Posts Tagged ‘Romania’

Brazilian IT outsourcing group opens third center in Romania

October 23rd, 2015

The local subsidiary of the Brazilian IT outsourcing group Stefanini will open its third IT support center in Romania next month. This will be located in Targu-Mures, central Romania, and will hire about 50 people in one year, according to the company.outsourcing10

Stefanini already has an IT support center in Bucharest, which employs 1,000, and another center in Sibiu, with a team of 250. The new IT support center in Targu Mures should reach 100 employees in two years. The company has already started recruiting people who speak German and Hungarian for the “service desk analyst” position.

Romania is the fourth most attractive market in the world for investors in outsourcing, according to a ranking carried out by Cushman & Wakefield’s this year.

Over 50,000 Romanians are currently working in the local outsourcing companies, according to US company CGS.


Agriculture, IT and outsourcing to produce largest FDI in Romania this year

January 14th, 2014

Agriculture, IT and outsourcing services are estimated to be the main domains of interest for foreign investors in Romania in 2014, according to Bogdan Badea, managing director of Accace Romania quoted by Actmedia.outsourcing51

The main argument for agriculture is the major interest of foreign investment funds in buying land and farms. Land in Romania presents major advantages for investors, due to the fact that there are large land areas which can be included in the bio area, which raises the prices of final products,” said Bogdan Badea, managing director of Accace Romania. Agriculture will attract most investments.

The IT triggers a rising demand or program development, where Romania is seen as one of the most mature markets for externalization, Actmedia states, quoting a press release of Accace. “One of the factors which has attracted companies of late is the development of the local externalization market.

The reason is simple: suppliers of externalization services held companies and investors by the advantageous quality-price ratio of services offered, simplifying internal processes and increasing the investor’s confidence in the local market by reducing the negative impact of fiscal unpredictability and taking over administrative burdens,” the Accace press release shows.


Expanding IT companies aims and Romania

April 5th, 2010

While the company Wipro announced in March a new investment in Brazil, followed by a research center in Australia, the HCL Technologies has opened an office in Dubai Regional West Asia and Genepact announced its expansion in Romania.
Intensifying activity is visible not only to Indian companies but also giants like Microsoft or deleted, which have expanded operations in India with new IT services or facilities for research and development, notes the publication.

“In recent months we saw an acceleration of activity in this area, and companies start to invest in anticipation of economic recovery,” says operations director of outsourcing advisory company TPI Indian, Sid A. Well.

This trend applies to all segments of IT.

“Companies exploring new growth engines and new geographical areas, there is a clear need to be close to the customer. So there will be expansion in all segments IT services, research and development, relocation,” said praveen Bhadada, manager of Zinnov Management Consulting.

Genpact announced last week that opens second office in Cluj until July, expansion of operations in Romania as part of the company’s U.S. growth strategy in Eastern Europe.

Today, Genpact Romania providing finance and accounting, procurement, IT support and customer service to over 20 multinational companies from Western Europe and the U.S..


Romania rises as outsourcing target

March 1st, 2010

High language and IT skills, coupled with low costs, makes Romania a new haven for outsourcing, such as call centres, help desks, IT and payroll. Analysis by Ana Maria Nitoi

