Romania's tech sector breeds jobs

Romania’s tech industry is its most powerful economic performer. But it needs to attract more investment to keep the momentum.

Are there parallels between IT systems and politics? There’s an argument to be made that the old centralised control of the mainframe, planned economies and five-year plans were like Communism. Today’s cloud computing model, with its free movement of people and processes brings us closest to the ideal conditions for free-market capitalism, through perfect liquidity of labour and assets such as processing power, memory and storage.

No, hang on, maybe it’s the other way around. The concept of virtualisation goes back to the mainframe era. A VMware-inspired revolution has levelled the play field and empowered the people. But they’ve decided to chain themselves to work permanently with a glowing screen permanently in their face and Big Browser endlessly watching them. So, it’s not clear whether visualisation and the cloud have empowered us or enslaved us.

Opinion is similarly polarised about Romania’s tech industry, an economic flagship that creates more in GDP terms than any other sector. Whether its strength is rooted in its traditional planned economy or through the force of the free market is a moot point. Some say that its tradition of educating scientists and mathematicians has created the foundation for its strong IT growth. The reverse is probably more true, says analyst Dana Samson, IDC research manager. The fact that Romanians are literate, multilingual and more akin to western Europeans made this an attractive destination for outsourcers, with local and international companies constantly looking to recruit. As a result, salaries were driven up and Romania’s IT industry became a magnet for the best brains in the country. “Many of the IT specialists are self-taught or they learn and get experience while working,” says Samson.


Supporting role

Romania is popular destination for support centres for IT multinationals. More than 60,000 people work in centres belonging to the likes of HP, Microsoft, Genpact and Oracle. In the next five years, analysts predict another 150,000 jobs will go there in a country of 19 million inhabitants.

As a plethora of outsourcing centres opened across Romania - not just in Bucharest, but second-tier cities like Cluj, Timisoara, Iasi, Sibiu and Brasov, or even third-tier destinations such as Galati and Craiova - companies were forced to hire juniors with little to no experience for relatively high salaries, says Samson.

Romania’s education system has five major seats of learning creating a constant flow of technical talent. The Polytechnic University of Bucharest, Technical University Gheorghe Asachi from Iasi, Technical University from Cluj Napoca and Polytechnic University from Timisoara collectively create 7,000 technology graduates a year.

The communist regime, which ended as recently as 1989, created a science and technology legacy, partly by design partly by accident. The country needed engineers and technicians, if only to replicate western technology. So by necessity they became experts in reverse engineering. The Romanian HC (Home Computer) was created by reverse engineering the British ZX Spectrum. Usually, clones had to be made more affordable compared to the original, using cheaper materials, and by necessity Romanians had learned to be creative. People had to build their own devices with handmade, smuggled or black market components.


Cleaning up

The economy is being fine-tuned as the corruption is being driven out by the current chief anti-corruption prosecutor, Laura-Codruta Kovesi, whose team prosecuted over 1,250 officials last year. There have been a lot of high-profile cases brought against a former prime minister, several MPs, mayors, and judges. Kovesi’s team has a conviction rate of over 90 per cent.

In some ways, the communists were more progressive than the West. Romania has Europe’s highest proportion of females studying in IT-related fields. This dates back to when women weren’t allowed to stay at home, as the country needed the workforce, so almost every woman had a job. There was no distinction between men and women working in factories. Mothers were called ‘superheroes of the working class’ and worked as welders or crane operators initially. Later, as regimes and social conditions changed, they encouraged their own girls to pursue better paid technical careers.

Upwards of 98 percent of the Romanian developers speak English and, judging from a recent visit, most Romanians seems to speak at least three languages. French, German and Spanish are spoken by 10 per cent of developers, says a study published by recruiting agency Brainspotting.

For Romanian techies, for whom the best aspects of planned and free market economies work in their favour, this must be a glorious time to be alive. They work in the most prestigious sector of the Romanian economy, which itself is one of the fastest growing in Europe. National tech exports (everything from computing to comms to services) grew from $0.8bn in 2005 to $3b in 2015 and now contribute seven per cent to the country’s GDP. To fan the flames of this fire, the government offers technology specialists tax breaks - not that they need them, arguably. Developers can earn six times the country’s average salary and their pay is rising by 10 per cent a year. So, despite being paid less than their Western European counterparts, they are far richer as their money goes a lot further. Consumer prices are 60 per cent lower and rents are 85 percent cheaper, even in the centre of the capital, Bucharest. A Transylvanian techie who takes home €1,700 every month would need to clear £7,000 a month in London to match the living standards they could in Sibiu, according to living cost comparison site Numbeo.

The communications infrastructure makes my home city of London seem medieval, with 1000Mbps connections available at 10 euros a month. Akamai’s State of the Internet Connectivity report in 2016 put Romania 10th in the world on broadband speed.

Despite these advantages, many developers are moving to the UK and the US, perhaps seduced by the myths of more glamorous lifestyles. Arguably, a developer is better off living tax free in Bucharest than paying a fortune just to sleep on someone’s sofa in London or San Francisco.

Rising salaries and competition for staff are becoming an issue, according to IDC’s Samson. The cost of finding and keeping staff is increasing and attracting investment is another challenge.

Robert Knapp, CEO at VPN service CyberGhost, came to Romania to enjoy the best of both worlds. “Developers here are hard-working, disciplined, and self-motivated,” he says. “Everyone can start a business here with minimum investment, since costs and taxes are low. Romania is the only country where protests to take down a Government and to support anti-corruption measures only happened between 7pm and 11pm, for several days, as people had to go to work the next day…”