Outsourcing IT Services to Romania: Why Global Companies Are Betting on Europe’s Hidden Gem

The Romanian advantage

Romania has quietly become one of Europe’s premier destinations for outsourced and nearshore software development. Its information and communications technology (ICT) sector is projected to generate $1.3 billion in revenue in 2025 and is expected to contribute 10% of the national GDP within five years. This growth is fueled by a large, highly skilled workforce—over 250,000 competitive software engineers—with 10,000 ICT graduates entering the market every year from 33 universities. Notably, Romania ranks first in Europe and sixth worldwide for certified IT specialists per 1,000 people.

Cost efficiency without compromise

• Salary savings of 36–43 %. Companies that nearshore to Romania save more than 36 % on developer salaries compared with the United States. For example, a senior AI/ML engineer earns about $78 k–$100 k per year in Romania versus $132 k–$187 k in the U.S., and a cloud engineer costs $84 k–$107 k compared with $174 k–$242 k in the U.S.. Recruitment fees and benefits are also lower; companies can save roughly $9 k per developer on benefits alone.
• Favorable tax environment. Romania offers a 16 % corporate income tax, one of the lowest in the European Union. For IT professionals, income tax can be as low as 10 %, and R&D activities benefit from a 0 % profit tax for 10 years. These incentives reduce payroll burdens and make long‑term investments attractive to foreign firms.
• Transparent labor costs. Under Romania’s B2B model, contractors pay their own taxes, relieving foreign companies from employer tax obligations. Recruitment fees hover around 15 %–20 % of salary for mid‑ to senior‑level talent, well below typical U.S. rates.

Deep talent pool and global companies

• 250 k engineers and counting. Romania’s tech workforce exceeded 250,000 software engineers in 2024. The country’s English proficiency ranks #1 in Central and Eastern Europe (CEE), and 79 % of Alcor’s respondents were surprised to learn Romanian developers top the region. High levels of English fluency and Western work culture make collaboration seamless for U.S. and EU clients.
• Big‑tech presence. Major technology firms such as Amazon, Microsoft, Google, Oracle and Adobe have established R&D centers in Bucharest, Cluj‑Napoca and Iași. Bucharest alone accounts for 63 % of Romania’s software‑development revenue and ranks eighth among Eastern European tech hubs. A vibrant startup ecosystem with over 1,660 startups and €19 billion in enterprise value shows the country’s innovation strength.
• Specialization in AI, fintech and IoT. More than 16 k professionals work in AI/ML, and Romania’s AI market is projected to reach $686 million in 2025, growing to $2.78 billion by 2031. Fintech revenue reached $74 million in 2023 and is expected to more than double by 2028. Romania’s Internet of Things (IoT) market will likely hit $2.4 billion in 2025.

Location and cultural fit

• Proximity to major markets. Romania’s GMT+3 time zone and central position enable same‑day collaboration with Western Europe and near‑real‑time communication with North America. Flights from London, Paris or Munich take 2–4 hours, and the 7–8‑hour difference with New York allows for “follow‑the‑sun” development cycles.
• Western mindset. Romanian engineers are recognized for critical thinking, creative problem‑solving and strong soft skills. The EF English Proficiency Index ranks Romania 12th globally, reflecting excellent communication capabilities.
• EU membership & data compliance. As a full member of the European Union, Romania adheres to GDPR and other data‑protection frameworks. This alignment ensures that outsourced projects meet stringent security and privacy requirements—a crucial factor for sectors like healthcare, fintech and e‑commerce.

Economic stability and incentives

Romania’s government has committed billions to digitalization and tech growth. The 5 Billion Plan for Digitalization and AI supports infrastructure, training and R&D initiatives. ICT services exports rank second in the CEE region, and the country is sixth in Eastern Europe for innovation capabilities. Tax incentives (profit‑tax holidays for R&D, low corporate tax rates and payroll subsidies) further reduce operational costs.

Why enterprises are moving

• Quality at scale. With a population of 19 million, Romania punches above its weight in tech expertise. The combination of large talent pool, high English proficiency and competitive salaries makes it ideal for building dedicated development teams or extending existing ones.
• Innovation partnerships. Rapid growth in AI, fintech and IoT creates opportunities for co‑innovation. Foreign firms can tap into Romania’s research institutes, universities and startup networks to collaborate on cutting‑edge projects.
• Regulatory certainty. EU law provides legal stability and intellectual‑property protection. Compared with some other offshore destinations, Romania offers a predictable business environment, reducing risk for long‑term partnerships.

How to succeed with Romanian outsourcing

1. Choose the right model – decide between outsourcing, staff augmentation, or opening a dedicated R&D center. Each has distinct legal and tax implications.
2. Vet cultural fit – look for vendors whose communication style and work practices align with your own. Assess English proficiency, agile methods and security protocols.
3. Start with pilot projects – begin with a small cross‑functional team to test collaboration, then scale based on performance.
4. Invest in onboarding and retention – treat remote teams as part of your organization. Offer professional development and emphasize company culture to retain top talent.
5. Leverage government incentives – explore R&D tax breaks, grants and other local programs to maximize cost savings.

Conclusion

Romania’s unique blend of world‑class talent, cost efficiency, favorable taxation and EU‑level data compliance makes it a compelling destination for enterprises seeking to externalize IT services. A growing digital economy, supportive government policies and a flourishing startup scene ensure that Romania will remain a key hub for innovative software development in the coming decade.