In outsourcing, it's risky to bet 100% on Bucharest

High labour costs and the growth of the RON against the euro and dollar are turning Bucharest into a risky location for outsourcing businesses, while the creation of support centres in Brasov, Iasi and the Republic of Moldova is providing a safer alternative.
“Off-shoring in Bucharest today is difficult as the costs are too high to remain competitive. In Bucharest, a policy that is 100% oriented towards the offshore market seems risky, to me, on the short and medium terms because many salaries in the IT sector no longer allow entrance onto the European markets such as Spain, Italy and Portugal.
“Also, the increase in recent months of the RON against the euro, and particularly against the dollar, does not make the situation any easier,” stated Monica Jiman, sales manager of Pentalog Romania, the domestic unit of the French-based provider of software consulting and development services, told ZF.
The French company has three offices in Romania: in Brasov, Bucharest and Iasi, and also opened an office in Chisinau, in the Republic of Moldova, around 2 years ago.
Pentalog Romania currently has 88 employees, of whom 55 work in Brasov, 27 in Bucharest, and 6 in Iasi.
“Since the beginning of this year, we’ve recruited 50 individuals in Romania and the Republic of Moldova, which accounted for a 110% increase in the first half,” explains Monica Jiman.
Until recently, major outsourcing players such as Accenture and Genpact used to carried out their operations exclusively in Bucharest, but have recently begun to shift their attention towards other cities. Genpact is now planning to open a call-centre in Cluj and will recruit several hundred people in the process.
The average net salary offered in Moldova is 150 euros lower than the salaries offered in Bucharest (400 euros), with Bucharest salaries advancing at an annual rate three times (15%) higher compared with the eastern region of the country.
Pentalog Romania’s customers include France Telecom, Societe Generale and Leroy Somer (a provider of industrial automated solutions).
The Bucharest agency mainly focuses on the domestic market, with an emphasis on Business Intelligence-type solutions. One of the company’s domestic customers is Vodafone Romania.
At a group level, Pentalog High Tech last year generated revenues worth 3.3m euros, with 40% derived from its French-based office, whilst the units in Romania and the Republic of Moldova contribution 40% and 20%, respectively, to the turnover.
This year, the company forecasts a turnover worth five million euros, with the Romanian unit expected to contribute 50%, whilst French-based operations are expected to contribute 30%.