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The Business Environment in Romania

8 April 2014 Outsourcing

Encouraging economic forecasts keep the spirits high for Romanian providers of Software outsourcing services

The Romanian economy followed a positive trend lately, as illustrated by the increase in GDP (0.7% in 2012, 2.4% in 2013, and forecasted values of 2.8% for 2014 and 3.5 for 2015) and the decrease in budget deficit (from 1.3% in 2013 to a forecasted value of 0.9% for 2014). All the macroeconomic indicators reflect a stable and healthy economic environment, with growth perspectives that exceed those from other countries in the region. Investments in infrastructure and the labor force are expected to take off following an improved absorption of EU funds, while inflation will drop to about 3.2% by the end of 2014. On medium term the Romanian economy is expected to do better than those of many EU countries, with an average of above 5% GDP growth for the 2014-2016 interval.

The tax incentives offered in Romania are quite competitive compared to those in many of its European peers. Among the fiscal measures that helped the IT sector are the flat tax rate of 16% on income and corporate profits, the accelerated depreciation method for equipment, and lower income taxes for employees working in the IT field than for other categories. Funds provided by the European Union to reduce the economic and social gaps between Romania and older members of the EU have also led to significant improvement of the economic environment in general and of the IT sector in particular.

Various development programs, state and EU funding have been contributing to accelerated improvements of the IT, road, and network infrastructures, energy, water and waste management systems, bringing the economic environment to a state of health that attracts ever increasing numbers of foreign investors.

“Upon my return to Romania in 2001, after having lived in the United States for several good years, I was truly shocked by the country’s primitive infrastructure. The breakneck speed at which the improvements came over the following 13 years was no less dazzling than the initial huge gap between these two countries placed “worlds apart”. My recent visits to cities with high standards of living and advanced civilizations from Switzerland, Germany, or the UK confirmed my feeling that Romania’s place in the European Union is well deserved. The Romanian business environment, IT and transport infrastructure, fiscal and educational systems have been catching up with those in developed countries at a pace that never ceases to amaze me.”
Tudor Precup, Senior Marketing Specialist, Fortech

Romania has a difficult battle to fight for software outsourcing projects with neighbouring countries like the Czech Republic Hungary, Poland, and even Turkey. While labor cost is still lower in Romania than in these countries, the existing gap might dwindle and even disappear in a few years.

The availability of consistent state aid schemes will alleviate the wage raise issue, especially for large multinationals aiming at setting up big specialist centres in Bucharest and regional cities.

The current real estate infrastructure, dominated by modern offices, is a world apart from the typical high density cubicles from the past, enabling the highly qualified work force to deliver services and products at the highest standards of quality possible.

“Here at Fortech we have always considered the employees the main pillar of the company and consequently done everything in our power to create an excellent work environment for them. As demand for office spaces has been rising rapidly, we soon realized that we can only keep our offices at Western standards by investing in a modern building which can accommodate at least 500 specialists while providing each of them with ample space. Spacious offices for 5 to 10 people, well equipped meeting rooms, a large cafeteria, areas for fun (terrace, table tennis room, etc), and generous parking space will make of our building one of the best in Cluj-Napoca.”
Calin Vaduva, CEO

All in all, signs and facts combine to encourage any company in need of long term partners for software development projects to look with confidence toward Romania.

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