THE END OF THE OUTSOURCING MODEL? Romania's IT Sector at the Breaking Point

Feb 4

A Strategic Analysis for Romanian Technology Leaders and Developers

February 2026

Executive Summary

Between 2022 and 2024, Romania's IT sector lost 54,629 jobs. That is a 27.2 percent contraction in the workforce in just two years. This is not a cyclical correction. This is the terminal collapse of an entire business model. Three decades of growth as Central Europe's outsourcing factory are ending abruptly, not because of isolated policy failures, but through the convergence of structural shifts that have rendered the region's fundamental value proposition obsolete.

For the first time in the history of Romania's IT industry, trust between international management teams and Romanian development centers is collapsing. Relationships that seemed permanent are breaking. Continental, Endava, Amazon, Microsoft, UiPath—companies that defined the sector—are fundamentally reassessing their Romanian commitments. Entire functions are being relocated or eliminated, not optimized. This whitepaper examines why this happened now and what it means for Romanian developers and managers. The analysis focuses on three converging crises: the collapse of trust in international partners, the strategic vulnerability created by dependence on a small number of multinational corporations, and the erosion of the cost advantage that has always been the foundation of Romania's value proposition.

Two external shocks accelerated the crisis. The automotive industry underwent a terminal restructuring. Major tech giants made catastrophic bets on digital transformation that failed spectacularly. Meta lost 73 billion dollars on a metaverse that never materialized. Siemens invested heavily in digital twins, but they failed to deliver. Romanian development centers absorbed the consequences of these failed strategies they did not create. Most importantly, this whitepaper demonstrates that Romania's situation is not unique. It is part of a broader Central European pattern. Poland and Sweden both experienced collapses in their outsourcing sectors in 2023 and 2024. But both countries escaped the worst outcomes because their tech ecosystems were larger and more diverse. They achieved what might be called escape velocity. Their question is no longer survival. Their question is acceleration.

Romania and the CEE region face different challenges. The country's tech sector is more concentrated. It is more dependent on outsourcing. But that concentration is not necessarily a weakness. It is an opportunity. Understanding why Poland and Sweden succeeded, and why their paths differ from Romania's, reveals the actual pathway forward. The conclusion is clear: The CEE regions cannot return to 2022 employment levels under the existing model. The sector must transform. But the transformation is not impossible. It is difficult, and it requires abandoning the old playbook. But it is possible.

PART I: THE NUMBERS WE CANNOT IGNORE

The Employment Collapse

Romania's IT sector employment figures tell a story of discontinuity. These are the facts:

Table 1: The Employment Collapse

Year	IT Employees	Change	% Change
2022	200,629	—	—
2023	190,152	-10,477	-5.2%
2024	146,000	-44,152	-23.2%
2022-2024 Total	-54,629	-27.2%

Source: ANIS (Employers' Association of the Software and Services Industry), Statista Romania IT Sector Data

The drop from 2023 to 2024 represents a critical inflection point. For context: the entire US technology sector, during the 2001-2002 Dotcom Crash, contracted approximately 18 percent over two years. Romania is losing more IT jobs in a single year than the United States lost during its worst technology sector crisis in modern history. This is not a normal correction.

Who Left: The Major Employer Exits

The following companies represent only the publicly documented, formal workforce reductions. The true figure includes unreported layoffs, attrition-based downsizing, and quiet closures. The real number is likely 5 to 10 times higher than what appears in official statements:

  
    Table 2: Major Employer Exits

            Company
            Jobs Lost
            Period
            What Happened
        
            Endava
            1,239
            2022-2024
            Lost 27 percent of workforce; closed Craiova and Sibiu entirely
        
            Continental/Aumovio
            870
            2025
            Timișoara embedded systems and ADAS software eliminated
        
            Amazon Dev Center
            810+
            2022-2025
            Dropped from 4,234 to 3,424 in two years; additional 500 cuts announced
        
            UiPath
            445
            2024-2025
            Global restructuring cut 420 jobs (10 percent of company); QA department Bucharest closed entirely (25 roles)
        
            Microsoft Romania
            180
            2025
            Cut 8 to 10 percent of local staff; software engineers and project managers primarily affected
        
            Bitdefender
            150
            2025
            Business Solutions Group downsized (7 percent of workforce)
        
            Total (Top 6)
            3,694
            2022-2025

All six of these employers represent international operators with decades-long relationships in Romania. Some were founded here. UiPath started in Romania. Microsoft has operated a development center in Bucharest since 2005. Endava's Romanian operations were, until 2022, considered a crown jewel of the company. This stability was assumed to be permanent. It was not.

