Romania is 10th in Europe, 30th globally in Kearney ranking of most attractive offshore locations for services

Romania has risen to 10th place in Europe and 30th globally in the ranking of the most attractive locations for offshore services, showing a slight improvement compared to the 2021 study, according to a report by the global consulting firm Kearney.

Romania remains relatively attractive in terms of finances (low labor costs), workforce availability, and digital skills, but it is losing ground to neighboring countries concerning digitalization and the business environment, the report says, cited by Economedia.ro.

"To maintain and even increase its attractiveness as an offshore services location, Romania needs to focus on three main directions: (1) increasing IT and digital competencies, (2) adapting the workforce, especially to new technologies, and (3) talent retention. Low labor costs are no longer the primary reason for a foreign company to offshore its services in Romania," said Florian Teleabă, principal and managing director of Kearney's office in Bucharest.

"In the Romanian business environment, across almost all sectors, there is pressure on salaries, finding good employees, and motivating and retaining them. Additionally, a large number of young people still choose to leave Romania. To be competitive, we must continuously improve what we do and the value we deliver. For that, we need to invest in people and their skills, and in processes and technology to increase the scalability of the services we offer – and this allows us to demand more for what we offer, moving away from the trap of 'staying cheap to stay competitive'," he added.

To compile the ranking, Kearney analyzed 78 countries worldwide using 52 indicators that cover four dimensions: financial attractiveness, workforce skills and availability, business environment, and level of digitalization.

As IT, business, and engineering services can now be provided from anywhere in the world, companies eager to reduce costs are increasingly looking to offshore their activities. According to the report, the top 10 most attractive offshore locations in Europe are the UK, Poland, Portugal, Estonia, Germany, Hungary, Latvia, Georgia, Bulgaria, and Romania.

The global services market grew from USD 624 billion in 2022 to USD 681 billion in 2023, indicating continued significant demand for such services. Regarding Eastern Europe, Poland, Hungary, the Czech Republic, and Romania show improvements in the rankings, while Bulgaria, although experiencing a slight decline in its score, remains in the European Top 10, positioning itself ahead of Romania.

In most Eastern European countries, including Romania, a slight increase in attractiveness was observed due to business environment development and digitalization level, as well as a significant influx of talent migrating from Ukraine to neighboring countries due to the war.