Nearshore Romania: IT Market Pros, Cons, Salaries & Insights

Elen Muradian

Last updated on December 24, 2024 | 17 min read

BusinessEastern EuropeOutsourcingSoftware development

• Romania offers skilled IT professionals, competitive costs, and tax incentives, making it a top nearshoring destination in Eastern Europe.
• Nearshoring to Romania provides cost savings of up to 45% compared to Western markets, with a strong alignment in business hours.

Nearshoring, the practice of outsourcing business or IT processes to a nearby country, has gained significant traction in today’s globalized economy. By focusing on geographic, temporal, and cultural proximity, nearshoring offers distinct advantages over traditional outsourcing. Businesses can achieve streamlined communication, reduced travel costs, and more effective collaboration with partners operating in the same or similar time zones. This makes nearshoring an attractive model for companies seeking to optimize operational efficiency while maintaining close oversight of their projects.

Romania has emerged as a prominent nearshoring destination in Europe, consistently drawing attention from global companies. The country’s reputation is bolstered by an 86% increase in projects funded by foreign direct investment, placing it among Europe’s top 15 investment destinations. Romania’s skilled workforce, competitive salaries, and strong academic background in the IT field make it an appealing choice for nearshoring. Additionally, its EU membership provides economic stability, while its geographical location ensures easy access for European businesses.

Major global players like Accenture, Adobe, Amazon, and Microsoft have established significant operations in Romania, further validating the country’s nearshoring potential. Accenture employs over 4000 IT professionals across several Romanian cities, while Adobe hosts its largest R&D center in the EMEA region in Bucharest. Amazon continues to expand its footprint with a recently launched corporate office in Iași, and Microsoft actively fosters innovation through scholarships and technical programs. These investments underscore Romania’s ability to meet diverse technological needs across industries, from cloud computing to big data.

For businesses considering nearshoring, Romania offers the perfect blend of technical expertise, cost-effectiveness, and accessibility. Whether for startups seeking agile solutions or large enterprises needing robust IT support, the Romanian IT market is well-positioned to deliver exceptional results. This article will explore the strengths and challenges of nearshoring in Romania, providing insights into salaries, market trends, and considerations for businesses aiming to leverage the country’s tech ecosystem.

IT market overview

Romania’s IT market continues to grow steadily, with its Information and Communications Technology (ICT) sector expanding at an annual rate of 3.7%. By 2026, the sector’s total value is projected to exceed $9 billion, reflecting its importance as a key driver of the national economy. Contributing 6% to the GDP, Romania’s IT industry has earned its place among the top 20 globally for software development. The IT services market alone is forecast to reach a volume of $1.8 million by 2029.

Investment in Romania’s technology sector has surged, supported by venture capital (VC) funding that reached $390 million in 2022 and added another $330 million in 2023. Bucharest and Cluj-Napoca are bustling tech hubs, hosting thriving ecosystems, including over 7,900 IT companies and 1,600 startups. Supported by more than 100 incubators and accelerators, these startups drive innovation across IT&C, media, fintech, and gaming sectors. Romania also boasts 3 unicorns—UiPath, eMAG, and MultiverseX—underscoring its growing global presence.

Romania offers a skilled and competitive talent pool of almost 120000 software engineers proficient in languages like Java, Python, and JavaScript. The country also ranks in the global top 6 for certified IT specialists per capita, with English proficiency placing it among the global top 15. This talent pipeline is continually replenished by 5 major technical universities and 59 domain-specific institutions.

Romanian IT companies are highly proficient in custom software development, wireless telecommunications, and IT consulting. The adoption of emerging technologies is robust, with Romanian firms leading Europe in Internet of Things (IoT) integration and excelling in Big Data, AI, and virtual reality. This alignment with European digital trends and local innovation highlights Romania’s position as a competitive nearshoring destination for businesses seeking high-quality IT solutions.

Romania vs other Eastern European IT destinations

When evaluating Romania against other Eastern European IT outsourcing destinations, several factors come into play, including talent pool size, language proficiency, tax structures, and prevalent programming skills.

Romania vs. Poland

Poland stands as a formidable competitor in the Eastern European IT sector. With a substantial talent pool of over 400000 ICT specialists, approximately 40% are engaged in IT outsourcing. Polish developers excel in backend programming languages such as Java, Python, PHP, and C#, and are also proficient in JavaScript, Ruby, and Shell scripting.

In terms of English proficiency, Poland ranks higher than Romania, enhancing communication with international clients. However, Poland’s tax regime includes a corporate income tax (CIT) rate of 19% and a personal income tax (PIT) rate that reaches up to 36%. In contrast, Romania offers a more favorable tax environment with a flat 10% rate for both CIT and PIT.

Romania vs. Ukraine

Ukraine presents a larger IT talent pool compared to Romania, with over 300000 ICT professionals. Ukrainian developers are skilled in key programming languages such as JavaScript, Java, C#, Python, and PHP. While Ukraine’s IT industry remains robust, Romania boasts a higher number of tech companies, with approximately 7000 compared to Ukraine’s 4000. Additionally, Romanian developers generally exhibit higher English proficiency, facilitating smoother collaboration with international partners. However, as of late 2024, the geopolitical situation in Ukraine is unstable; thus, we discourage clients from choosing that region.