The Dependency Trap: Who Employs Romania

The most revealing data comes from employment distribution by employer category. This shows the concentration problem clearly:

Table 3: The Dependency Trap - Employment by Category

Employer Category	2022 Employees	2024 Employees	Jobs Lost	% Loss
Top 5 International	18,500	12,800	5,700	-30.8%
Top 20 International	35,000	22,000	13,000	-37.1%
Domestic Romanian Firms	165,629	124,000	41,629	-25.1%
Total IT Sector	200,629	146,000	54,629	-27.2%

Source: Estimated from ANIS data, Statista, and individual company statements

The pattern is unmistakable. International employers contracted 37.1 percent while domestic firms contracted 25.1 percent. The exodus of multinational capital is the primary driver of Romania's employment crisis.

In 2022, the top 20 international employers represented 17.4 percent of Romania's total IT workforce. Their 37 percent reduction means the loss of approximately 13,000 middle-class, high-wage jobs concentrated in Bucharest, Timișoara, Cluj, and Iași. This is not a minor adjustment. It is structural reshaping of the entire employment landscape.

PART II: THE CRISIS OF TRUST

What Changed: From Stable Partnership to Strategic Reassessment

For the first time in modern Romanian IT history, the fundamental relationship between international headquarters and Romanian development centers is fracturing.

Historical context matters here. During the 2008-2009 financial crisis, international employers reduced headcount in Romania but maintained strategic presence. They rehired aggressively during 2010-2015. During the 2020-2021 Covid period, remote work normalized. Romanian developers proved equally productive working from home. Investment actually increased.

Today's crisis manifests differently. This is not downsizing. This is strategic withdrawal.

The evidence is clear. Endava did not downsize offices in Craiova and Sibiu. It closed them entirely, transferring remaining operations to Bucharest while simultaneously cutting that headcount too. UiPath eliminated not individual QA roles but the entire Bucharest QA department, replacing it with AI-driven testing automation. Amazon is not consolidating Romanian teams into other Romanian centers. It is shifting functional responsibilities entirely away from Romania. Continental is not optimizing the Timișoara engineering center. It is exiting automotive software R&D in Romania altogether.

This represents fundamental strategic reassessment, not tactical cost optimization. The psychological and organizational shift is complete. Management teams have decided that Romania is no longer strategic.

Why Management Lost Faith: The Value Proposition Died

Internal conversations with senior managers at international tech corporations, conducted confidentially during 2024 and 2025, reveal a consistent narrative. The conversations all follow the same pattern. The managers express frustration. They explain that the original logic no longer works.

"We can no longer justify why Bucharest should be 40 percent cheaper than Munich when productivity is identical and coordination complexity has increased," they say.

The logic inverted. Romanian development centers were originally positioned as cost reduction with acceptable quality tradeoffs. Today they deliver equivalent quality at no longer meaningfully lower cost. They introduce coordination overhead that erodes value further. From a CFO perspective, the arithmetic is unfavorable.

In 2015, a German developer cost 8 times as much as a Romanian developer. A company could hire 8 Romanian engineers for the price of 1 German engineer, accept 75 percent productivity, and achieve 6 times the output. The return on investment was clear.

In 2025, a German costs 2.4 times a Romanian. A company could hire 2.4 Romanians for 1 German, get 95 to 100 percent productivity, and achieve 2.3 to 2.4 times the output. The return on investment is not premium. It is economically neutral or even negative when coordination costs are taken into account. The value proposition, which existed for three decades, has disappeared.

Three Triggers That Converged (2023-2025)

Three separate factors aligned during 2023 to 2025 to trigger management reassessment. Each factor alone would have been manageable. The combination was fatal.

Trigger 1: Tax Abolition

The Romanian government eliminated IT sector tax benefits in phases. In 2023, there was a partial reduction in allowances. In January 2025, the government abolished all IT-specific tax advantages. This increased employment costs by 10 to 15 percent nominally. For international CFOs, this created a decision point. If Romania is no longer cheap and the government has eliminated tax advantages, why maintain the presence?

Trigger 2: Productivity Parity Achieved

Over the past two decades, working conditions and compensation for Romanian software engineers have evolved dramatically. In the early days, nearshoring was often run like a low‑cost “sweatshop” model, with weak local line management and a narrow focus on cheap headcount rather than sustainable productivity. Instead of optimizing solely for code output, a new generation of teams invested in modern engineering practices, strong technical leadership, and process discipline but without the rigid bureaucracy that plagues many Indian outsourcing setups. As a result, Romanian engineers have become genuinely world‑class. In most development centers, day‑to‑day coordination was already organized through project structures, whereas HQ traditionally attempted to steer projects via line management and high‑level reporting. As complexity rose, that model reached its limits: real productivity gains came from empowered local lead engineers, not from additional reporting layers at HQ.

Once that productivity parity was reached, the old “sweatshop” logic could no longer be sustained. The war for talent drove salaries and conditions upward, which in turn destroyed the original nearshoring business case based purely on cost arbitrage. India is experiencing a similar dynamic, with a significant brain drain of top talent moving to the U.S. and other high‑value markets.

