IT outsourcing in Romania versus East Europe- an analysis using a fine-tooth comb
Season 1: Ukraine
There is a lot of buzz going on online, regarding the competition on the global IT outsourcing market between Romania and Ukraine, Poland, Bulgaria, Belarus, Moldova. But most of this buzz is sourcing from opinion leaders and organizations outside Romania.
If you are looking more towards North — East and the competition in IT outsourcing between Romania and Ukraine is a constant subject of our Ukraine companies. In Romania, this subject simply seems to not exist. Do we contemplate too much inside our yard? Are we not interested at all in our neighbors?
On the other side of the border, there are a lot of studies and articles debating every little point of advantage or disadvantage for the Romanian or Ukraine companies, some of those points being connected to globally recognized sources of information.
What about starting a new public and professional debate about the quality and the perspective of our industry, here in Romania, as compared to our neighbors. Because, before we contemplate toward the distant horizon, letʹs just start by looking around. Let us start analyzing the information going over it with a fine-tooth comb.
We gathered a lot of material, so this should be our first episode, the first part.
Ukraine, episode 1
Economic stability: Romania vs Ukraine
We will start with the basics: Romania has 238,397 square km and Ukraine has 603,628 km. The population difference is also impressive: 19,6 millions of Romanians vs 42 millions of Ukrainians.
When getting to the economic indicators, in 2018, Romania’s gross domestic product amounted to around 239.85 billion U.S. dollars, while, for the same year, Ukraine’s GDP was 130,83 billion U.S. dollars, as stated by World Bank.
Other notable difference would be the unemployment rate. In Ukraine, in 2018, it was 9.38 percent of the total labor force. While in Romania, it was merely 4.3 percent.
The World Bank created The ease of doing business score, where economies are ranked on their ease of doing business, from 1–190. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. More about the World bank procedure here https://www.doingbusiness.org/en/rankings
That was nice finding out that New Zealand is №1 country as regarding the ease of doing business, but we should be pleased with ranking Romania has 52. Going further, we found Ukraine at 72.
Another pleasant surprise was the good score Moldova has — 47 — and this number is a true reflection of the success we have with our AROBS office in Chișinău. AROBS Chișinău means today a thriving team of almost 100 talented software developers.
Let us get down to outsourcing in IT business
Software services and IT outsourcing are sophisticated businesses. It needs highly qualified people, with open culture environment and with an entrepreneurial approach.
We prefer to separate the information technology outsourcing (ITO) and business process outsourcing (BPO), each industry having specificities that should be analyzed from a separate perspective.
As regarding ITO, The Outsourcing Review comparison between Romania and Ukraine shows us that the IT headcount is 125.000 in Romania and 115.000 in Ukraine. Annually, there are 48000 young IT related fields graduated in Ukraine and 17000 in Romania. Other sources show that IT headcount is much larger in Ukraine. Please feel free to comment below the article if more consolidated information might be found.
Another interesting fact is the comparison between the salaries for IT professionals, that shows that hiring junior developers in Ukraine is cheaper — 600 US Dollars versus 900 in Romania. The amounts balance when looking at the middle developers’ salary, while seniors in Ukraine seem to make 3400 dollars a month — 2750 in Romania. The Lead level shows even more discrepant data: 4750 for Ukraine and 3300 for Romania.
What everybody knows in software services is that sophisticated and complex projects need expertise, and expertise is a matter of seniority.
The second part of the article will attack education, innovation, culture and internalization and the sensible subject of staff turnover.