by Jackie Bojor, CBA Associate in Bucharest, Romania
Romania is one of the most preferred near-shore locations, capitalizing on the solid education system, with a strong focus on IT and finance & accounting and, therefore, providing a steady, inexpensive and qualitative flow of skilled resources to meet the growing demand of SSC/ BPO entities.
Cultural compatibility and a large scale of foreign language skills, covering English, French, Spanish, Italian, German, Portuguese, Hungarian, Czech, Slovak, Bulgarian and Russian, provide a competitive edge to the Romanian work force.
The Romanian BPO market includes more than 250 companies that activates in the business service sector. More than 64,000 university graduates form the talent pool of the sector.
According to sector experts, the market of outsourcing and support services in Romania is estimated at over 1.5 billion EUR.
The Romanian outsourcing market has recorded a significant growth in the recent years. The Romanian BPO industry is consolidating its position as one of the leading outsourcing markets in Europe, due to the technical and language skills of the employees and the competitive labour costs.
The outsourcing sector in Romania is characterised by:
- good availability of qualified resources
- language proficiency
- low labour costs
- strong IT infrastructure
According to the Association of Business Service Leaders in Romania (ABSL), over 109,000 persons are employed in companies operating in the outsourcing sector, representing 1.3% of the Romanian working population. The Romanian market includes over 250 companies activating in the business service sector. According to ABSL, the average attrition rate in the business services sector in Romania is 17 - 23%.
The jobs created in the business services sector in Romania have recorded a Compound Annual Growth Rate of 33% during 2013 – 2016, according to ABSL.
The players active in the Romanian Business Process Management industry are characterised by continuous business process improvement, high quality of services, technological and process innovation and ability to meet the market new requirements.
The significant development of the private healthcare sector in Romania in the last years has had a positive influence on the growth of the BPO industry,
1. Main services and sectors
According to an ABSL and KPMG report in 2016 carried out by interviewing 36 outsourcing companies operating in Romania, the main sectors serviced are:
• banking, insurance, financial services: 16%
• technology and telecom: 15%
• industrial and consumer goods: 14%
• business and professional services: 13%
• consumer services (including media, retail, travel and leisure): 11%
• energy, utilities and basis materials: 11%
• healthcare: 8%
• public sector: 5%
• others (transportation, logistics, pharmaceutical, gaming and betting, airport management, automotive, audit etc): 7%
The clients of the domestic business services providers are mainly located in Western Europe and CEE, including Romania. Furthermore, the domestic business services providers have clients located in North America, South America, Middle East, Africa and Asia Pacific.
2. Recent new entries on the market
Romanian BPO sector attracts numerous foreign investment, both greenfield and crossborder M&A.
In regards to M&A, for example, global BPO player Telus International has acquired in 2012 CallPoint New Europe, a successful regional BPO provider with operations in the CEE region, including in Romania. CallPoint New Europe has been established in 2004.
NTT DATA Corporation has acquired in 2013 the local company specialised in providing near-shore IT services for international customers EBS Romania. With headquarters in Cluj Napoca (NW Romania), EBS has outsourcing experience in the
segments of software engineering, software testing, quality assurance and application management and support.
Several local BPO and call centers activate as independent players on the market and operate quite successfully, reaching turnovers of between 2.5 and 15 MEUR.
3. Expected evolution for next years
According to an ABSL and KPMG report in 2016, the 36 outsourcing companies operating in Romania that have participated at the survey have the following plans for the next two years:
- 19 companies have expansion plans (52.8%)
- 14 companies have expansion plans, combined with stabilisation and optimisation of current activities (38.9%)
- 2 companies have plans for stabilisation and optimisation of current activities (5.5%)
- 1 company has no plans to change its current activities (2.8%)
According to ABSL, the number of jobs in the business services sector in Romania is estimated to reach 200,000 by 2020.
Future legislative and fiscal changes are expected to support the growth of the outsourcing market in Romania:
- increased fiscal incentives
- flexibility in hiring and terminating labour contracts
- access to grants and subsidies
- increased government support
- decreased corporate and labour taxation
- facilities for headcount increasing
flexibility in arrangements for night shifts
4. Main players
Some of the most active BPO players in Romania are Genpact Romania, Computer Generated Solutions Romania, Accenture Services, Webhelp Romania, Wipro Technologies and WNS Global Services Romania. FRD Center has analysed their financial performance and activities.