Trigger 3: Regional Competition Reemerged

As of 2025, alternative outsourcing destinations have become competitive again. Bulgaria now offers developers 950 euros per month, with a 10 percent flat corporate tax rate. Ukraine offers 800 euros per month with 5 percent FLP for IT companies. Moldavia offers 650 euros per month with 7 percent flat tax. Romania now costs 1,200 euros per month with abolished tax benefits.

Romania lost its cost advantage in Eastern Europe. International employers now have superior alternatives for cost-reduction outsourcing while maintaining equivalent quality.

The Aftermath: Brain Drain Accelerates

When management teams at Endava, Amazon, Microsoft, and Continental decide not to backfill departing roles or let teams shrink through attrition, they signal that their strategic commitment has ended. This is fundamentally different from the 2008-2009 crisis, when companies cut aggressively but then reinvested heavily in 2011-2015. In 2024-2025, there is no signal of reinvestment. Positions are eliminated permanently. The consequence is predictable. Romanian managers and senior engineers at these companies now understand their employer has deprioritized Romania. Career advancement will require relocation. High performers will leave. The institutional knowledge that took 20 years to build will disperse.

Conservative estimates suggest that 15,000 to 25,000 experienced Romanian developers will emigrate or shift to remote work for foreign companies between 2025 and 2027. They will take institutional memory and relationship networks with them.

PART III: THE AUTOMOTIVE SHOCK

Continental Timișoara: More Than Just a Factory

For those outside Romania, Continental is an automotive supplier. For those in the sector, Continental Timișoara was something more fundamental. It was one of the institutions that built Romanian software management capability.

The facility was established in 1998. Over the past 25 years, it has become much more than a cost center. It became a management incubator. Romanian engineers learned to lead distributed teams. They learned to manage cross-functional projects. They learned to coordinate with global stakeholders. It became an architecture training ground. System-level thinking, not just feature implementation. It became a career ladder. Junior developer to senior to team lead to engineering manager to director, all locally, without requiring relocation. This mattered because outsourcing companies like Endava and Luxoft rarely invest in building management depth. Their model is execution. Take requirements. Deliver code. Repeat. Continental, Bosch, Siemens required local engineering leadership because they were building complex systems, not just delivering projects.

This is critical. The automotive industry was the backbone of Romania's engineering culture and, less so, of other CEE regions’ engineering culture. They trained people not just to code, but to own outcomes and manage complexity and make architectural decisions.

When Continental announced 870 layoffs in Timișoara in 2025, it was not eliminating factory workers. It was exciting to leave the embedded systems R&D center entirely. ADAS software engineers, automotive firmware architects, and systems integration leads, roles that took 10 to 15 years to develop, were being eliminated. Bosch, ZF, and Siemens will follow. Conservative estimate: 3,000 to 4,000 automotive software and embedded systems jobs will be eliminated during 2025-2027. This is the second shock wave.

Why Automotive Collapsed: Portfolio Poison

The automotive crisis that is unfolding in 2024-2025 is not a classic cyclical downturn. It is a structural crisis triggered by catastrophic portfolio management decisions made during 2015-2020. Here is what happened.

Every major automaker simultaneously doubled its portfolio instead of transitioning from internal combustion engines to electric vehicles. BMW did not phase out the 3-series. It kept it and added the new EV i4. Mercedes kept the E-Class and added the EV EQE. Volkswagen kept the Golf and added the ID.3 and ID.4. Ford kept the F-150 and added the F-150 Lightning. General Motors maintained its full ICE lineup while aggressively expanding into EVs.
This strategy was economically insane. From a unit economics perspective, every platform suddenly faced half the production volume because production was split between ICE and EV variants.
- Lower volumes mean higher fixed costs per unit.
- Lower volumes mean lower automation ROI
- . Lower volumes mean the same engineering overhead spread across a smaller revenue base.
What companies did instead of absorbing costs was obvious. They dramatically increased vehicle prices from 2016 to 2021. Average new-car prices rose by 35 to 40 percent globally. Premium brands reached 50 percent increases. Simultaneously, they realized windfall profits from chip shortages and demand volatility during 2020-2023.
Then they did something remarkable. They paid out massive shareholder dividends during 2020-2023 even as EV transition demanded massive capital expenditure. Automotive companies distributed more than 150 billion euros to shareholders. They deferred essential capital investment in new EV platforms and manufacturing.

The reckoning arrived during 2024-2025. Customer demand normalized. Chip supplies became adequate. Pricing power evaporated. Car prices began normalizing downward. Margins collapsed. Simultaneously, EV development required massive new investment in battery technology, software platforms, charging infrastructure, and supply chain partnerships. The cash that should have been preserved for this transition was paid to shareholders.

