CGS Romania: The local outsourcing market reached 800 million Euro in 2019, 8 per cent y-o-y growth

The local Business Process Outsourcing (BPO) market reached 800 million Euro in 2019, up 8 per cent compared to 2018, according to the estimates of Computer Generated Solutions (CGS) Romania, the leader of the local profile market.

“The Romanian outsourcing market also had a substantial growth in 2019, being one of the sectors with a positive evolution reported from year to year, since the beginning of its development locally. This was determined by the interest that foreign companies have towards the outsourcing of services on the domestic market due to the high human and technological potential offered by Romania,” said Vladimir Sterescu, Country Manager of CGS Romania.

According to statements, in the period when the outsourcing phenomenon was expanding globally, respectively between 1980 and 1990, it was primarily a model by which large companies were to reduce their costs. Today, however, things have changed, and outsourcing business processes is a way to make business more efficient, at a qualitative level that maximizes customer satisfaction while offering access to specialized and flexible workforce.

“If 15 years ago Romania did not exist on the international map of outsourcing, and 5 years ago it was still on the list of the cheapest countries in terms of outsourcing business processes, today things look different. Thus, the local market is preferred by the multinational companies, especially due to the high level of education of the employees in the industry and their possibility to support complex projects,” stated Vladimir Sterescu.

Outsourcing specific lines of business within the organization is a common activity for companies in different sectors such as: telecommunications, IT, utilities, financial-banking, insurance, pharmaceutical, etc. The main benefits of companies that subcontract certain activities are cost reductions, centralization, standardization and efficiency of business processes. By resorting to outsourcing, a company has provided specialized personnel at both execution and coordination levels, benefiting from flexibility in terms of human resources, as operations that have seasonal or cyclical demands can be easily supported and, additional resources may also be allocated as needed.

“By using outsourcing services, sales performance can be much better controlled and continuity ensured. For example, if a company has an internal sales team that it wants to develop, the manager has the option of recruiting new employees to be trained, following a learning curve. Another alternative is the outsourcing of processes to a contact center, having a contract with very clear performance criteria, which the supplier is obliged to respect,” added the CGS representative.

According to CGS Romania estimates, at this moment, on the local market, the largest volume of projects comes from companies in the telecommunications industry and IT&C, especially with operations based in US. Reported in the geographical areas of Romania where the BPO market is concentrated, Bucharest is by far the first place, followed by Brașov, Cluj Napoca, Iasi and Sibiu.

CGS Romania data shows that, at this moment, approximately 25,000 employees are active on the local market of business process outsourcing, a number that is growing year by year. Thus, only in 2019, CGS Romania estimates that approx. 2,000 – 2,500 recruits in the BPO segment.

“At this moment, an employee in the outsourcing sector has a net average salary of approx. 2,800 lei, in addition to a series of benefits such as meal vouchers or health insurance, as well as a modern working environment,” said the company representative.

Reported to the retention of industry personnel – a challenge in recent years, Vladimir Sterescu said that 2019 brought a drop in fluctuation well below the average of other countries with a tradition in outsourcing. Thus, at this moment, in Romania the staff turnover rate is approx. 35% per year, while in countries such as the US, Philippines or India it reaches between 80% and even 110%.

According to Vladimir Sterescu, the Business Process Outsourcing segment will also see a new growth in 2020, both in terms of value and volume of projects carried out locally. Thus, for 2020, an advance of almost 10 per cent of the profile market value is estimated.

In addition, the representative of CGS Romania estimates that gradually, medium-sized companies will increasingly access outsourcing services, understanding the added value that outsourcing can bring.