Bogdan Putinica and Daniel Bogdan were only 14 when they set up a part-time business repairing PCs. After taking computer science classes at their high school in Bucharest, Romania, the two teenagers got hooked on writing software code but neither could afford to buy a PC. So, after fixing other peoples' PCs, they would use the machines to practice writing code before returning them to their owners. "We wanted to accumulate know-how," explains Putinica.
That practice paid off handsomely. Now 29, the two buddies are millionaires. After finishing school, they set up a business that reeled in fat outsourcing contracts from clients such as Citibank (C ) and AT&T Wireless (T ), to develop software for mobile phones and other devices. On July 26, they sold 76% of their company, IP Devel, to Swiss temporary-services giant Adecco (ADO ). It will become the nucleus of a Bucharest-based software development and testing business that Adecco will use to serve clients worldwide.
Bogdan and Putinica are part of the talent pool that's turning Bucharest into the Bangalore of Eastern Europe. The city, still scarred by a quarter-century under the iron rule of dictator Nicolae Ceaucescu, is attracting hundreds of millions in investment by global giants such as Oracle (ORCL ), Hewlett-Packard (HPQ ), and Accenture (ACN ).
They're opening shiny new office complexes and recruiting thousands of IT specialists, while shopping for acquisitions and technologies developed by Romanian startups. "Bucharest is becoming a hot city—finally," marvels local publisher Rachad El Jisr over dinner at La Mama, a popular café near the former Communist headquarters where Ceaucescu holed up before he was captured and executed in 1989.
Cheap brainpower is one key to Romania's success in outsourcing. Romania is one of Europe's poorest countries, and programmers' salaries start at around $500 a month, which is on a par with India and 50% less than more prosperous neighbors such as Poland and the Czech Republic. Romania also boasts a well-educated workforce with an estimated 60% speaking at least one foreign language.
"Start your career!" exhorts an advertisement in a local magazine seeking speakers of German, Italian, Hebrew, Hungarian, and English for a call center run by Akela, a Romanian software developer that was acquired last year by U.S.-based TechTeam Global (TEAM ). It's among more than a dozen foreign companies that have set up Romanian call centers handling everything from software troubleshooting to airline customer-service requests.
SKILLED AT RESEARCH.
Language skills and low wages are only part of the appeal, though. IT executives rave about the topnotch training and problem-solving prowess of Romanian computer specialists. Student teams from Romanian universities routinely take first place in global software-development contests sponsored by Microsoft (MSFT ) and Oracle.
"If you want 5,000 people doing coding, India is a better choice." But for more advanced research and development, "it's better in Romania," says Eugen Schwab-Chesaru, who heads the local office of Pierre Audoin Consultants, which has helped broker several multinational investments, including the recent Adecco deal.
About half the country's 16,000 software engineers now do research and development rather than coding, says Varujan V. Pambuccian, a computer scientist who serves in the national Parliament. German chipmaker Infineon Technologies recently set up a center in Bucharest where about 120 engineers are to conduct research on power semiconductors used in automotive and other applications, a priority for the company. And several of Microsoft's antivirus offerings, including Windows Live OneCare, are built on technology developed by Romania's GeCAD.
FOCUS ON EDUCATION.
To strengthen the country's hand in bidding for more skilled research jobs, local industry leaders are lobbying hard for increased spending on IT and mathematics education. Oracle is subsidizing IT courses in local universities and has agreed to offer additional programs in secondary schools.
Oracle has some 350 employees in northern Bucharest working on software development and product support. The workforce is expected to swell to 1,000 in the next few months. "This has become a global and regional hub for us," says Stefan Cojanu, the company's managing director for Romania.
Perhaps most encouraging, some young Romanians who moved abroad during the economic chaos of the 1990s are now trickling back. Software engineer Eduard Fabian worked in Sweden, the Netherlands, and Ireland but moved back to Romania in 2004 to take a job at Oracle. Although he took a big pay cut from his last job in Ireland, "On balance, I'm better off," he says. "And it's good to be home."
By Carol Matlack