BrexitToRemainia Newsletter #40

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Amendments to fiscal code are done: emergency ordinance of course. Since this is no more a surprise, let’s move to other things. For example, let’s look into the future and think about those tech specializations where Romania could leapfrog: eGovernment, Marketing automation, artificial intelligence, Edtech and Global Services automation. If you see a light at the end of the tunnel and you currently work abroad, check out a relocation guide presenting simple and strong facts about your IT life back in Romania. It convinced us it’s worth a try ;).

Be savvy: know what`s happening right now in Romania. News from politics, economy, business, various industries and social life.

Fiscal code changed!

Short update: the Government changed the fiscal code through emergency ordinance, few weeks before it was supposed to enter into force and against opposition from businesses, labour unions, local authorities and Fiscal Council. As discussed last time, the change is about passing over social contributions from employer to employee. The change has a big stake: it is less about how more money would be collected overall, but rather …

… who takes the money? As it stands now (well, until the ordinance), the local authorities would collect the employer contributions and use them for local development projects. Now, these deeds will come directly into the governmental / central coffers. With 6 million contracts in scope, there is much to celebrate (and spend on populist promises). PS: It is estimated that Mairy of Bucharest will lose 1.3BN EUR from this single ordinance.

If you are working with Romanian employees, you are affected. Read here a good summary of what happened.

The 5 specializations

One day we will write about the success story of Bitdefender, the famous Romanian antivirus of which we are sure you heard. Today we talk about its founder, Florin Talpes and his views Romania’s key to success: betting on IT&C sector, but becoming more specialized. What he would choose if he had the magic wand?

  1. Education, the TechEd of course. Traditionally Romania has been renown for its high quality education, with many of our students winning international olympics, as you might recall from previous newsletters. But with 20 ministers of Education within past 25 years, things are getting worse everyday
  2. eGovernment: if you remember GovITHub you’ll recall it was a top down initiative driven by a technocrat government which vanished as soon as power was back to political parties (but didn`t die completely :)). Mr Talpes doesn`t believe in top down initiatives anymore (we still hope!), so he advises a bottom up approach driven by local communities and entrepreneurs
  3. Marketing Automation: or the power of influencing consumer buying decisions is, as the title suggests, a key to welfare. Romania starts from a low base here, given the many years of communism, where engineering and sciences were the cool kids on the block, not marketing or sales. But we showed capacity to leapfrog several times already, let’s do it once more
  4. Artificial intelligence: it is said these are the 3 technologies of the future: AI, robotics, new materials. With this in mind, the recommendation to focus on AI comes naturally, for a country who needs to leapfrog if it were to ever succeed. Those engineers & scientists who are not good for marketing automation will surely do with AI J, especially in the car industry where Romania has built a large components sector.
  5. Global Services, where Romania is already a top 10 global player, and for which we will allocate a full article next time. A specific area of excitement comes from Robotic Process Automation, where UiPath managed to raise 30M USD, the single largest transaction in Romania so far.

We read this interview several times and everytime we concluded in agreement. If Romania was to get its act together, it should be bold enough to target the technologies and services of the future, while using its history (e.g. engineering / science talent) in its favor. The entrepreneurship ecosystem is still very young in Romania, with hundreds of startups making it for a while (and up to a point), but only dozen of them becoming disruptive or globally significant in the end.

Take action: grasp opportunities for advancing business in (and/or with) Romania. What others think & do. What business events to attend.

