Experts consider that increasingly more companies might resort to outsourcing with a view to trimming their operation costs. According to estimations by management consultancy firm A.T. Kearney, in the short run, the revenues of the players on the local outsourcing market will go down as an effect of the international financial crisis, but they will bounce back in the second half of 2009.

“According to global estimations, at least 10% of the revenues of large-size Business Process Outsourcing companies are at risk. It’s hard to assess the exposure of the companies that operate in Romania to international financial institutions, but I expect the impact to be negative in the short term,” A.T. Kerney Romania representative Bogdan Belciu told the seminar “Trends on the outsourcing market” organized by Business Magazine in partnership with Sixt New Kopel, Ericsson, Xerox and Class IT Outsourcing.

The major issue challenging the companies amid the crisis is how to increase their operational efficiency, said the A.T. Kearney official. “All companies are trying to get more efficient in order to offset the lesser growth and narrower profit margins. Cost trimming carries a higher chance for outsourcing,” said Belciu.
President of Class IT Outsourcing Bogdan Tudor shares the same opinion. He expects a boom in the outsourcing of IT services, as the first option of the companies seeking to reduce outlays.

Tudor estimates that IT outsourcing accounts for less than 10% of the overall local market. “This percentage is far below the level in Central and Western Europe (30-40%), or the US, where it goes as high as 70-80% because workforce outlays are prohibitive there,” said Tudor.

According to an A.T. Kearney survey, in 2007 Romania slid on position 33 in the ranking by the outsourcing market’s attractiveness to foreign investors. In 2005 Romania was on position 24, but fell in the ranking as a result of rising costs, especially of staff outlays and the lower workforce availability.

The reasons why many foreign companies resort to Romanian manpower are the low costs of service outsourcing, the gap that separates Romanian wages from more developed EU member states, the skilled workforce and the low cultural and linguistic barriers, head of the Planning and Employment Strategy Department of the Ministry of Labor, Family and Equal Opportunities (MMFES) Cristina Mereuta told daily Ziarul Financiar.

The US company Xerox is contemplating tapping the Romanian market and is analysing the possibility to transfer here its manual invoice processing operations. Xerox Romania estimates for this year more than 74 million dollars (50 million euros) in turnover.
China’s Lenovo, the world’s fourth largest PC producer, announced that it might open a PC assembly facility in Central and Eastern Europe and that Romania is a potential target for this plan.