Romania needs to remain competitive regionally and globally in the business services industry

The business services sector continues to grow globally at an average of 6% over the last two years. After Asia, where approximately 45% of the total number of companies are concentrated, Central and Eastern Europe rank second in the world in terms of regions where this industry is developed, with about 31% of companies. Romania ranks 6th in the world in the list of countries operating in this industry and 2nd in Europe, following Poland. Currently, the number of employees in our industry accounts for over 2% of the country’s active population.

“Romania still offers numerous advantages to investors in the business services industry. Among these is a favorable cost of business and workforce development, even in the IT field, with a smaller difference of 20% compared to Poland. Most foreign languages spoken in Romania from all CEE countries, this being considered one of the most important advantages for diversifying services in business services (according to the latest ABSL Romania study, 23% of companies provide activities in 11-15 foreign languages, and 15% of companies have between 16-20 foreign languages). Additionally, technology expertise is a significant advantage,” says Nicoleta Apetrei, Vice President of ABSL.

The Centers of Excellence developed in the last two years bring strong expertise in fields such as IT, finance and accounting, procurement, making Romania still a preferred destination for high-value-added services.

However, Romania is in direct competition with countries in the region (especially Poland and Hungary) in terms of available grants, fiscal incentives, and support for the business services industry. ABSL is preparing a study to showcase Romania’s position in relation to the countries in the region in this regard.

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While Romania provides support through fiscal incentives and labor force policies, Poland and Hungary offer a more comprehensive set of measures that may seem broader, including support for equipment acquisition and a higher total grant value (100 million EUR in Poland vs. 45 million EUR in Romania).

In Poland, non-repayable funding from the state ranges from 30% to 50% depending on the region, while in Romania, it varies between 30% and 60%, reaching even 70% for certain regions, creating a more attractive framework (even if these regions are not always conducive to the business services industry). The difference is that Poland has seven industries of interest on its list, with business services ranking high on this list. In Romania, fiscal incentives are granted for production, research and development, and IT.

“The competitiveness of Romania in the business services market is influenced by many factors, including the performance of the educational system, a large number of foreign language speakers, IT knowledge, fiscal policies, daily cost of living, cost of labor, and more. All of these factors converge into a single point: the human resource. If we lose this resource, the sector cannot develop. The growth of professionals in this industry and their retention in Romania represent the guarantee of our future. I am convinced that for this reason, they are priorities for both the companies in the sector, as well as those who influence economic policies,” says Cătălin Iorgulescu, Vice-President of ABSL.

According to ABSL, 70% of companies estimate that they will experience a growth in turnover in 2023, and 94% of companies believe that Romania offers numerous investment opportunities in this sector.

The most recent data shows that the revenues generated by the business services industry amounted to 9 billion euros. Additionally, the contribution of this sector to Romania’s GDP has been higher than the European average in recent years.

“The fact that we still have a significant percentage of students in engineering and mathematics universities helps us outline the future of this industry more clearly. We estimate a growth of 10-15% in the number of employees by 2025 and an increased importance of smaller cities,” explains Ciprian Dan, President of ABSL.