Briefing on Romanian ICT Market

1
Briefing on Romanian ICT Market

• March 2006

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Romania offers unique combinatorial skills
supported by broad country advantages

• Investment Targets
• Offshore Product Development
• Nearshore
• Outsourced RD
• Multilingual Contact
• Center
• Complex BPO

• Ideal Partners
• Multinationals
• Small-medium firms
• Venture investors

Technical Talents
Combinatorial Skills
Basic Science
Languages
Domestic Market
Location
Business Environment
Proven success by top investors high FDI
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Economic Highlights

• Population of 21.9 million, 7th in Europe and
  largest in Southeast Europe
• 2005 GDP was 62.1 billion, 2840 per capita
• 2005 GDP growth was 5.5 despite heavy flood
  damage effecting agriculture, beating the EU-10
  average of 4.9
• Inflation in 2005 high at 8.6 but will fall to
  4-5 by 2007

Historical and Forecast Economic Data
70
25.0
60
20.0
50
15.0
40
Billions
30
10.0
20
5.0
10
0.0
0
2002
2003
2004
2005
2006
GDP
Inflation Rate
Growth
Source EIU, National Bank of Romania, RZB
analysis, CIA World Factbook

• Parliamentary democracy since 1December 1989
• Expected EU accession in 2007

4
Most dynamic technology market in Europe
20.2/2004
14.2/2005
13.1/2006
100
Growing twice as fast as next fastest follower
75
50
25
Source European IT Observatory
0
Western
Eastern
Romania
Europe
Europe
Estonia
And still early days
Latvia
One of the largest
Lithuania
IT Services
Carrier Services
Slovenia
4th overall 4th in Software and Services
Software
ICT Equipment
Bulgaria
Source European IT Observatory
Slovakia
Telcomms
Romania
IT
Hungary
Czech Republic
Source European IT Observatory
Poland
0
5000
10000
15000
20000
Billions
5
One of the most friendly business environments
for IT anywhere

• Overall Business Environment
• 16 flat tax on profits
• One of the Top 10 most progressive reformers
• Benefits to IT Industry
• Software developers are exempt from payroll and
  income taxes
• Investment imports of hardware and software are
  exempt from customs
• IT Infrastructure Deployment
• 300 vouchers to subsidize home computer purchase
  for families with school age children
• Planned 69M program to boost rural broadband and
  IT deployment for small companies

Country Corporate Tax
Serbia 10
Bulgaria 15
Macedonia 15
Romania 16
Hungary 16
Slovakia 19
Poland 19
Croatia 20.32
Slovenia 25
Czech Rep. 28
World Banks Doing Business 2006
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A Top European Location for RD and specialized
BPO
2500 engineers developing embedded automotive systems and network operator equipment all over Romania
1200 engineers developing network operator equipment in Western Romania
Intel Capital invested 12M in Romanian IT services and outsourcing company, Siveco, in Bucharest
250 RD engineers working on semiconductor design in conjunction with Bucharest Polytechnic
100 engineers developing compilers and development tools in Bucharest
Operates five global IT Technology Centers including development and a 15-language call center
Acquired RAV Antivirus from Romanian, GeCAD, as component of global Windows internet security releases
The global outsourcing firm, owned by GE and Oak Hill Partners, employs 170 and plans to expand to 1500 for IT outsourcing, financial services and supply chain BPO
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Strong outsourcing and technology players
700 employees focusing on CRM contact center, application development especially in structured content (eContent)
350 employees primarily in application development, maintenance and integration
570 employees focused primarily on outsourced technical support and outsourced manufacturing
200 engineers focused on application development and RD. Romsys is a Lockheed Martin Star Supplier
Founded by Cap Gemini execs, 150 engineers focused on application development primarily for the German UK markets
Development subsidiary for 2400 employee US-based TechTeam provides application development for the automotive sector
Provides multilingual research services for Frost Sullivan and other complex BPO for clients like Alfa Romeo and Fiat
200 employees provide technical documentation, drawing and parts inventories for Airbus and other aviation clients
Includes companies with primary development
locations in Romania. Multinationals like Ness,
GenPact and Wipro are excluded.
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Large and largely untapped pool of technical
talent
7-9K
75K
2K
Highest density of IT grads and Top 10 in volume
overall
300
25-32K
250
6-7K
1-2K
200
IT Graduates Per Million
150
50-70K
25K
100
Source UNESCO, RUSSOFT, BASSCOM, Romanian NIS,
US NCES, Carmel (2003)
50
0
India
China
Ukraine
Russia
Vietnam
Romania
Hungary
Indonesia
Bangladesh
United States
Czech Republic

• Technical Education
• 5 Elite Polytechnics
• 59 Universities
• 174 Private Colleges

The decision to open the center in Romania
followed analysis of 15 offshore locations. Among
the deciding factors was cultural affinity to
Western European clients, the capacity of
the skilled employee base which is
still relatively untapped, and the quality and
diversity of language skills.  Director
Strategic Planning, Global Operations, Top 10 IT
Company
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Worlds most multilingual offshore market

• Romania has a large trained workforce in non
  commodity European languages (plus English and
  German)
• Why
• Romania speaks a Latin language, is bordered by
  Slavic-speaking countries and has a sizable
  German-speaking population
• The education system remains broad and high
  quality

Source Pierre Audoin Consultants 2003

• Pierre Audoin Consultants (2003) found that 80
  of the IT work force speaks English, 25 speak
  French, 12 speak German (many natively)
• Oracle is operating a call center in 15 European
  languages including Danish, Finnish Greek, all
  with Romanian nationals
• Two large offshore contact centers do at least
  70 of their volume in languages other than
  English

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Culture, history and tradition of technical
excellence

• Top 3 in the IEEE International Design
  Competition since 2001
• Top 10 in the Association for Computing Machinery
  (ACM) Intercollegiate Programming Contest in 8 of
  the 10 past years (ACM)
• More Informatics Olympiad medals than any country
  but China and the USSR
• More Math Olympiads than any country but China,
  the USSR and the USA

CIFA-1, the first computer in the communist bloc
(1957)

• The Most Certified Nation in Europe (and 3
  worldwide after the US and India) according to
  Brainbench Employment Testing
• Romanian companies captured 2nd and 3rd place
  prizes at the Eureka Innovation awards in each of
  the past two years
• Strong mechanical and other engineering science
  capacities near IT Polytechnics
• The only two non-American of the top ten
  antivirus programs are from Romania

It is an internationally acknowledged fact that
Romanian educational system distinguishes itself
through quality. Steve Ballmer, CEO, Microsoft
(2003)
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Romania has a uniquely convenient location open
to all major global markets

• Easy to Reach
• Over 30 international directs from Bucharest
• International flights to other regional centers
• Less than two hours from most European capitals
• No visas required for EU and US citizens in
  Romania
• No short-term visas for Romanian citizens in EU

• Six regional technology clusters provide
  capacity, room to grow, and access to skills
• Intersection of three major markets EU, CIS and
  Middle East

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Thank You!