Unleashing the Potential Growth of Business Services in Romania: An In-depth Analysis
Romania's Business Services Industry: Opportunities Remain for Expansion, Albeit at a Moderated Rate
The business services industry in Romania holds promise for expansion, despite a slower pace chalked up by market maturity and fierce regional and global competition, reveals a report jointly conducted by the Association of Business Service Leaders (ABSL) in Romania and Deloitte Romania. However, the phaseout of tax incentives and the absence of a national education and training strategy may impact Romania's long-term attractiveness, as per ABSL's sentiment.
Take a peek at some key factors that could crucial to future growth:
- Local Workforce: The local business services sector currently represents 2.5% of Romania's active workforce, in contrast with 3.5% in countries like the Czech Republic and Bulgaria.
- Education: Romania's educational system is breeding ground for talent, with the country placing second in Central and Eastern Europe (CEE) in terms of student population, only lagging behind Poland.
- Population Centers: With 24 cities housing more than 100,000 residents, Romania catches the eye of businesses in the field.
- Multilingual Talent Pool: Romania boasts a high percentage of French, Spanish, and Italian speakers, giving it an edge in servicing multilingual clients.
- Competitive Employment Costs: Ranking third or fourth in the region for total employment costs, costs are relatively lower compared to countries like the Czech Republic, Poland, Slovakia, and Hungary, (except for some services). However, Bucharest, where the majority of jobs are concentrated, sees significantly higher salaries, 38% above the national average.
As the global economy embraces technology and digitalization, Romania runs the risk of losing its competitive edge, even though ABSL foresees growth potential. While Romania discontinued incentive programs for the industry, other countries in the CEE such as Poland, the Czech Republic, Bulgaria, Hungary, and Slovakia have attractive support schemes offering grants, tax breaks, and vocational training facilities.
Additionally, political instability surrounding the ongoing west Ukraine conflict may influence potential investors' decisions.
The study, undertaken by ABSL and Deloitte between October 2024 and March 2025, scrutinized data from Eurostat, the European Commission, partners (IO Partners and Randstad), national statistical institutes, and assorted Deloitte analyses.
Business services sector's contribution to Romania's GDP, including IT services, hit the region's highest at 10.5%, in 2023, ABSL noted. The industry has shown a rapid increase in employment numbers as compared to the overall economy, with an average growth rate of 14% per year over the past decade, according to ABSL Vice President Cătălin Iorgulescu. However, the abolition of tax benefits for the sector in late 2023 has resulted in a decrease in the number of IT employees and potential investors, observed Iorgulescu.
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- In spite of the abolition of tax benefits for the business services sector in Romania, the competitive employment costs, multilingual talent pool, and the potential for growth in Romania's business services industry, particularly in IT services, remain attractive for finance and business ventures.
- To maintain Romania's attractiveness in the global finance and business industry, it is essential to address the phaseout of tax incentives and develop a national education and training strategy to ensure a steady growth of business services in Romania, as suggested by the Association of Business Service Leaders (ABSL) in Romania.