Romania vs. Czech Republic

The Czech Republic’s IT sector expertises in Swift, alongside proficiency in Python, Java, JavaScript, and C#. The Czech tax system imposes a CIT rate of 15% and a progressive PIT rate ranging from 15% to 23%. However, Czech developers rank lower in English proficiency compared to their Romanian counterparts, which may impact communication in international projects. Additionally, the Czech market is overly saturated by companies from Germany, which drives the local rates up.

Romania vs. Bulgaria

Bulgaria’s IT sector mirrors Romania’s in terms of popular programming languages, including C#, JavaScript, Java, and Python. Bulgarian developers are close behind Romania in English proficiency. Bulgaria offers a competitive tax environment with a flat 10% rate for both corporate and personal income taxes. However, Bulgaria’s talent pool is smaller, with approximately 70000 ICT specialists.

Romania vs. Slovakia

Slovakia’s IT sector comprises around 13000 developers, recognized for their skills in Python, PHP, Microsoft ASP.NET, and Node.js. Slovak developers also rank among the top 20 globally in English proficiency. The number of IT companies in Slovakia is lower compared to Romania, slightly over 4000 firms. Despite incentives like a 200% R&D expense deduction, Slovakia’s CIT rate stands at 21%, which is higher than Romania’s 10% rate.

Pros of nearshoring in Romania

Skilled and abundant talent pool

Romania is a hub of highly skilled IT professionals, boasting over 202000 certified software engineers in 2024, proficient in top programming languages like Java, Python, and JavaScript, alongside expertise in frontend frameworks such as React and Angular. Ranked among the global top 6 for IT certifications per capita, Romanian developers bring not only technical excellence but also strong English proficiency, placing the country in the global top 15. The steady influx of talent, fueled by 5 prominent technical universities and 59 specialized institutions, adds approximately 7000 new ICT graduates annually.

Proximity to Western Europe

Located just a few hours from major European capitals, Romania offers seamless collaboration opportunities due to minimal time zone differences. This proximity ensures real-time communication, enabling quick project iterations and effective team management. Romanian developers are known for their consultative approach, adopting agile methodologies and delivering high-quality results, often exceeding client expectations.

Thriving tech infrastructure

Romania’s tech ecosystem is flourishing, with over 7900 IT companies and 1600 startups supported by more than 100 incubators and accelerators. Innovation hubs like Bucharest and Cluj-Napoca are magnets for investment, driving advancements in IT&C, fintech, media, and gaming. The country is home to 3 unicorns—UiPath, eMAG, and MultiverseX—highlighting its status as a leader in technology development.

EU-compliant and secure business environment

Romania, as an EU member, adheres to stringent data protection regulations like GDPR, ensuring a secure and compliant framework for handling sensitive information. Tech talent here is typically more aware of GDPR and other technical policies. The country’s geopolitical stability and adherence to EU standards provide a trustworthy ecosystem for nearshoring operations.

Cost-effective solutions and high ROI

While offering world-class talent and infrastructure, Romania maintains competitive pricing for software development services, making it a cost-effective choice for nearshoring. High ROI is evident, with large companies achieving a 9% profit margin in the IT services sector and businesses with foreign capital dominating 73% of the market.

Salaries

Having discussed the competitive costs and high ROI, we now turn our attention to salaries. One of the most compelling reasons for nearshoring IT services in Romania the cost efficiency it offers. Businesses can save between 30% and 45% on salaries compared to hiring equivalent talent in the US. This significant reduction in labor costs allows companies to allocate resources to other critical areas, such as innovation or expanding their operations.

The gross annual wages of senior programmers illustrate the stark contrast in remuneration between the 2 countries. While maintaining high-quality output, Romanian professionals offer a more budget-friendly alternative, making nearshoring a strategic choice for cost-conscious companies.

Below is the chart that can help you compare the average salary in the US and Romania, to help you better understand the actual financial benefit of nearshoring in Romania.

Cons of nearshoring in Romania

Changing legislation

One of the potential challenges when nearshoring to Romania is the evolving legislative environment. The country offers favorable tax policies: 0% profit tax on new and specific technological equipment and R&D 0% profit tax for the first 10 years of activity (exclusively R&D and innovation or related activities). However, Romania frequently updates its fiscal regulations, requiring businesses to stay informed. Recent changes in 2024, including updates to the Fiscal Code, local VAT rates, and the RO e-invoice system, highlight the importance of monitoring these developments.

For companies expanding their operations, legal compliance becomes a crucial factor. Consulting with legal professionals familiar with Romanian laws is essential to navigate tax obligations, documentation, and regional requirements effectively. While these updates can be managed, they require proactive oversight and may add complexity to operating in Romania.