The global economic turmoil has allowed Romania to surface as a promising destination for outsourcing – including IT services and support, contact centres and back-office support.
In financial attractiveness, people skills and the business environment, a 2009 AT Kearney Global Services Location Index shows that Romania has climbed from the 39th to 19th place last year as an outsourcing location.
Meanwhile Europe’s leaders, including Poland, the Czech Republic and Hungary, have fallen as increasing costs for companies erode their competitiveness.
Rough estimates of the outsourcing industry players show that about 50,000 people are employed in this sector in Bucharest and a further 50,000 outside of the capital. Three of the largest outsourcers, Genpact (with 1,500 people), Wipro (about 800 employees) and Teleperformance (500 people) have built in Romania their largest operations in central and eastern Europe.
These three firms offer mainly business process outsourcing (BPO) services to corporate clients. Also TechTeam, WNS, XL World, Computer Generated Solutions and Accenture together employ around 1,500 in Romania.
Big employers in the outsourcing industry include global corporations that have set up international service centres in Romania because of the cheap labour force. The most significant are Hewlett-Packard (HP), which is employing about 2,000 and will hire another 600 this year, Oracle, Bosch and Unicredit.
IT outsourcers also represent a big chunk of the local outsourcing industry, considering Romanians’ good technical skills. Capgemini, IBM, Bit Solutions, IT Six Global Services, TotalSoft, iQuest, Dell Perot Systems, Intel, EA Sports, UTI, Wipro, Intrarom, IIRUC Service (part of Raiffeisen Informatik) and Xerox are active local companies in software and hardware outsourcing, for both the domestic and international market.
In human resources, Romanians have excellent natural ability to speak foreign languages, low labour costs compared to other EU states, job commitment and a high level of education in engineering and economics. Plus they rarely call in sick.
“The employee absence rate in Romania is one of the lowest worldwide,” says Giorgio Modesti, managing director at Teleperformance Romania, a market leader in contact centre management.
The local outsourcers mainly target European customers – which makes Romania’s time zone more suited compared to India, China or Malaysia, the world’s top three outsourcing markets. Some focus on the US market and few on Romania.
Also attractive are the country’s good flight connectivity with European capitals, its good level of IT infrastructure, good electricity infrastructure and stability provided by EU membership. “Romania is a wonderful place for outsourcing,” says Modesti.

Language opportunity
In languages, English, French, Italian and Spanish are the easiest to find, but German, Russian, Hungarian, Greek, Hebrew and even Scandinavian languages and Dutch are available.
“Three years ago when we decided to expand to Romania and we looked at new locations to set up, we found Romania the best in Europe in terms of the combination between a large qualified labour pool and low labour cost,” says Pascal Henssen, chief operating officer (COO) at Genpact Europe.
There are many companies who are now looking at building a captive firm to offer outsourcing services within their own corporation or a BPO centre.
“Poland continues to be the first choice in eastern Europe because it is the biggest,” says Gilles Courtat, CEO at Capgemini Romania. “Ukraine and Russia are not good choices because of political instability and high corruption and the Czech Republic and Slovakia are considered for small or niche businesses, while Hungary’s tax system does not allow companies to be more aggressive at cost level.”
Courtat believes some platforms in Slovakia will soon relocate to Romania as the outsourcing market here is becoming more attractive.
Meanwhile Vivek Bakshi, country manager at Wipro Romania, believes that Romania and Poland complement each other. “While Poland is better in German and Russian language skills, Romania is better in Latin-based languages,” he says.

Downside lack
Romania has few disadvantages. “The country’s reputation of having the highest corruption index in the EU is considered a problem by some of our customers,” says Genpact’s Henssen. “Romania is perceived further behind other European locations, such as Poland and the Czech Republic, where most of our competitors are located – but I do not believe this perception is justified.”
Another disadvantage is that outsourcing activity is not recognised as a distinct business by the Romanian state. “There is no CAEN code for this type of activity, so that we have to fit in one of the existing activities recognised by Romania,” says Wipro’s Bakshi.
There are no incentives available for investments in this industry – one which requires high employment. Outsourcers in Romania are some of the few firms continuing to recruit and this is crucial in times of economic downturn and an 8.1 per cent jobless rate.
Currently Bakshi is making efforts to unite all outsourcing companies in Romania to create a lobby association.
In Romania companies are focusing on expanding their customer base without providing good customer services for existing clients. Companies do not consider customer service as a marketing tool, but a cost.
“It is enough to enter a supermarket and look at the products which do not offer helplines for customers to learn how to use the products or to make a complaint,” says Giorgio Modesti. “This is proof of the market’s immaturity.”
All players agree that the outsourcing sector is underdeveloped with only a few companies present locally. This can only mean that there is enough room to grow. On the other hand, local companies are not open yet to the concept of outsourcing different processes to specialised companies. This is the reason why some of the largest local players in outsourcing, such as Wipro and Genpact, are not offering their services to the Romanian market.
“The situation can be found across Europe and the maximum interest is coming now from Germany, followed by France,” says Bakshi. “What we see now in Europe, we saw in the USA ten years ago.”