The result? catastrophic margin compression combined with massive, unfunded capital requirements. This led to brutal cost-cutting across the board.

Why Romania Gets Hit Differently This Time

Historically, Romanian automotive suppliers absorbed downturns by reducing manufacturing capacity. Build fewer brake components. Reduce production shifts. Lay off factory workers. This was painful but manageable.

Today's situation is different. Continental Timișoara, Bosch, ZF are not primarily manufacturing facilities. They are embedded systems R&D and automotive software centers. When Continental announces 870 layoffs in Timișoara, it is cutting ADAS engineers, embedded systems architects, and automotive firmware specialists. These are white-collar, high-wage, highly specialized roles. They took years to develop. When they are eliminated, it signals that Continental is exiting software R&D in Romania entirely.

Why would a company do this? The answer is straightforward. EV platforms require a consolidated, centralized software architecture. Tesla's competitive advantage, centered in Palo Alto, versus legacy automakers with distributed R&D defines the competitive landscape today. Continental, Bosch, and ZF are consolidating all EV software into central hubs, primarily in Germany and partially in California. Peripheral centers like Timișoara are being exited.

The broader implication is sobering. If automotive, a physically embedded and mature industry with decades of relationships, can reorganize this radically, then software-intensive sectors with no physical constraints can reorganize even more aggressively. Amazon, Microsoft, Oracle, IBM are watching Continental's reorganization. They are asking themselves the same question: If Continental can exit Romania entirely, why cannot we? The answer is: they can, and increasingly, they will.

PART IV: THE COVID GAMBLE AND ITS AFTERMATH

The Great Digital Bet (2020-2022)

During the Covid period, major technology corporations made a strategic bet. They decided the future was entirely digital, immersive, cloud-based, and virtualized.

This bet manifested in specific ways. Meta rebranded Facebook as Meta and committed to building a fully immersive virtual reality internet. The company projected more than $ 100 billion in R&D spending and expected Metaverse revenues to drive its growth by 2025. Siemens positioned industrial digital twins as the future of manufacturing. The company reorganized around this strategy, diverting software investment from traditional manufacturing products to cloud-based digital platforms. Every major software company expanded subscription-based services, operating systems, and platform-as-a-service offerings. The assumption was that the "do not own, subscribe" model was inevitable. Between 2020 and 2023, billions flowed into product development, infrastructure, and hiring to support these bets. Tech company headcount expanded aggressively specifically to support these initiatives.

The Bets Failed

Meta's Reality Labs division has accumulated 73 billion dollars in cumulative losses since inception. As of February 2026, the division continues to lose 4 to 4.5 billion dollars per quarter. Metaverse adoption remains negligible. Tens of millions of VR headsets exist, but sustained usage is essentially zero. The bet that the metaverse would become the future of the internet has completely failed to materialize. Meta is now cutting Reality Labs investments by 30 percent and shifting focus entirely to artificial intelligence. The metaverse is being repositioned from a company's future to a niche product for enthusiasts.

Siemens invested heavily in digital twin platforms from 2018 to 2023. The company bet that discrete manufacturing would undergo wholesale digitalization. The reality arrived: adoption is slower, more fragmented, and less transformative than projected. Siemens is consolidating digital twin investments, cutting R&D in peripheral markets, and laying off approximately 5,600 workers from its Digital Industries division as of March 2025.

The assumption that SaaS would grow at 30 percent or more annually proved false. Growth rates compressed to 10 to 15 percent. Churn increased. Customer acquisition costs exploded. Companies including Salesforce and Datadog cut aggressively during 2023-2024 after over-investing during 2020-2022.

How This Killed Romanian Outsourcing

When these bets were placed between 2020 and 2023, companies urgently needed software developers, infrastructure engineers, and R&D capacity to build their digital future. Romania benefited. International companies expanded hiring in Bucharest and other centers specifically to feed these initiatives. When the bets collapsed during 2024-2025, companies needed to cut aggressively to restore profitability. The software built to support the metaverse, digital twin, and SaaS expansion was partially or fully abandoned. The teams that built it needed to be downsized or eliminated.

The critical point: these were not measured, cyclical adjustments. These were crisis-driven restructurings triggered by massive strategic errors. When a company realizes it has wasted 10 to 50 billion dollars on a failed strategic bet, it cuts brutally. Peripheral operations are the easiest to cut. Headquarters-based teams often face political resistance to layoffs. Romanian, Polish, and Ukrainian teams are easier political targets. Among the companies that have cut most aggressively in Romania, all had significant exposure to failed Covid-era initiatives. Amazon over-invested in retail technology and logistics automation during 2020-2022 and is now consolidating. Microsoft invested heavily in mixed reality through HoloLens and enterprise digital transformation tools and is now deprioritizing. Siemens made a failed bet on digital twins and industrial IoT and is now retrenching.

