Dutch players tap into Romania’s nearshoring potential

With a dwindling talent pool back home, Dutch companies are looking for nearshoring opportunities in Romania to keep their competitive edge.

By Ovidiu Posirca

Nearshoring, which is outsourcing at shorter distances, first emerged in Romania due to Western companies’ wish to cut costs. However, as local firms started to do more complex work, Romania’s competitive advantage has moved more towards the skilled labor market.

Although wages have gone up, the country is still trailing its Western peers in terms of pay. According to the Netherlands-Romanian Chamber of Commerce (NRCC), local net wages were the equivalent of 25 to 75 percent of those in the Netherlands last year, depending on industry and staff qualification. However, the level of labor taxes and social security contributions are roughly the same as in the Netherlands. “The initial idea was basically to be cheaper than the people in the Netherlands. As time went by, we found out that we are not necessarily cheaper, but we have good quality programmers in our company who are hard to find in the Netherlands,” Bert Steenbeeke, owner of Dutch company BT&T Software Development, told BR.

His Bucharest-based company is doing nearshoring for small Dutch firms active in the software business. It currently employs ten people and the headcount is expected to go up in the near future.

“There are fewer people doing computer science in the Netherlands than there are here. We are facing a big shortage of engineers in the Netherlands in the future,” he added. Nearshoring has proven to be effective in the IT business, but smaller foreign companies have acknowledged that high fliers are targeted by big companies, willing to pay big bucks for their skills.

“There are lots of businesses all over the world trying to find software engineers in Romania and sometimes they just try to get them by money,” said Steenbeeke. He says there are now fewer IT specialists leaving the country. According to Huub Drabbe, economic counselor at the Netherlands Embassy in Bucharest, nearshoring can also be used in manufacturing. For instance, Dutch shipbuilder Damen took over a shipyard in Galati in 1999. The company is currently building a wide range of products in the Danube-based town, from offshore to naval vessels, tugs and workboats.

Local nearshoring guide launched

In early October, the NRCC launched a guide and white book on nearshoring to Romania. Chamber representatives said this could represent one of the avenues to attracting fresh foreign direct investments to the country.

The guide outlines the main steps for starting and running nearshoring operations in Romania, while also focusing on the specifics of the country’s labor and education sectors.

For instance, Dutch investors should know that the Romanian work environment is more hierarchical than in the Netherlands and that questioning the decisions of superiors is uncommon.

ovidiu.posirca@business-review.ro

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