A short overview of the Romanian market for software development

Software engineering in Romania. A strong market, steadily growing. Some big players giving the trends and high pressure from Western Europe to "steal" some good professional.
I don't have exact figures, but I expect that the overall picture is not very far away from reality.

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Overall potential of market

There are like 10 universities which can train software developers with an adequate quality of know-how.
The average number of graduates is somewhere about 200.
Multiplied with about 15 years, you have about 30000 graduates with relevant degrees. Out of these, let's take out about 15% which went in sales, teaching or simply dropped out the careers in IT and we can consider about 25.0000 graduates who are relevant for the market. Add to this 5 to 10 thousands coming from other specialties or older engineers and we are speaking about 35.000 engineers currently in Romania.
I repeat, this is a rough estimation.

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Main technologies

There are a few main trends followed in Romania. Main one is development of enterprise applications for large companies. These are mainly ERP or similar applications and have been the main trigger for growing the software development market in the late 90's and early 2000's. The reason for starting with this was that the costs of development were reasonable low and distance short enough to compete with India or similar locations. A few thousands developers, using Java, C++, some scripting are the basis for this branch.
Some international companies established their local branches in Romania around 2000. Some of them went in database related development (e.g. Oracle, Mind), some in embedded and telecom (Alcatel, Siemens VDO-now Continental, Motorola - now Freescale, later Infineon, Continental, Microchip, Autoliv, Hella, IXIA, recently Intel), some in development centers based on acquisitions (see Adobe Romania, Amazon Romania), others in customer centers (like HP, Microsoft, IBM, Oracle again). Nevertheless, there are some companies which are running their business with a smaller number of employees, based on niches, like Route66, Oce and others. These are not trend setters for the market, but they increase, from time to time, the payment on local markets. Last, but not least, there is a fairly decent market for antivirus, based on Bitdefender, RAV, than
new established branches of AVG, Comodo, which employ a significant number of developers and are pretty successful on the global market. Bitdefender is a trend setter
Besides the companies which develop their own products, there are the so-called near-shore development offices, which supply the right cost for the external services from Western Europe and US.
The most famous are IP Devel (meanwhile bought by Addecco and afterwards Enea), ITC Networks (they were quite successful with contract for Nortel), Pentalog, Endava, Arobs. They have a wide range of activities, from Java, C++ to C# and embedded. These companies usually have great networking in universities and local market and they can employ quickly a significant number of developers. Nevertheless, it seems that they are also able to pay a little extra compared to market median. Business as usual ;)
One special niche is verification and validation for chip designs, with a few players located mostly in Bucharest and Iasi. Iasi has a long history in chip verification and validation, based on collaboration with some Israelian businessmen.


Fluctuation

The dynamics of the workforce is quite high and the stability of employees is below the European average. The fluctuation has been reduced in the last 3 years, after the crisis. Anyway, this is not comparable in any terms with Indian market. The average period for stability in a job I consider to be 3-4 years, which is anyway acceptable for any cycle of development.

The engineers are looking more and more to their development path and it is less likely to grab a limited time contract than an internal position. This trend became more evident after 2009. Nevertheless, there are persons who appreciate an excellent wage and disregard the rest of environment. They are usually in the first 5 years of their career
The pressure on the market is quite high and coming from three or four direction.

First interesting and objective thing is that the history of software engineering in large scale is starting somewhere after '95. Nowadays, there are very few of the starters, mainly due to emigration reasons. The are a 3 waves of emigration: before 2000,  2003-2004 and 2010 onwards. Crisis pushed some of them to emigrate, as well as the political system. Romania has reasonable number of graduates in technical fields, but this is not covering immediate the leavings due to missing experience of the fresh graduates. Having the work permit issue easily to be solved by being part of EU, Romania quickly become a preferred market for agencies in Western Europe. They can place good candidates for the jobs available in Germany, UK, Netherlands, Belgium, Ireland, France. Romanians speak good English and/or French, sometimes even German.

Another pressure is given by locating offices of foreign companies in Romania. Last example is Intel, who placed a local branch of their Software and Services Group. As always, they needed experienced developers to start activities and therefore recruited from competition. You can find software developers with relevant 10+ yrs experience only in the big cities: Bucuresti, Timisoara, Iasi, Cluj. There is the second wave of cities, with good technical universities, where there are less engineers, but good potential:  Craiova, Oradea, Sibiu, Suceava, Targu Mures. So, the number of experienced engineers is high, but not high enough for the potential contracts to be covered.

Third point of pressure is coming from existing business who grow due to crisis. There are many companies who extend their operations in Romania to match the cost pressure they have in their home market. Having a location somewhere nearby their major hub of development, it is easier to decrease development costs by mixing the teams. It is actually what Pentalog is proposing as an external contractor: local + low cost = right cost. This proximity advantage is valid also for other industries. See this article.

The last fact which somehow influencing is that studying abroad has become a trend. Having a master or a scholarship in Western Europe is very accessible and lots of good students are following this opportunity. Some of them return in Romania, some stay in the countries they studied.

Competitive advantages of Romanian market

I will just list now, what I see as competitive advantages for the moment. More about each of them in other posts.
1. There are enough competencies to start about any business in Romania, from customer centers to development hubs. IBM, as well as Intel, were able to start businesses in Romania during 2011.
2. There are enough universities to generate a reasonable number of engineers to match the market increase.
3. The mobility of the developers is high and they are willing to relocate from one city to another.
4. Romania is a market of 20 millions inhabitants, which can ensure the right size of the employment market.
5. Romanians speak fairly good foreign languages and they are easily adaptable to foreign cultures.
6. The workers from Eastern Europe could be attracted to run local offices.
7. The timezone is matching with all Western Europe business hours and big cities from Europe can be accessed within the same day for business meetings.

That's it for the moment. I am looking forward for opinions related to my short analysis. This is generated from my personal experience, articles from local newspapers, analysis of jobs available on Romanian sites and LinkedIn and other information from the market.

More about where to start an office in Romania, how to establish a decent hiring plan and more on the market trends, in later articles, published on www.CarteNoua.com