Management Accountability Avoidance

There is a troubling pattern here. High-level executives who made the failed strategic bets are not being held accountable. But frontline teams are being decimated. Mark Zuckerberg acknowledged Meta's Metaverse failure but remains CEO with no material consequences. Corporate boards approved the spending. No directors were removed. Instead, reality labs teams in Dublin and platform teams in London and engineering centers in Bucharest get eliminated. This represents a perverse incentive structure. Senior management can make massive strategic errors, face no consequences, then solve the problem through cost cutting that disproportionately impacts lower-level employees in lower-cost regions.

From a Romanian developer's perspective, the situation is clear. You had no role in Meta's decision to invest 73 billion dollars in a failed metaverse platform. Yet you lose your job because executives made that bet and lost.

PART V: THE COST ADVANTAGE IS GONE

The Fundamental Equation Broke

Romania's entire 30-year success story was built on a single equation:

Western European Quality plus Eastern European Costs equals Irresistible Value Proposition

In 2025, this equation no longer holds.

Salary Convergence: The Death of the Arbitrage

Table 4: Salary Convergence - The Death of the Arbitrage

Year	Romania Monthly Net	Germany Monthly Net	Ratio (DE:RO)
2015	€400	€3,200	8.0:1
2020	€650	€3,100	4.8:1
2024	€1,100	€2,800	2.5:1
2025	€1,200	€2,900	2.4:1

Source: Statista, PayLab, Numbeo, salary surveys

The compression is dramatic. In 2015, a German developer cost 8 times as much as a Romanian developer. A company could hire 8 Romanian engineers for the price of 1 German, accept 75 percent productivity, and achieve 6 times the output. The return on investment was clear. In 2025, a German costs 2.4 times a Romanian. A company could hire 2.4 Romanians for 1 German, get 95 to 100 percent productivity, and achieve 2.3 to 2.4 times the output. There is no premium. The return on investment is economically neutral or negative when coordination costs are taken into account. This is the death of the outsourcing model.

PPP-Adjusted Reality: When purchasing power is factored in, the gap has essentially closed. A Romanian developer earning 1,200 euros gross in Bucharest has approximately the same purchasing power as a German earning 2,900 euros in Berlin. The arbitrage opportunity that existed for three decades has disappeared.

Lost Regional Leadership?

As Romania's costs rose, the country lost pricing leadership within Eastern Europe:

  
    Table 5: Regional Comparison - Lost Pricing Leadership

            Country
            Median IT Salary
            Cost vs. Germany
            Tax Incentives
        
            Bulgaria
            €950
            3.1:1
            10 percent flat corporate
        
            Ukraine
            €800
            3.6:1
            5 percent FLP for IT
        
            Moldavia
            €650
            4.5:1
            7 percent flat
        
            Romania
            €1,200
            2.4:1
            Abolished 2025
        
            Poland
            €1,600
            1.8:1
            Partial

In 2015, Romania could undercut any regional competitor. In 2025, Romania is among the most expensive options in Eastern Europe with no tax advantages. This is catastrophic. International companies shopping for cost-reduction outsourcing now choose Bulgaria, Ukraine, or Moldavia over Romania. Endava, which was founded in Romania and built its business here, is now establishing new centers in Chișinău rather than expanding in Bucharest.

Tax Abolition: Structural Trap, Not Policy Error

The Romanian government eliminated IT tax benefits in 2023 and 2025. This is criticized as bad timing or mismanagement. The reality is more complex. IT tax benefits cost approximately 1.2 billion euros annually. With a 3.5 percent fiscal deficit and scrutiny from the European Union, this was increasingly unsustainable. The government faced an impossible choice. Keep tax benefits and the fiscal deficit widens. The EU pressures consolidation. Other sectors protest the favoritism. Or abolish tax benefits and the IT sector faces a cost shock. But the budget consolidates, and the EU is satisfied.

There was no good choice. The government chose abolition not because it was ideal, but because maintaining benefits was impossible.

The tragedy: the abolition occurred when the cost advantage was already eroding. If the tax advantage had been abolished during 2016-2018, when the cost advantage was still substantial enough to justify the business case, it would have been manageable. Instead, it was abolished in 2025, when the advantage was gone. The government is not incompetent. It is trapped by structural forces beyond its control. Policy matters far less than the sector's underlying economics.

PART VI: REGIONAL COMPARISON - POLAND AND SWEDEN'S ESCAPE VELOCITY

The Central European Pattern

Romania's crisis is not unique. The outsourcing model is collapsing across Central Europe. But not all countries are experiencing the same outcomes. Poland and Sweden both experienced significant collapses in their outsourcing sectors during 2023 and 2024. Major staffing agencies closed. Development centers shut down. Headcount reductions accelerated. The symptoms were identical to what Romania experienced.

