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What the statistics don't say about outsourcing in Romania

We have enjoyed an excellent first half with a 5% economic upswing year-on-year, but what did trigger most of the employment were the automotive and outsourcing firms.

2016-08-23 15:10:32 - by Bogdan Tudorache

The phenomenal upswing of the economy is explained by the multitude of IT and automotive announcements stating huge growths. A simple visit to Timisoara showed an impressive unemployment rate, in fact, a negative one, since the county imports personnel from nearby Romanian towns, Serbia and Hungary and even from the remote city of Iasi, but that's old news.

Meanwhile, a lot of companies started to move to secondary and tertiary towns and hire people that otherwise would only dream to find a job until last year in the region.

To the poor regions' demise contributed heavily the lack of road and rail infrastructure and hefty air prices, that prevented people to commute. Even if this is still the case, the plethora of newcomers to towns such as Iasi, Buzau, Sibiu, Brasov and Sibiu change the economy.

They all have stolen personnel from one another in largest cities, such as Bucharest, Timisoara and Cluj, as the attrition rate grew more than 20% over the past year. To steal personnel means to increase salaries, and 25-35% is the average for this move. Also same figure applies to the automotive and ITO and BPO growth for the past year, according to absolutely all of the interviewed managers.

Therefore, no wonder salaries went up, services boomed – especially in offices rental and lunch lounges, and an average for the whole industry of 10-15% a year is the norm.
So, a 5% growth of the economy seems right, thinking that while energy and other large sectors stagnates, ITO, BPS and automotive grew 20-30%.

Going to the smaller towns poses a threat, though. Once there, the limited qualified personnel will soon empty the HR pool, and newcomers will have to move elsewhere. Also, once in town, the stealing of personnel will only grow salaries to unsustainable levels, and this phenomenon will end in a couple of year time. Others move up north to the Basarabia former province, in Chisinau, even the political instability may lure in only a handful of firms, given the late Russian expansionist policy to Ukraine and the risk of economic contamination.

And the basis for the growth will only swell prices to the area, deepening the purchasing power divide between employees of the same regions. And lowering the purchasing power for the stagnant industries (media included) will not reflect into the statistics, even if on average Romania will look well.

A 200-400-euro salary is no longer suited for a large city like Bucharest, where the standard of living is given by the demand of quality services from the better paid industries.
That's why Romania looks good on paper, but actually the purchasing power divide creates poverty pools that deepen, while salaries grow only for the part that forms the pricing of the growing supply-demand basis.

So outsourcing is good and bad for Romania. It settles a larger basis for the salaries of some, while services suppliers grow prices to fit in to the higher salary curve. And it deepens the poverty pools, purchasing power parity considered.



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