Romania: Silicon Valley of Europe? Where is the IT sector heading to?

Alexandru Borcea is the president and the co-founder of the Romanian Association for Electronic Industry and Software. Being also a president of the Labor Commission and together with other members has formulated the EUR-ACE standard which has the focus on the quality of the engineering education for Romania. With this process, Romania is the ninth country in the world and the seventh in Europe which has this accreditation. 

I know that Romania is so successful with the IT that the biggest problem for you is finding human resources. Would you share this point of view Alexandru?

Yes, I am sharing this point of view of course. Is not a problem of one or two associations, all over Romania we have such a problem because more and more investments are registering in our country and even if the number of graduates is raising every year in the field of IT, only in the computer science and electronics are about 8.000 people graduating per year and this is not enough for what is happening in our country.

So who is so hungry for the talent, is it  the national rising startup ecosystem, the Romanian companies or the big players like Oracle that want to expand and found this land of talent?

Everybody. To explain our picture: about 38% of the country´s income is from the domestic companies and 62% is coming from the foreign investments- in general large SMEs which are searching and hiring thousands of people. The romanian companies are small, there are many of them but with just few employees compared to Ukraine, Russia or even India where they have bigger and huge companies.

So roughly in our membership we have 200 companies and around 10.000 companies all over the country and we have about 80-200 employees per company.

The biggest problem is not the number but the adequacy of the human resources to the needs and aspirations of the companies so the number of the specializations did not rise enough and I can give you a figure because just few months ago I got some figures from Nordrhein-Westfalen, Germany which has a similar population as Romania, a similar number of universities, about 18-19 million citizens. So in Romania we have for all those universities 500 specializations, in Nordrhein-Westfalen there are more than 6.000 so you can compare the things and how the adequacy in Germany related to the needs of the companies is responding in comparison to what is happening in Romania so we have to fight to get more specializations according to the real needs of the companies, so not the number is the problem but the adequacy of the curricula to the needs of the employers. 

So what kind of specialization you think that now in this status of 2017 is most needed, which field is the best and traditional universities fail to educate or develop these skills?

So as we are running more and more to the innovation driven economy the situation becomes more complex that it was before, so it is not enough to be a coder or a software developer, you have to have competences in specific vertical issues, for example in medical science or system or in learning or security, there is not only special coding but there are many things that you have to know and be aware of it. So we need much more competencies as in this very moment exist in the world and especially for Romania the gap is larger: as I´ve mentioned there are 500 specializations, 10 times less than in Nordrhein-Westfalen.

Can you give us some insights if there is a trend for the companies that instead of going up for outsourcing and nearshoring they prefer to have an alternative by developing software and apps instead of IT services. Is that a way which is open or gone already?

Yes it is a process and I can tell you that the most important vector for us in this very moment in this innovation driven economy is more the foreign market than the domestic market. So we began with outsourcing and nearshoring and in between costs or the salaries in Romania have raised and they are not anymore so competitive in dealing only with outsourcing, so every company (even if they are dealing also with outsourcing mainly) they have a specialization, specific competences and specific tools and products which were developed.

What is missing in Romania and what we believe that we have to work more on it is the National Innovation system which is very weak, we have to enforce, to enable the possibilities for more and more companies to get into the innovation driven economy. 

Second option, also discussed and also practiced is of course looking for the international resources so are the romanians active not only in the neighboring countries like Moldova, but also India, Philippines and are there discussions of expanding even further. Is this tendency growing?

Yes, if you are looking at the romanian domestics industry you can see that they are shifting more and more to the innovation driven economies. That means mainly innovation for new products, new services, new processes to bring to the market and less and less related to the so called blind outsourcing. I mean blind because this is what is understood by companies in Europe, if you are going into the United States outsourcing is much more complex, that means also strong competences of the companies and outsourcing and the entire value chain of this companies. Generally in Europe this means mainly cheaper labor cost so there is a difference between the approach of this term in the United States or Europe. If you want to talk about the competence development this is more and more in place in our companies and also successful. Here are some figures to understand. So from 1999 when I got the first figures on the Romanian export until this very moment, we have started with 30 million $ at that time and in 2016 it was more than 2 billion € only for the software development so the software services they have about 4-5.000 mil € of ICT export of 2.5 but clear export and coming from this low level of 30 mil to this level of 2 bil is an increase of at least 2 digits each year. Only during 2009 this stopped due to the fact that was an year of rearranging and restructuring, then the companies found a new way and we started the increasing process with 2 digits since 2010 until this very moment. 

Hans Gäng
29.10.2019
von Hans Gäng