Is IASI the best city in Romania to implement a call center / BPO site?

Interview on http://www.multilingual-bpo.com/

The contact center industry in Romania employs over 20,000 people in over 250 centers. The Romanian contact center market, with an estimated turnover of 120 million EUR last year, is growing rapidly. In the next 5 years, many experts foresee that its value could even increase to 350-500 M EUR.

At the beginning of the years 2000, Bucharest was pretty much the only hub for local and international players who were starting call center and BPO activities in Romania. But the situation has changed: now, many operators have opened facilities in the countryside.

And IASI is one of the most famous ones. Located in the historical Moldavia region, in the North-East of Romania, the city has more 300,000 habitants and more than 70,000 students. But what makes IASI so attractive from the outsourcer’s perspective? We have met Dan ZAHARIA, Office Leasing Manager at IULIUS GROUP in IASI.

The main advantages of IASI that makes it an ideal nearshore outsourcing destination are: the strong academic environment, advanced telecom infrastructure and an on-going flow of new IT specialists from three specialized faculties (more than 600 new graduates per year).

These are supplemented by close proximity to Europe, compatibility to western culture, increasing office premises stock, active recruitment agencies, long tradition cultural centers, training-specialized companies.

What are the call center and BPO players that currently have operations in IASI? How big they are and what services are they providing? Which languages are they serving?

Many BPO players have opened centers in IASI: XL World (1,000 employees), SCC (250), CapGemini (300), Unicredit Business Partner (500), Pentalog (200), VEO Finances (60).

Also KPO players (software development) are present: Continental, Amazon, Endava (200+), Comodo (100+), Embarcadero, Allied Telesys, Synygy, Mind Software, Bentley Systems.

One should take into consideration than any active inhabitants of IASI knows at least one foreign language (usually English or French) at least at conversational level.

Besides, the cultural centers (British Council, Deutsche Kulturzentrum and Centre Culturel Francais) provide good value services to boost future employees’ language proficiency. There’s also a quite large number of language training providers, classes in foreign languages at all phases of formal education (from kindergarten to post-graduates studies).

Other language competencies will find in IASI are: Italian (soon there will be an Italian Cultural Institute opened), Russian, Spanish and at a smaller scale: Turkish, Greek, Japanese, Korean, Chinese.

For BPO, entry level gross yearly wage is less than 4,000 euro. Normally, a BPO center has a performance based bonus/malus system which can be +/- 25% of the above figures.

• Entry level operational personnel – up to 4,000 euro gross yearly wage

• Middle level (up to 3 yrs experience) – up to 8,000 euro gross yearly wage

• Team Leader – up to 15,000 euro gross yearly wage

• Operations Manager – more than 25,000 euro gross yearly wage

Of course, depending on experience, regular/exotic language proficiency, responsibilities and position, there are significant variations.

For a KPO company entry level employee earns more than 7,000 euro as gross yearly wage.

IASI has flexible public local institutions focused on attracting and maintaining new investors. As fiscal policy, Romania has a tax exemption for employees that have graduate an IT profile faculty and are working in IT companies.

The office premises market in IASI, a city with more than 320,000 inhabitants, is currently of up to 100,000 sqm, of which 70,000 sqm are A or B+ buildings, according to our studies. The stock in IASI is rapidly increasing with more than 50,000 sqm new office premises to be delivered until 2014.

This year alone 25,000 office sqm have been delivered. Iulius Group have inaugurated 3 new office buildings (named United Business Center) with more than 20,000 sqm class “A” office premises within downtown PALAS multifunctional complex.

IASI has an advanced telecom infrastructure (High Speed Data Communication Links): optical fiber (up to 10 Gbps), radio back-up solutions, national/international leased line with SDH/MPLS technologies.

The average office area leased by a company in IASI is of 200-250 sqm, however there are a number of companies in the range of tens, which lease areas exceeding 1,000 sqm. The basic rents for the office premises in IASI have decreased by 20-25% as compared to the peak level in 2007, currently ranging between 10 to 12 Euros/sqm plus VAT for A-class, and 7 to 10 Euros/sqm for B-class buildings.

IASI airport is relatively small, but with decent connections. Good news is that it will be upgraded with European funds in the near future and transformed in a regional hub. Express roads link IASI to Bucharest (capital), other major cities and the neighboring Republic of Moldova.

Until recently, IASI has not been on the BPO radar as a favorite city on the list of multinational companies intending to open or expand their offices in Romania.

The situation has changed however as the office stock has increased, and the investors have begun to take advantage of the high number of students and salaries which were significantly lower than those in other major cities from the Central and Eastern Europe.

New players are testing the city of IASI researching the talent pole, the macro economical data, the office buildings and as a consequence they found gold, some of them will implement new sites in 2012-2013.

Also existing players are pleased with the talent pole of loyal and skilled people they harvest here and are expanding their operations in IASI (ex. XL World, VEO Finances, Pentalog, Unicredit, Endava).

IASI is transforming into an European hub for IT and outsourcing industry. Any BPO key decision maker should at least visit the city of IASI in order to properly assess a long-term opportunity.