Tech Company in a Growing IT Hub

Romania is rapidly emerging as one of Europe’s premier destinations for information technology (IT) companies, both for startups and established enterprises. With access to a skilled workforce, competitive labor costs, and a favorable business environment, Romania offers a dynamic ecosystem for technology firms looking to scale their operations. This article explores the factors that have contributed to Romania’s rise as a 4b.ua thriving IT hub, and how companies can successfully build and grow their tech businesses in this booming market.

Overview of Romania’s IT Sector

Romania’s IT sector has experienced remarkable growth over the past decade, becoming one of the key drivers of the country’s economy. In 2019, the Romanian IT industry contributed over 6% of the country’s GDP, with revenues exceeding €6 billion (European Commission, 2019). The sector is characterized by a high concentration of software development, IT outsourcing, and innovation-driven services, making Romania a sought-after destination for global tech companies.

One of the country’s key strengths is its favorable business environment for IT companies, with a range of tax incentives, government support, and simplified regulatory frameworks. This has made Romania not only an attractive location for foreign direct investment (FDI) but also a breeding ground for local tech startups (KPMG, 2020).

A Skilled and Competitive Talent Pool

One of the primary factors driving Romania’s rise as an IT hub is its highly educated and skilled workforce. Romania boasts one of the largest pools of tech talent in Eastern Europe, with over 200,000 IT professionals currently working in the industry (PwC, 2019). Each year, Romanian universities produce more than 8,000 graduates with degrees in computer science, engineering, and related fields (Romanian Ministry of Education, 2018).

The technical education system in Romania is one of the strongest in the region, with universities such as the Polytechnic University of Bucharest and the Technical University of Cluj-Napoca known for their rigorous programs in IT and engineering (Deloitte, 2018). These institutions provide a steady stream of highly qualified developers, data scientists, and IT engineers who are well-versed in modern programming languages and technologies.

In addition to formal education, many Romanian IT professionals have gained international certifications and possess experience working with multinational companies. This combination of academic and practical expertise makes the Romanian workforce particularly attractive to tech firms looking for high-quality talent at a fraction of the cost compared to Western Europe or North America.

Cost-Effective Labor Market

Romania’s low labor costs are a major advantage for IT companies. The average salary for a software developer in Romania is significantly lower than in Western Europe or the United States, while the quality of work remains high (Eurostat, 2020). For example, the average monthly wage for IT professionals in Romania is around €2,000, which is considerably less than the €5,000 to €6,000 paid in countries like Germany or the UK for comparable roles (OECD, 2018).

This cost advantage allows startups and established firms alike to optimize their budgets, enabling them to invest in innovation and scale their operations more efficiently. The combination of cost-effective labor and a highly skilled workforce has made Romania a leading destination for IT outsourcing, attracting companies such as Microsoft, Oracle, and Amazon to establish development centers in the country (EY, 2017).

Thriving Startup Ecosystem

Romania’s tech startup ecosystem has flourished in recent years, driven by a growing culture of innovation and entrepreneurship. Cities like Bucharest, Cluj-Napoca, Iași, and Timișoara have become vibrant hubs for tech startups, offering a wealth of co-working spaces, incubators, and accelerators that support the development of new companies.

Initiatives such as Techcelerator, Spherik Accelerator, and MVP Academy have played a significant role in nurturing the local startup scene, providing funding, mentorship, and networking opportunities for early-stage tech companies (World Bank, 2019). Additionally, Romania has seen an increase in venture capital investment, with both local and international investors recognizing the potential of the country’s tech sector (European Investment Bank, 2019).

Success Stories and Unicorns

Romania is home to several successful tech startups that have gained international recognition. One of the most prominent examples is UiPath, a leader in robotic process automation (RPA) that became Romania’s first tech unicorn in 2018. Founded in Bucharest, UiPath’s rise to global prominence has inspired a new generation of Romanian entrepreneurs to pursue their ambitions in the tech industry (Forbes, 2019).

Other notable startups include Bitdefender, a cybersecurity company that has become a global leader in the antivirus market, and eMAG, an e-commerce platform that has expanded its operations across Central and Eastern Europe. These success stories demonstrate Romania’s potential to produce globally competitive tech companies that can scale beyond its borders.

Government Support and Tax Incentives

The Romanian government has played a proactive role in supporting the development of the IT sector. One of the most significant advantages for tech companies in Romania is the personal income tax exemption for software developers. Romanian IT specialists are exempt from the 10% income tax, which significantly reduces labor costs and increases the country’s attractiveness as a destination for IT talent (KPMG, 2019).

In addition to tax breaks, Romania offers R&D incentives that allow companies to deduct up to 50% of their eligible research and development expenses from their taxable income. This encourages innovation and the development of new technologies, making Romania an ideal location for tech companies that prioritize R&D activities (Deloitte, 2017).

The government has also implemented initiatives aimed at improving the country’s digital infrastructure and creating a favorable environment for tech startups. The Romanian Digital Agenda 2020, for example, outlines a comprehensive strategy for the digital transformation of the economy, focusing on increasing broadband access, promoting digital skills, and encouraging entrepreneurship in the IT sector (Ministry of Communications Romania, 2018).

Strategic Location and Access to EU Markets

Romania’s strategic location in Eastern Europe makes it a valuable gateway for companies looking to expand into both Western and Central Europe. As a member of the European Union, Romania benefits from the EU’s single market, allowing businesses established in the country to operate across the region without trade barriers or tariffs (European Commission, 2018).

This access to the EU market is particularly important for tech companies that want to scale quickly and serve a broader customer base. Romania’s proximity to major European tech hubs such as Berlin, Vienna, and London, combined with its competitive operating costs, gives businesses a strategic advantage in reaching key markets while minimizing expenses (OECD, 2017).

Challenges and Opportunities

While Romania offers numerous advantages for IT companies, there are still some challenges that businesses need to navigate. One issue is the bureaucratic hurdles that can complicate the process of setting up and running a business in Romania. Despite efforts to streamline regulations, the country’s legal and administrative frameworks can still be complex, particularly for foreign investors (World Bank, 2018).

Moreover, although Romania has a large pool of IT talent, the demand for skilled professionals sometimes exceeds supply, leading to increased competition for the best talent (PwC, 2019). As a result, companies may need to invest in employee retention strategies, training, and development to maintain a competitive edge.

Nevertheless, the opportunities far outweigh the challenges, and Romania’s IT sector is poised for continued growth. With its combination of skilled talent, cost-effective labor, supportive government policies, and access to European markets, Romania remains an ideal destination for tech companies looking to build a strong presence in the region.

Romania’s thriving IT sector offers a wealth of opportunities for companies looking to establish or expand their operations in Eastern Europe. The country’s skilled and competitive workforce, favorable tax incentives, and growing startup ecosystem provide a solid foundation for building a successful tech business. As Romania continues to develop its digital infrastructure and attract foreign investment, the IT sector will play an increasingly important role in the country’s economic growth and its position as a leading technology hub in Europe.Copy textCopy HTMLRefuseDone