In-house or out-source dilemma
The economic crisis has determined companies first to reduce their costs and then to revise their internal processes to make the businesses run more efficiently. Out-sourcing non-core activities has advantages, such as companies being able to cut expenses and better control their costs. But even though outsourcers have increased their number of clients in the last 18 months, the volume per company has dropped because all economic sectors have contracted.
The average cost reduction is between 15 and 20 per cent for a contract of between three and five years. The longer the period, the smaller the monthly installment to be paid to the outsourcer. “We guarantee a 25 per cent cost cut for a minimum three year contract,” says Razvan Botezatu, strategic accounts operations manager at Xerox. About 170 employees of the total 250 working for Xerox Romania are involved in providing outsourcing services to other companies in Romania. “About 150 of them work for the client at the client’s premises,” says Botezatu. Telecom companies, utility firms and banks prefer to outsource to Xerox their office printing equipment and maintenance for their country network.
The US giant provides office equipment, supplies and maintenance, but it can also print documents, such as bills and bank statements.
Now Xerox is focusing on increasing its revenues from providing outsourcing services. IBM Romania has the same target, with the company providing outsourcing services for customers’ IT infrastructure and technical support.
“Multinational companies with subsidiaries in Romania are more inclined to out-source their IT infrastructure rather than Romanian-owned firms,” says Dania Selaru, country global technology services manager at IBM Romania. “We aim to optimise our territorial network and promote our outsourcing services especially to Romanian companies.”
Starting at the end of January 2009, Romtelecom has transferred 400 of its employees to Ericsson, which took over part of the telecom company’s infrastructure maintenance services.
“We have examined the processes, the methods, the instruments and the experience of our partner, but also the social aspects of this deal, trying to find an advantageous solution for our employees,” said Romtelecom’s CEO Yorgos Ioannidis. The company succeeded in making a smooth transfer of its people to Ericsson, who offered Romtelecom a considerable cost reduction.
This was not the case with Alcatel Lucent in Timisoara, which has faced protests from its 475 employees. The staff were transferred to Wipro (455 people) and HP (20 employees), after Alcatel outsourced its non-core departments such as IT support, equipment maintenance, procurement and accountancy. “The concept of out-sourcing is so new in Romania that people did not understand what this deal meant and they were afraid to lose their jobs,” says their new employer, Wipro.
The Indian-based company has insured people’s jobs for a 18 month period and decided not to affect their salaries as part of the transfer deal from Alcatel in Timisoara. “For Alcatel these people meant costs, while for me they represent profit-generating people, since their activity is my core business and they have the possibility of building a career inside Wipro, unlike in Alcatel,” says Bakshi.
Timisoara is now a strategic location for Wipro and the company plans to expand to offer services to other customers. Wipro has another 350 employees working in Bucharest for about ten different companies offering 16 languages services including technical support, help desk, procurement, HR operations such as payroll, software development, accountancy and logistics management.
Last year Capgemini chose Iasi to locate its second office in Romania after Bucharest. Now the company employs 45 people in Iasi and plans to hire up to 250 in IT help desk. “There are many young graduates in Iasi with a good level of education capable of speaking different languages willing to work for wages lower than in Bucharest,” says Capgemini Romania’s CEO. “In addition the attrition rate is much lower than in Bucharest.” About 80 people work for Capgemini in Bucharest.