But Poland and Sweden did not experience the same existential threat. Both countries' tech sectors contracted, but neither collapsed. The difference is not policy or luck. The difference is structural diversity.

Poland's Escape: Scale and Diversification

Poland's tech sector is substantially larger than Romania's. Poland has approximately 350,000 IT professionals compared to Romania's 250,000. More importantly, Poland's tech ecosystem is more diversified. Poland has multiple major tech hubs. Warsaw hosts headquarters for global software companies and significant R&D operations. Krakow has developed a strong product engineering and startup ecosystem. Wroclaw has deep expertise in specific technical domains. Gdansk has enterprise software capabilities. The geographic and functional diversity means that when outsourcing contracted, the Polish tech sector had other segments to rely upon.

Additionally, Poland developed a larger number of product companies. Companies like Allegro, Mux, and Brainly are Polish-founded, venture-backed, and scaling globally. When international outsourcing contracts disappeared, Polish developers could find employment at domestic product companies. This created a safety valve that Romania lacks. Poland also maintained stronger relationships with Central European markets. Polish companies serve regional customers throughout Czech Republic, Slovakia, and Hungary. This regional diversification meant that when global outsourcing demand fell, domestic demand continued.

The key point: Poland's tech sector is big enough and diverse enough to absorb the outsourcing contraction without existential threat.

Sweden's Escape: Innovation and Premium Positioning

Sweden's tech sector experienced significant disruption during 2023 and 2024. Staffing agencies that relied on outsourcing contracts to India and Eastern Europe struggled. Development centers that focused on cost-reduction outsourcing closed.

But Sweden's tech sector did not collapse. The reason is different from Poland's. Sweden is not competing on cost. Sweden is competing on innovation. Sweden has developed a strong reputation for building cutting-edge technology. Spotify, Klarna, Skype, the list is long. Swedish companies are not built on outsourcing. They are built on developing proprietary technology and scaling globally. When the outsourcing model collapsed, Swedish tech companies were not vulnerable. Swedish developers did not lose jobs because Swedish tech companies were not competing on cost. They were competing on capability and innovation.

Additionally, Sweden maintained strong venture funding. Swedish venture capital, particularly from the Swedish government and private funds, continued to back technology companies through the outsourcing collapse. This capital allowed Swedish companies to continue building.

The key point: Sweden's tech sector is not vulnerable to outsourcing collapse because Sweden was never primarily dependent on outsourcing.

What This Means for Romania

The comparison between Romania, Poland, and Sweden reveals a critical insight. Romania's situation is not unique in Central Europe. The outsourcing model is collapsing everywhere. But the impact varies based on sector structure and diversification.

Poland survived because it had scale and diversification. Sweden survived because it was never primarily dependent on outsourcing. Romania faces a different challenge. Romania's tech sector is concentrated on outsourcing. It is less diversified than Poland's. It is more dependent on international customers than Sweden's.

But this does not mean Romania is doomed. It means Romania must choose a different path. And that path is visible when you examine what Poland and Sweden actually look like today. Poland is not winning because Poland is cheap. Poland is not winning because Poland cut costs. Poland is winning because Poland has enough scale and diversity to sustain itself independent of any single industry or customer segment. Romania can build that. Sweden is not winning because Sweden is cheap. Sweden is not winning because Sweden competed on cost. Sweden is winning because Sweden built proprietary technology and competitive advantage. Romania can build that.

Neither Poland nor Sweden succeeded by doubling down on what they were good at. Poland did not try to be cheaper than Ukraine. Sweden did not try to be cheaper than India. Instead, both countries moved away from competing on cost altogether.

This is also a lesson for Romania and other CEE regions: The question is not how to become cheaper. The question is how to build what Romania was actually good at all along. World-class engineering. Strong technical culture. Proven ability to build complex systems. Romania's mono-culture in the tech sector, its heavy dependence on outsourcing, is a liability in one sense. It means the sector is vulnerable. It means there is no diversification buffer.

But it is also an advantage. It means the sector has deep expertise in one area. It means the sector has built institutional knowledge around software development and systems engineering. It means there is a concentrated group of talented engineers who understand how to execute at scale.

The opportunity for Romania is to take that concentrated expertise and redirect it. Instead of applying it to serving international outsourcing contracts, apply it to building products that Romania controls. Instead of competing on cost, compete on quality and capability.

Poland did this. Sweden did this. Romania can do this. But only if Romania understands that the old path is closed.

PART VII: WHAT THIS MEANS FOR YOU

For Developers: Four Pathways

If you are a software developer in Romania today, you face a choice. The choice is not easy, but it is clear.

Option 1: Stay Employed at a Domestic Company

Work for a Romanian company. The advantage is job stability through 2027 or 2028. The disadvantage is limited income growth and no equity upside. This is appropriate if you have family obligations, prefer stability, or are within five to ten years of retirement.

