Romania leads outsourcing charge

June 17th, 2004

Eastern European, Middle-Eastern and Asian nations were in London this week to pitch for outsourcing business. Although it can’t match the tax-free incentives of some states, Romania reckons it has other benefits to offer

Romania led the charge this year at London’s second OutsourceWorld conference, as it seeks to find more UK businesses willing to take advantage of its IT expertise which, in 1962, was responsible for building the first computer in a Communist-bloc country.

Despite these useful technical credentials the country is now keen to distance itself from its communist past and promote its suitability as partner for companies in Western nations who are looking for offshoring and outsourcing partners.
At the OutsourceWorld exhibition and conference, which was squeezed into the smaller of the two Earls Court exhibition centres in London alongside a handful of other tech conferences, a dozen countries sent trade delegations.

Romania’s presence was by far the largest – possibly due to the fact that it has largely been ignored by UK companies.
“Romania has the best human resources in the world for IT,” said Florin Vrejoiu, vice president of Aries, the Romanian Association for Electronic and Software Industry, which has some 300 member companies. “Among the socialist countries, Romania was the first to develop computers and networking,” he added.

Other countries keen to make an impact included Dubai, Egypt, China, Sri Lanka and South Africa. China, while not providing quite such extensive tax breaks as Dubai, where companies pay no corporate tax and their employees pay no income tax, does offer some tax breaks to foreign companies looking to offshore operations there. According to Li Bing, deputy director of the Department of Computer Software in China’s Ministry of Science and Technology, “software companies pay zero tax for the first two years of operation and then a favourable rate for years three to five.”

Japan is currently China’s biggest customer for outsourcing, said Bing, accounting for some 60 percent of the work. The US is in second place and Europe lags way behind, said Bing.

China’s presence – the first at a UK outsourcing event – appears to mark a sea change. Dr Brian Nicholson of Manchester University, who has written a book on outsourcing, said he had a PhD student three years ago who wanted to research the outsourcing market in China but who could find no companies there. “It’s a surprise to find them here,” he said, “but it is encouraging.”

Meanwhile Howaid Kamel of Egypt’s Ministry of Communications and Information Technology said this marked the second trade delegation from that country. “Now the focus is on London as it is closer to European countries,” she said, adding that the country has a rapidly growing IT industry. According to statistics compiled by the Ministry, the number of IT companies in Egypt has ballooned from 266 in 1999 to 1,133 firms in 2003 employing 32,763 people.

16 Jun 2004

Source: ZDNet

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