Rising wages, labor saturation in the large university centers and surging office rentals are not reasons enough to chase outsourcing services providers away from Romania, at lest not for the next five years, reads a recent study conducted by PricewaterhouseCoopers (PwC) Romania, carried by business daily Business Standard.

“Romania can stay competitive in the medium term as far as outsourcing services are concerned.

At the current pace of wage increases, Romania’s advantages will still be sustainable for the next four-five years. Anyway, the wage rises will be offset by human resources quality, particularly the foreign language, technical and IT skills of Romanians,” PwC Romania partner Dan Iancu tells the paper.

According to Iancu, Romania’s EU membership and a relatively stable political climate will still be Romania’s advantages compared with other Eastern European markets, such as Russia, Ukraine or Belarus. At the same time, geographical closeness to and cultural affinities with Western Europe will remain Romania’s advantages against Asian countries, said Iancu.

Romania is currently ranked 11th among interesting destinations for outsourcing, behind other Eastern European countries, such as the Czech Republic, Poland, Russia and Bulgaria, according to the Black Book of Outsourcing 2008, a reference guide of outsourcing services published by the Brown-Wilson Group. First countries in the rankings are the US, Brazil, China and Chile as alternative destinations to India, the traditional destination for services outsourcing.

Given that Romania has been attractive for opening call centres over the past years, demographic resources are now limited and consequently more expensive, particularly in big cities such as Bucharest and Timisoara, Iancu explains. He adds that because of the saturation on the labour market in the cities that were not long ago targeted by all large service providers, the trend of migrating toward other university centres, such as Iasi, Craiova and Brasov, becomes very likely.

The costs borne by services outsourcing in Romania are still attractive, despite their constant rise, says Iancu. He says Bulgaria, where office rents are lower than in Romania and where large outsourcing providers have yet to show up, is more attractive than Romania.

Despite being ranked before Romania’s in the Black Book of Outsourcing, the Bulgarian market for outsourcing is still limited by a small number of urban agglomerations. Besides a better-trained labour force, another advantage of the Romanian market against the Bulgarian one is that in Romania there are call centres already operational from where potential outsourcing providers can recruit staff with specific expertise.

In relation to the Romanian market, Iancu says that as the profit margins go down, the qualified staff pool decline and wages increase, the large companies may start considering outsourcing their support services as a viable alternative for cutting costs and improving performance.