Romania face to face with its Outsourcing challenges
Author : Amalia Sterescu
Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. This may be a standard definition used for many years by different publications to describe the practice of outsourcing and its functionality worldwide. However, I do believe it’s high time to upgrade the term and to shed some light upon what Outsourcing really means for companies and contractors around the globe and what are the current trends investors follow at present.
Let’s take a glance at Romania and the Outsourcing business environment as well! How is our country coping with the changes? Does it maintain its competitiveness in terms of providing the best services for the offshoring demand?
Money is only a tool. An investment in knowledge pays the best interest
Global outsourcing has been continuously growing, with more and more Western European and North American companies seeking to open shared service centers, outsource products or manufacture in countries where they were offered relatively low wages. If costs may have been the main concern in the past, companies have now recognized the value of quality delivery and flexibility. They are now focused on superior services, geographical advantages, gainful business environment and stable economies.
Outsourcers that are searching to open shared service centers for support or other operational lines of business are more and more focused on countries that have a reputation for their educated workforce and language skills and that have as a resource a great number of specialists in terms of IT and finance. Their expectations are higher, and their investments are more sophisticated. They are aiming towards states that are active, powerful and with a high potential for future development.
Romania, a top player on the Outsourcing Eastern European Market
There are more and more positive signs which makes Romania a top outsourcing destination for opening new Shared Service Centers in Eastern Europe:
Based on 2014 Top 100 Outsourcing Destinations of the world – report produced by Tholons, Romania (Bucharest) is still on top 40 and gained 4 points vs. 2013;
Based on ABSL (Business Service Leaders Association) – Romania, the Romanian outsourcing market will grow with 20% in 2014;
Many existing investors in Shared Service Centers (e.g Microsoft, Oracle) have announced the expansion of their investment in Romania because they applied & accessed EU founds in order to create more jobs locally;
Starting with 2013 more and more companies selected Romania as a destination for starting their Shared Service Centers at EMEA level first. (E.g: Deutche Telecom, Vodafone). The most popular field for outsourcing in Romania is the IT sector. At the moment there are more than 1,000 IT companies, roughly 90% of which are foreign-owned.
Therefore, if we read the recent signs correctly, Romania seems to be the number one choice in terms of hosting new Shared Service Centers operations and start-ups, for major multinational players in Eastern Europe!
The shared Service Center market in Romania is not a new entry on the market but started back in 2004 when giant multinationals such as Oracle, HP, Microsoft, Endava, EON, Deutche Telecom, Office Depot, Temenos, Stefanini and many others – set-up their service centers in Romania in different cities like Bucharest, Cluj, Iasi, Timisoara, Brasov and Sibiu.
Small country, huge potential
Romania is near the top of anyone’s list for best place to outsource having a series of advantages that bring an added value to the country and weight heavily on every investor’s list when looking to open an offshore center:
Multi-language capability – Romania is known for its language diversity, in Bucharest for example in many of the SSC’s you can find teams with 24 languages spoken which makes Romania unique as outsourcing destination in this part of the world. The Eastern European Translators Association classed Romanians as “the best foreign language speakers in Eastern Europe”
High-skilled professionals – the mix of technical skills plus language skills is also unique for this part of the world – Romania’s professionals deliver top outsourcing services at an advanced quality level and often with no additional investment in training.
Experienced leaders – Considering the Romanian experience in SSC’s versus other new European locations on the outsourcing map, you can find locally experienced managers/leaders/consultants which can accelerate your start-up and can reduce your implementation costs;
Top education – the education sector is becoming more developed nowadays, especially in IT and business management fields. There are more than 100 universities in the country now with professionals that graduate in these areas;
Geographical advantage – a perfect near shore location for Western European countries looking to outsource in this part of Europe, perfectly located and with a time zone advantage;
Cultural compatibility – the professionals in Romania are flexible, opened and innovative, they easily understand different organizational cultures, and fit perfectly within global multinationals
The future looks bright for current SSC’s and potential investors in terms of outsourcing – there are more and more partnerships built with the Ministry of Education in order to support future pools of resources needed in this industry, there is more lobby being done in comparison to the previous years done by Outsourcing Advisors, ABSL Romania and other entities, in order to make Romania more visible on the Outsourcing map.
With the the BPO industry generating more than 25,000 jobs so far in Romania and their number expected to increase, I strongly believe that Romania has widen its appeal from a simple outsourcing location, into a higher value add destination for any outsourcer willing to relocate a certain part of their business here.
Romania has distinguished itself as an innovative and competitive outsourcing market and the results in the quality of service offered are more and clearer for investors. It also stands in our powers to continue promoting Romania as top outsourcing destination by maintaining the high standards imposed up until this point and delivering top results in the field!
Article published in Business Arena