Option 2: Remote Arbitrage

Secure remote employment with a US, UK, or German tech company. Live in Romania. Earn Western salaries while benefiting from purchasing power parity. The advantage is a 60 to 80 percent income increase compared to local market rates. The disadvantage is tax and immigration complications. You are walking a legal gray area. The rules could change.

Option 3: Deep Specialization

Transition from generalist developer to specialist. Become an expert in cybersecurity, cloud architecture, data engineering, or blockchain. The advantage is a 40 to 60 percent income premium in the Romanian market. The disadvantage is 18 to 24 months of lower income during the transition. This field is highly competitive.

Option 4: Emigration

Relocate permanently to Germany, the Netherlands, the UK, or the US. Accept higher visa friction and relocation challenges. The advantage is 50 to 100 percent long-term income increase. The disadvantage is life disruption and significant social costs.

These are the four paths. Each one requires accepting tradeoffs.

For Tech Leads and Engineering Managers: Navigate the Minefield

If you are a technology leader or engineering manager, your situation is more complex. Your choices have broader consequences.

High-Risk Employers: Amazon Romania expects continued contraction. Attrition rates exceed 20 percent. This is not a safe place for a long-term career. Microsoft Romania is in consolidation mode. Watch for the next restructuring in 2026. Oracle, IBM, and Accenture are all at risk of further reduction. Monitor attrition closely.

Potentially Stable Options: Bitdefender is profitable, product-based, and growing internationally. Romanian headquarters means commitment to the market. UiPath is still growing globally despite recent cuts. Romania remains strategic for now. Scale-ups like Tremend and Zitec carry higher risk but higher upside than shrinking multinationals.

The Critical Shift: In the outsourcing era, you could build a career climbing the corporate ladder at a multinational. In 2026, that ladder is shrinking. Instead, prioritize founding or joining early-stage companies. Build equity, even with a salary discount. Develop product sense, not just engineering skill. Network aggressively within the Romanian tech community. Learn business operations. The management skill gap is real, and you have an opportunity to close it.

PART VIII: THREE SCENARIOS FOR 2026-2030

Based on structural analysis, three scenarios are plausible:

Scenario Best Strategic Pivot (25 percent probability)

Complete break with the outsourcing business model. Emergence of 10 to 15 Romanian scale-ups with global reach and sustainable product market fit. Focus sectors include cybersecurity, FinTech, DeepTech, automation. Employment falls further to 120,000, but productivity per employee increases 40 to 50 percent. BIP contribution remains at 7 percent or grows to 8 percent despite lower headcount. Brain drain slows as high-value opportunities emerge domestically.

Outcome: The sector becomes smaller but dramatically more valuable and strategically important.

Scenario Middle: Managed Contraction (55 percent probability)

IT employment is expected to stabilize at 130,000 to 140,000 by 2027. That is 30 to 35 percent lower than the 2022 peak. Romania becomes a mid-tier nearshoring hub. Competent and reliable, but not premium. Focus shifts to maintenance, support, and routine development. Limited high-value innovation. Primarily commodity services. BIP contribution declines from 7.2 percent to 5 to 6 percent. Thousands of experienced developers emigrate.

Outcome: The sector survives but is fundamentally diminished in scale and strategic importance.

Scenario Worst: Structural Collapse (20 percent probability)

Further international exits occur. Oracle, IBM, and SAP substantially reduce their presence. Brain drain accelerates. 30,000 or more developers emigrate during 2026-2028. Domestic firms struggle without international anchor customers. Employment falls below 100,000. BIP contribution drops below 4 percent. The sector becomes a regional backwater with pockets of resilience but no critical mass.

Outcome: Economic crisis for Bucharest and Timișoara. Significant social disruption.

PART IX: WHAT THE SECTOR MUST DO COLLECTIVELY

We Cannot Wait for Government Solutions

This is the most important realization. The “government” cannot restore the sector to pre-2024 employment levels. All available policy tools are constrained. Tax benefits are fiscally unsustainable. Wage subsidies violate WTO rules and are politically toxic. R&D grants have low absorption capacity. Immigration liberalization faces public opposition.

The sector must solve this through self-organization, capital formation, and entrepreneurial energy. Not policy advocacy.

Four Strategic Imperatives

Imperative 1: Break with Outsourcing Identity

Romania spent 30 years building the identity of Europe's outsourcing hub. That identity is now a liability. Every conversation with multinationals starts with how cheap you are. The answer is no longer competitive.

Shift to: Central Europe's product innovation hub. Or Central Europe's deep tech center. This requires investing in early-stage venture capital. Building IP infrastructure. Developing product-market fit expertise. Shifting mindset from execution to innovation.

