Outsourcing locations: Romania, Cluj Napoca

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Outsourcing locations Romania, Cluj- Napoca

• 9 June 2009
• Mihai Rada, KPMG Romania

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Presentation Overview

• Introduction
• CEE comparative analysis
• Romania emerging destination
• Cluj-Napoca emerging destination
• Conclusions

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Introduction

• Global financial crisis drives companies to
  pursue rationalization measures over the longer
  run
• Traditional outsourcing locations rapidly
  approach saturation point
• A new rush for outsourcing services across the IT
  sector, with a number of new locations worldwide
  emerging as viable Business Process Outsourcing
  (BPO) hubs is developing
• A study realized by KPMG identified 31 possible
  locations for the next outsourcing boom
• Location selection criteria needs, priorities,
  compromise, site visit, location specific data
• Advantages offered by the emerging cities
• lower costs,
• size of workforce,
• quality of talent,
• linguistic and cultural similarities,
• government support and incentives
• dedicated infrastructure for IT-BPO companies,
• quality of life.

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Introduction (outsourcing locations)
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CEE comparative analysis
Internet users per 1,000 inhabitants Source CIA
World Factbook, World Bank, Eurostat
Historical FDI inflow (million EUR) (2003
2007) Source UNCTAD World Investment Report
2008
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Romania emerging destination

• Foreign direct investment (FDI) Romania amounted
  large FDI inflows in the last years
• GDP growth the Romanian economy has been
  expanding and real GDP grew by 7.1 percent in
  2008
• Inflation with a value of 6.3 percent in 2008
  and expected to decline to 4.5 percent in 2009
• IT-BPO Scenario the IT outsourcing industry
  comprises around 600 companies and is
  concentrated in and around Bucharest. Second tier
  cities such as Cluj-Napoca have emerged as new
  outsourcing locations
• Government incentives the maximum amount of
  grants offered amounts to USD 28 million (EUR
  22.5 million) in the Bucharest-Ilfov region and
  USD 35.5 million (EUR 28.1 million) in the rest
  of the country
• Membership of the European Union
• Distance to Western Europe countries is smaller
  as compared to traditional outsourcing locations
  (e.g. Asia).

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Cluj-Napoca emerging destination

• Development of the current IT-BPO industry
• an alternative outsourcing location to Bucharest,
  due to increasing competition
• In 1999, ISDC opened its own development and
  testing centre in Cluj-Napoca
• in 2006, Wirtek acquired Code Wizards
• in 2007, Genpact opened its second BPO center
• in 2008, Evalueserve opened its first European
  research center at Cluj-Napoca
• Industry Profile- Size and Specifics
• 245 IT companies operating in the Cluj County
  including over 100 software companies in the city
  of Cluj-Napoca
• the services offered out of Cluj-Napoca include
  research and data analysis, order management,
  finance and accounting, engineering services,
  software development and IT services

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Cluj-Napoca emerging destination (contd)

• IT-BPO key drivers
• important financial and university center
• benefits from a pool of qualified personnel
• the talent pool is suited to provide
  multi-lingual services
• the talent pool is suited to offer research and
  development services
• the city has both, an established manufacturing
  and a services industry
• the city is developing as a tier II alternative
  for companies with centers in Bucharest
• the time-zone advantage
• cost advantage over the West and East European
  cities

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Cluj-Napoca emerging destination (contd)

• Human Resources
• important academic center with about 62,600
  students in 2007
• employers benefit from the foreign languages
  skills of Romanian workforce
• Infrastructure
• office space (IT parks) in 2007, the area of
  office space available in Cluj-Napoca was 20,150
  sq. meters. The 2008 real estate projects are
  likely to add 84,000 sq. meters of available
  space
• telecom infrastructure a network of 64,000 km of
  optical fiber is currently being developed
• national and international connectivity the city
  has a well developed rail, road (the city is
  crossed by the European Road E60) and flight
  (Cluj-Napoca International Airport is the third
  largest airport in Romania) network
• upcoming projects the city is to be linked with
  Bucharest and the Hungarian border by Romanian
  Motorway A3
• several real estate projects are being developed

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Conclusions

• Alternatives to traditional outsourcing locations
  arose
• A wide range of outsourcing locations are
  available for companies
• Cluj-Napoca is an important emerging location
  offering talent pool, lower costs, developed
  infrastructure

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Questions?
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Contact details

• Mihai Rada
• Senior Manager, IT Advisory, KPMG Romania
• Mobil 40 744 655 832
• Fax [phone]
• Email mihairada_at_kpmg.com