IT Community Relocation Guide

Last time we promised a more detailed coverage of the “IT Community – relocation guide”, a simple but useful handbook for Romanian IT specialists who work abroad but wish to return home. The guide has only 10 pages and can be downloaded here. In essence, it says:

  • We are talking about an industry which would reach 5BM EUR in 2019 and which contributes 6% of Romania’s GDP
  • There are 100.000+ IT specialists currently working in Romania: to be tripled by 2020
  • 8.000 tech graduates join the ranks in Romania’s top 4 cities alone (Bucharest, Cluj, Timisoara, Iasi). 60+ universities fuel the pipeline
  • Bucharest is the largest tech hub, with more than 130 incubators and accelerators
  • Fancy more adrenaline? Then ride the next wave of tech developments in Craiova, Targu Mures or Galati
  • Worried you’d feel alone in your professional development? Not really: there are dozens of tech events awaiting, from DevTalks to Techsylvania or How to Web
  • Most demanded programming languages are: Java, SQL, COBOL, Phyton but mobile development languages are picking up fast
  • 76% of respondents in DB’s study would return for a salary range of 700 – 3.500 euro net / month. This is aligned with the current offering in the market, it is confirmed. An IT manager would earn between 2.000 and 3.000 euro, while a junior Mobile Developer would fare 500-700 EUR / month
  • Salary is only 4th placed in terms of factors to consider for returning home: healthcare system, political stability and professional growth are more important
  • Cost of living in Bucharest is 60% that of London or Paris, and 15% higher than in Iasi. Funny enough, it’s cheaper to buy an apartment in Bucharest than in Cluj

Having said that, we wish you safe return – if you’re considering returning – or happy recruiting – now you know your pitch!

Moldavian entrepreneurs

If you wonder where could “the next big thing” in Romania come from, look no further than Moldavian region (not the republic with same name!). Moldavia (or Moldova as we call it) is currently the most under-developed of all our regions. That means good things for your business: faster growth, cheaper workforce, cheaper supply chain, beautiful landscapes and a rich history.

Last month 16 Moldavian companies were recognized and awarded during the Business Champions Gala in Iasi. They grew by 9.5% y-o-y in 2016 and increased their profitability by one fourth. These (together with the broader impact on jobs and the region they come from) served as criteria for selection. You must be now ready to hear the winners, right? We clustered them per industry:

  1. Agriculture: Plantagro Com, Comcereal Vrancea, Agricola Bacau, Betty Ice (yummi!), Agricultorul
  2. Manufacturing & Production: Symmetrica (construction materials), Electra (video interphones),  Barleta (ecological paper), Te-Rox Prod (baby car seats), Pandora Prod (textiles, worth going to Focsani to have a look!)
  3. Distribution: Alevia (for over the counter pharmaceuticals), Quatro Grup Distribution (for beverages)

You can find the full list of winners here. And by the way, the organizers of this event also run Awards Galas in Cluj (remember from past edition?) and Bucharest (Nov 15th, you still have time to make it).

Know your game: Build your Aces for when you meet a Romanian business partner for coffee. What we (might) like to talk about.

November business events in Romania

There is still time to join these events, should you happen to be around Romania these days:

  1. Champions in Business Awards Gala in Bucharest (Nov 15th, from 18:00 at Biavati Events) – contact organizers here,  there doesn`t seem to be a dedicated registration form
  2. ABSL – Business Services Annual Conference in Iasi (Nov 14th). The Conference is about emerging technologies and their impact on the business services industry. Register here.
  3. Impact Hub Bucharest organizes 12 events during the month of November alone. Are you ready? See them all (and register) here

Romanian Overview Report: In this comprehensive report you will find information about: macroeconomic landscape, industries and investments, infrastructure and technology, taxation system, human capital, governmental support and last but not least quality of life in Romania (if you decide to move over here ;)).

Investor Guide Romania: In this well-structured guide you will find information about: investment climate in Romania, economy in general and the business ecosystem in particular, availability of financing, employment and labour law, fiscal policies, as well as how it is for an expat to live in Romania (not too bad, we can assure).

#MondayMemo Newsletter (register): If you are Romanian (or able to speak the language) we highly recommend you register to MondayMemo. It is a weekly newsletter dedicated to entrepreneurs covering news from Romania and abroad (written exclusively in Romanian though!). While we just like to read news and share them with you, the author(s) of MondayMemo are experienced and high quality journalists: Mona Dirtu and Andreea Rosca.