Imperative 2: Dramatically Increase Company Formation

Romania has approximately 250,000 IT professionals. Approximately 200 Romanian software companies have achieved international scale. That is a 0.08 percent conversion rate. Israel, with a similar tech workforce, has approximately 3,000 companies at international scale. That is a 1.2 percent conversion rate.

Romania is dramatically underperforming. The barrier is not talent. It is capital access, business expertise, and cultural risk tolerance.

Solutions include government-backed venture funds targeting Romanian founders. Import business mentors from diaspora. Create a regulatory sandbox for tech startups. Simplify company formation and employment law.

Imperative 3: Regional Consolidation Over Competition

Rather than competing with Bulgaria, Moldavia, Ukraine for cost-arbitrage outsourcing, partner to create a consolidated Central European tech region with 1 million or more developers. Such a coalition would have genuine negotiating power.

Imperative 4: Build the Management Layer We Never Developed

The outsourcing model never required learning portfolio management, product strategy, market positioning. Romania learned to execute. But Romania did not learn to own.

Romania must develop product management expertise. Business operations. Strategic thinking. Risk assessment for opportunity, not just for allocation. This is the hardest transformation because it requires cultural shift, not just skill acquisition.

CONCLUSION: AN EPOCH ENDS

Romania's IT sector is experiencing the end of an era. The outsourcing factory that sustained three decades of growth is collapsing. Not from policy failures or poor company management, but from structural shifts in global economics and technology strategy that Romania cannot control.

The loss of 54,629 jobs in two years is not crisis. It is a transformation.

What comes next is uncertain. The next three years determine whether Romania adapts or collapses. The sector cannot restore 2022 employment levels. It should not try. Instead, build product companies, not service companies. Develop entrepreneurship. Strategic consolidation with regional peers. Self-organize. Do not wait for government solutions. For you personally, your career is no longer defined by climbing the corporate ladder. The ladder is shrinking. Develop specialized expertise or product intuition. Build business acumen. Network within the Romanian tech community. Build options. Remote arbitrage. Emigration. Founding or joining startups.

An epoch is ending. What comes next depends on the choices we make now. Individually and collectively.

References

[1] ANIS (2024). IT Industry Study 2024: Impact on Romanian Economy. https://anis.ro/it-industry-study-2024/

[2] Statista (2024, December 18). Romania: employees in IT industry 2024. https://www.statista.com/statistics/1537504/romania-employees-in-the-it-industry/

[3] The Recursive (2024, October 24). Number of IT Employees in Romania Dropped by 10,000 in 2023. https://therecursive.com/number-of-it-employees-in-romania-dropped-in-2023

[4] How About Tech (2025, June 4). Continental to Lay Off 900 Employees in Romania. https://howabout.tech/continental-to-lay-off-nearly-900-employees-in-romania

[5] Romania-Insider (2025, July 16). Amazon to cut 500 jobs at Romanian center. https://www.romania-insider.com/amazon-development-center-iasi-layoffs-2025

[6] Romania-Insider (2025, February 13). UiPath closes QA department in Romania. https://www.romania-insider.com/uipath-closes-quality-assurance-department-romania-2025

[7] Informat.ro (2025, July 18). Microsoft Romania to lay off 138-180 employees. https://informat.ro/en/news/microsoft-romania-announces-redundancies-71561

[8] Informat.ro (2025, November 13). Bitdefender strategic layoffs. https://informat.ro/en/economy/bitdefender-announces-strategic-layoffs-91239

[9] Romania-Insider (2025, January 8). ANIS: fewer contracts, layoffs, fiscal instability for IT 2024. https://www.romania-insider.com/anis-romania-it-industry-2024

[10] Business Forum (2024, December 29). ANIS: Tax measures hit IT stability. https://www.businessforum.ro/industry/20241230/anis-new-tax-measures

[11] Yahoo Finance (2025, December 5). Meta Lost 73B on Reality Labs. https://finance.yahoo.com/news/meta-platforms-lost-73-billion-165823364.html

[12] MoneyControl (2026, January 28). Meta Reality Labs bleeds 19B as VR falters. https://www.moneycontrol.com/technology/meta-reality-labs-bleeds-19-billion-1379576

[13] Reuters (2025, March 18). Siemens to cut 5,600 jobs in automation. https://www.reuters.com/technology/siemens-cut-5600-jobs-automation-business

[14] Tech Monitor (2025, March 18). Siemens cuts 5,600 in Digital Industries. https://www.techmonitor.ai/ai-and-automation/siemens-job-cuts-digital-industries-automation

[15] PayLab Romania (2025). IT Salary Radar October 2025. https://www.paylab.ro

[16] Numbeo (2025). Cost of Living: Germany vs Romania. https://www.numbeo.com/cost-of-living/compare_countries_result.jsp

Thomas Winz