In the late 2000s and early 2010s, Romania established itself in the global IT scene and is currently competing with other Eastern European countries like Poland and Ukraine (both among the top 10 IT outsourcing destinations worldwide).
With a steadily growing pool of IT professionals, a university network that supports the demand, attractive labor costs compared to Western Europe and the USA, and generally higher skilled workforce compared to Asian outsourcing counterparts such as India, China, and the Philippines, Romania attracts companies looking for cultural compatibility and cost-effective solutions.
If your business considers hiring IT employees in Romania, it is crucial to understand what the talent pool is like and analyze the legal framework as well as taxation system before making the most beneficial decision. Another important thing to keep in mind is the method of entering the market: for many players in the industry as dynamic and competitive as IT, establishing an entity in Romania is not a viable option.
What makes the IT talent pool in Romania stand out?
The Romanian IT sector is a significant contributor to the country’s economy and is continuously expanding, with a 5.1% growth recorded solely in 2023. The national tech industry benefits from legislation that supports startups and educational reforms focused on producing highly skilled graduates in Computer Science, Software Engineering, and Cybersecurity. The key IT hubs include the country’s capital Bucharest renowned as the highest-ranked startup ecosystem in the Balkans, alongside cities like Cluj-Napoca, Timisoara, and Iasi. The local IT specialists stand out as attractive hires with their industry-specific expertise, strong English proficiency, and the ability to integrate well into multicultural working environments.
IMPORTANT: After the beginning of the war in Ukraine in 2022, the local IT professionals had to relocate from the most affected regions like Kyiv, Kharkiv, and the southeast in search of safety, and many opted to go abroad. Romania, a neighbor and one of the primary destinations for Ukrainians seeking refuge, has welcomed a substantial number of the nation’s IT specialists since 2022. This influx has enriched Romania’s talent pool in the tech industry, with ongoing openness to potential immigrants from Ukraine.
Labor law and taxes in Romania: what employers need to know
Minimum wage
As of the first quarter of 2024, the gross minimum wage in Romania is 663.24 euro/month, with an average gross wage for an employee in the IT industry typically ranging from approx. 940 euro to 3000 euro/month, depending on the experience level.
Employment terms and conditions
In Romania, full-time employees over 18 y.o. normally work 40 hours/week or 8 hours/day. A maximum legally acceptable overtime work is extra 8 hours/week.
The maximum wage period is 1 month, and salaries must be paid on a predetermined date stated in the employment contract.
The minimum number of paid vacations in Romania is 21 days/year.
Employees are eligible for up to 183 days of paid sick leave per calendar year, receiving either 100% compensation (for severe illnesses and conditions) or 75% (for less serious cases), based on the average monthly salary over the preceding 6 months. Employers cover the first 5 days of sick leave, with subsequent days covered by health insurance.
Paid maternity leave constitutes 85% of the average monthly salary over the preceding 6 months. Employees are eligible for 63 days of prenatal time off and 63 days of postpartum leave.
The notice period is to be agreed upon and stated in the employment contract, the minimum being 20 days both in the cases of resignation and dismissal. For employees in managerial positions, the minimum notice period in case of resignation is 45 days.
For a more detailed overview of employment terms and conditions in Romania, we recommend visiting Countrypedia.
Work permits for foreign nationals
Nationals of the EU, SEE (South East Europe), and Switzerland can enter and reside in Romania for up to 3 months with no additional visa, permits, or registration documents required. If there is a need to extend their stay, a registration certificate must be obtained after 3 months.
Individuals with other citizenships must obtain a work permit (issued by the Immigration Office) and a long stay visa (issued by diplomatic missions or consular offices) for work-related residency in Romania.
Employer and employee taxes
As of 2024, employers in Romania are subject to a 2.25% work insurance contribution. Health insurance (10%) and social insurance/pension contributions (25%) are deducted from employees’ gross salary income.
IMPORTANT: to receive an accurate and up-to-date payroll calculation with all relevant tax deductions taken into account, we recommend using Payroll Cost Estimator.
Employers hiring graduates benefit from a governmental incentive – a 12-month exemption from payment of contributions to the unemployment fund for the eligible employees. Additionally, such employers receive a monthly subsidy for 12 months, the amount of subsidy ranging from 1 x RSI (Reference Salary Index) to 1.5 x RSI, depending on the educational level of eligible employees.
What is the best way to enter the IT market in Romania?
For most small to medium-sized businesses, expanding to a new market is a time-consuming and financially challenging step. The traditional way – establishing a local subsidiary – includes numerous costly setup procedures that take up to 6 months to complete. On top of that, a company entering Romania through its own subsidiary faces the following challenges:
- hiring an on-site legal team to ensure compliance
- relying on numerous third parties for administrative tasks
- experiencing major delays in talent acquisition
IMPORTANT: Given that appealing and cost-efficient local workforce is the main incentive for IT companies to enter Romania, it is counterproductive to deny yourself the opportunity to hire there until your subsidiary is fully established.
Employer of Record (EOR) is the best alternative. The benefits of international expansion via an EOR provider include:
- in-depth legal and administrative expertise
- well-coordinated procedures
- onboarding within days as opposed to a 6-month waiting period
- immigration support for overseas team members
- payroll and tax management
- mitigation of all but financial risks
If your business is looking for a reliable EOR partner with local presence in the European region, attuned to the industry-specific needs of IT labor market, experienced in employing both local and international talent, and offering competitive prices for EOR services, schedule an e-meeting with our team member or leave us a message. We are excited to assist with your business expansion in Romania!