Public opportunities
For Capgemini, the public sector is one of the most active sectors in Romania during the economic crisis. “It is especially interesting because of the EU funds available,” says Gilles Courtat.
Greek-owned Intrarom is focusing its attention mainly on public projects, but is less confident that there will be many IT projects tendered by Romanian authorities this year. “2010 seems to be more difficult than 2009, considering the very few governmental programmes expected to be tendered, regardless of the availability of EU funds available for the IT sector and the public sector’s IT needs,” says Nikos Doukakis, CEO at Intrarom. The company focuses on large IT projects and often cooperates with software developer and customiser Siveco. The two companies won in 2008 one of the most costly IT projects tendered by the Romanian state, amounting to 120 million Euro, to equip IT labs in 8,200 schools.
One of Intrarom’s largest ongoing projects is worth about 11 million Euro and targets the implementation of a data base – called a Single Information Network System (SINS) – for the Ministry of the Interior, as part of Romania’s preparation process to join the Schengen zone in March 2011. “We have to make Romania’s criminal record data base compatible with the similar data bases in the rest of the EU members states,” says Doukakis. About 40 per cent of the company’s 80 million Euro turnover last year was made from IT projects with the Romanian state.
Even though the company that he runs offers outsourcing services, Doukakis does not believe in the benefits of outsourcing on the long-term. “On the short term out-sourcing seems advantageous because it can cut costs,” says Intrarom’s CEO.
The public sector has also become attractive for a company such as printing equipment manufacturer Xerox in the last year, following a new law which forbids public authorities and state-owned companies to purchase IT equipment. “The needs continue to exist, so these entities have no choice but to outsource their IT hardware, software and maintenance services,” says Xerox’s Botezatu.
Romanian-owned mixed interest group UTI is traditionally working closely with public authorities. About 60 per cent of its turnover is made from contracts with public institutions and about 20 per cent comes from outsourcing services, mainly from IT products and services and facility management.
The company also provides city traffic systems and maintenance work for Galati, Craiova, Braila and Bucharest and security systems and required maintenance services. UTI provides IT infrastructure and technical support, as well as document processing and electronic archiving for several city halls. Recently Constanta Port outsourced to UTI for 20 years its telecommunications infrastructure and maintenance services. About 1,300 employees of the group’s total 5,000 are involved in providing outsourcing services.
“Foreign companies are interested to create consortia together with UTI, but we generally tend to play alone if we can offer all services required inside the group, especially when it comes to outsourced activities,” says Tudor Popescu, executive manager at UTI Systems. “The local IT outsourcing market is quite small and the Romanian state is the main investor, which is why we are aiming to extend our services abroad.”
Most IT projects that can be financed with EU funds require a small financial participation from state authorities of around two per cent. “Last year, city halls all over the country fought for the available EU funding creating viable financing projects to attract these funds,” says UTI’s Tudor Popescu. He believes that outsourcing is not always the best solution and if a company has an efficient in-house team, perhaps it is better to be kept.