Competitive market dynamics

Romania’s booming tech ecosystem also presents a challenge: intense competition for top talent. With a growing number of global companies establishing hubs in Romania, demand for skilled developers is high. While the talent pool is abundant, securing experienced professionals for niche roles can be time-consuming and costly. This dynamic may require businesses to offer competitive salaries and benefits to attract the best candidates, potentially reducing the overall cost-saving advantage of nearshoring.

Unsuitable nearshoring approaches

Choosing the wrong nearshoring model or partner can lead to challenges. For instance, IT outsourcing may work for short-term projects, but it comes with potential downsides such as limited team loyalty, reduced code quality, and potential buy-out fees. Businesses with long-term goals might find hiring in-house developers through employer of record (EoR) services or dedicated IT recruitment a more sustainable approach.

However, finding the right recruitment provider can be difficult. It’s important to partner with firms experienced in tech hiring, transparent in their pricing, and capable of meeting deadlines. Poor communication or mismatched expectations can lead to setbacks, emphasizing the need for diligence in selecting a partner.

DevsData LLC — your nearshoring partner In Romania

Website: https://devsdata.com/
Company size: ~60 employees
Founded: 2016

DevsData LLC is a trusted software development and IT recruitment agency with over 8 years of expertise, providing tailored solutions for businesses seeking nearshoring options. With a client base that spans Europe, North America, and Asia, the company has established itself as a reliable partner for firms aiming to streamline their operations. Renowned for excellence, DevsData LLC boasts a 5/5 rating on platforms such as Clutch and GoodFirms, underscoring its commitment to client satisfaction.

A key differentiator for DevsData LLC is its dual focus. The company excels in custom software development, with capabilities in cutting-edge fields like artificial intelligence, machine learning, and data science. Their portfolio of over 100 projects includes scalable backend systems and dynamic web applications for industries such as healthcare, eCommerce, and finance. Clients range from startups to large enterprises, including well-known names like Skycatch, Cubus, and Novartis.

Complementing its development services, DevsData LLC offers specialized IT recruitment solutions, addressing one of the most significant challenges of nearshoring—securing top talent. Their recruitment process is led by senior engineers, ensuring candidates meet stringent technical and soft-skill requirements. In a recent project for a financial services firm, DevsData LLC demonstrated its ability to source exceptional talent from regions including Eastern Europe, a notable nearshoring hub. Initially tasked with hiring one developer, their performance inspired the client to hire 4 developers and establish a new engineering office. More about this case here.

By integrating expertise in software development and recruitment, DevsData LLC provides businesses with a comprehensive approach to nearshoring. Their adaptability, technical precision, and client-oriented ethos make them an ideal partner for companies looking to leverage Romania’s nearshoring advantages and beyond.

Bottom line

Nearshoring IT services to Romania offers a strategic advantage for businesses seeking skilled talent at competitive costs. With a thriving tech industry, Romania boasts a workforce of over 200,000 IT professionals, many of whom are highly educated and proficient in English. Companies can achieve significant cost savings, with salaries often 30% to 45% lower than those in Western Europe or North America, without compromising on quality. Furthermore, the country’s cultural alignment with Western business practices and its favorable time zone make collaboration seamless for international teams.

However, nearshoring to Romania also comes with challenges. The country’s frequently changing legislation can complicate tax and operational planning for foreign businesses. Staying updated on regulatory shifts, such as recent changes to the Fiscal Code and VAT rates, is crucial for smooth operations. Additionally, choosing the right nearshoring approach is vital. While IT outsourcing can be suitable for short-term projects, recruitment or employer of record (EoR) services are often better for long-term goals, ensuring loyalty and consistent code quality. Partnering with experienced recruitment providers who excel in the tech sphere and understand local market dynamics is key to overcoming these hurdles.

For businesses seeking to establish a nearshore presence in Romania, DevsData LLC provides an exceptional blend of IT recruitment and legal assistance. With 8 years of experience, the company has a proven track record of matching global enterprises with top-tier Romanian tech talent. Their extensive database of over 65000 vetted IT professionals ensures that clients find candidates who meet their specific needs. Operating on a success-based model with no upfront fees, DevsData LLC offers a transparent, low-risk solution for companies entering the Romanian market.

By combining global reach, personalized service, and rigorous candidate screening, DevsData LLC stands out as a trusted partner for nearshoring IT talent to Romania, making the process efficient and results-driven for businesses of all sizes.

Contact DevsData LLC via email at general@devsdata.com or research their services more at www.devsdata.com.

Address:
DevsData IT Recruitment Agency Bucharest
Splaiul Unirii 160,
030133, Bucharest, Romania
romania@devsdata.com Copy email

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Elen Muradian Copywriter and Marketer

As a versatile and accomplished writer with 3+ years of experience in digital media publishing, Elen is skilled in crafting engaging content across various subjects, styles, and media. In her previous experience, Elen worked closely with editorial teams and visual artists to bring content to life. She always seeks opportunities for personal and professional growth and is eager to contribute to the writing field.

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