Payroll and IT rule
IT and payroll are the most widely outsourced services. “IT services in a company where IT is not a core-business is best to be outsourced especially in large corporations, because this is a domain where hi-tech is essential and no company from a different industry can afford the necessary investments to keep up with the latest technology and innovations,” says Anca Crahmaliuc, marketing and communication manager at software developer, customiser and integrator Siveco Romania. The company does not focus on offering outsourcing, but has had some contracts in the past where Siveco provided software maintenance remotely for HP Germany.
Market estimations show that the IT sector has dropped on average by 20 per cent last year compared to 2008 and may register an increase of up to ten per cent in 2010 compared to the previous year. “I believe that Romania’s IT sector in 2010 will come back to 2007’s level,” says Crahmaliuc.
Market sources told The Diplomat that Magyar Telekom is in negotiations to take-over Siveco, as Hungary’s main fixed-line telecom firm aims to provide enhanced IT services. But Siveco’s marketing manager denied the deal was in play. When asked whether the software provider is in sale discussion with other companies, Crahmaliuc said: “I do not have such information.” The company registered last year a 49 million Euro turnover, down from 2008’s 66.55 million Euro (90 mill USD), according to its website.
Primarily a software developer, TotalSoft makes half of its turnover providing out-sourcing and focuses on IT and payroll. Targeting large companies and promoting its own software Charisma, TotalSoft processes 40,000 salaries every month for big names in Romania, including BRD – Groupe Societe Generale, Unicredit Tiriac, Butan Gas Romania, Zentiva, Philip Morris, Pfizer Romania and Arctic.
The firm is focused on expanding its payroll outsourced services outside Romania and is in negotiations to buy a company in Greece that has similar activities to TotalSoft. “Colonisation is what TotalSoft is doing now,” says Lucian Solcan, Charisma HR operational manager at TotalSoft. “The company has the advantage of forming a good reputation in Romania and local subsidiaries of international firms recommend us inside the group, which is how we have been able to expand to Serbia and are preparing the same move to Bulgaria.”
The company is currently developing software for Nokia gadgets and offers for ten years customised software development services for private medical clinic chain Medicover. “Outsourcing software development represents a bigger chunk in TotalSoft’s business,” says Bogdan Paduraru, software development director of TotalSoft.
Bit Solutions, an IT outsourcer targeting medium-size companies around Bucharest, has seen an increase in its activity during the crisis, mainly because companies wanted to rapidly cut their costs. But Florin Scarlat, general manager at Bit Solutions, says the company is confronted with two main problems.
“Either many of our possible customers do not understand what IT outsourcing is and believe it is the same as IT maintenance services or they want to hire us mainly to reduce costs on the short term, without considering to plan a development strategy for their IT infrastructure and services on the long term – which represents a main aspect of the outsourcing concept,” he says. “Local companies have an organisational culture typically Romanian, where usually the general manager is used to call the IT manager at any hour of the day or night every time his or her laptop crashes. If the IT department is outsourced, a manager cannot do that, which is why many local firms prefer to keep it in-house to have a better control.”
Working for global names such as Virgin Atlantic, Vodafone, HP, Aegon, Pinnacle and Volvo, iQuest offers outsourcing services such as IT solutions and consultancy for software solutions architecture, proof of concept, systems integration, performance benchmarking and testing.
“Diversification of our set of applications is a priority for us because it allows us to be innovative and meet the market needs,” says Cornelius Brody, CEO at iQuest.
Many believe that only large corporates outsource. But outsourcing is a solution for small businesses as well, because they want to develop, but may not have money to invest. For many businesses, cutting costs and increasing productivity is the only way to compete with the big companies. “It is important that small businesses regard outsourcing as a way to stay solvent and competitive, because doubling productivity while cutting costs by half helps everyone,” says iQuest’s Cornelius Brody.
Valerica Dragomir, executive director at the Association of Software Developers (ANIS), says that compared to the rest of the countries in the region, Romania has a large population of high-quality IT specialists. “This is how the slogan ‘Creative Talent. Technical Excellence’ was developed to accompany ‘RomaniaIT’ country brand, which was promoted by the Romanian authorities,” says Dragomir. She adds that before outsourcing processes, a company needs to first clarify all its internal activities and smooth the interaction between them, otherwise the outsourcing process is doomed for failure.
Located in Craiova, IT Six Global Services’s 81 employees are fully engaged in providing IT outsourcing services such as customised software development and testing and remote IT infrastructure management, IT consultancy and hosting for companies all over the world and from different business sectors such as telecom, transport, retail, eGovernment and pharma. “In addition to above the average expertise of Romanian IT specialists, local engineers also have a pro-active attitude in solving problems and improving processes and they are flexible in adapting to changes and are orientated towards innovation,” says Sorin Gavanescu, general manager at IT Six Global Services. “But if the cost does not drop by at least 30 to 40 per cent when outsourcing compared to the customer’s in-house cost, the competitive advantage disappears.”
A company focused 100 per cent on providing payroll and personnel administration outsourcing services is Romanian-owned PayLogic. The company is seeing benefits during this crisis and has increased the number of processed employees per month to 16,500 last year compared to 12,500 in 2008.
PayLogic has four offices outside Bucharest, in Timisoara, Medias, Sibiu and Cluj-Napoca and works for companies such as Mercedes-Benz Romania, Cetelem, Toyota Romania, Kronberg&Schumbert and Pioneer Romania.
The bad news is that the price per processed employee has dropped by 60 per cent in 2009 compared to the previous year.
“During the economic boom, companies were not cutting costs, amounting to a few 10,000s or 100,000s of Euros, such as outsourcing payroll, while they were registering incredible economic growth,” says Cristian Udrescu, CEO at PayLogic. “Last year the same firms have reorientated their strategy and outsourced such services because they can cut costs of a minimum 20 per cent for 100 processed employees and up to 50 per cent for 5,000 employees.”
PayLogic estimates that about 150,000 employees in Romania have wages calculated by specialised payroll companies.


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