Romania Investment in key sectors

Investment in Key Sectors: Driving Technology and Education in Romania

Romania’s economic development is closely tied to its strategic focus on technology and education. These sectors have received significant public and private investments, fostering innovation, building a future-ready workforce, and enhancing the country’s global competitiveness.

Technology Sector: A Catalyst for Growth and Innovation

Romania’s technology sector has emerged as a cornerstone of its economic strategy, supported by substantial investments from both public and private stakeholders. These efforts are positioning Romania as a rising hub for digital innovation and technological advancement in Europe.

Public Investment: Driving Digital Transformation

Romania has been actively investing in digital transformation to enhance its technological infrastructure and public services. Key initiatives include:

• Connectivity
  • Romania’s 5G coverage is improving but remains below the EU average, standing at 32.8% compared to 89.3%. The country aims to achieve 100% 5G coverage, aligning with the EU’s Digital Decade objectives.
• Public Sector Digitalisation
  • The government has allocated over €2 billion through its Recovery and Resilience Plan (RRP) to develop and improve e-government systems, including:
    • Creating a government cloud infrastructure.
    • Issuing electronic ID cards for 8.5 million people.
    • Enhancing cybersecurity across 65 organisations.
  • Romania dedicates 21.8% of its RRP funding to digital transformation, equating to €5.8 billion. An additional €3 billion from Cohesion Policy funds supports digitalisation efforts, including:
    • €1.07 billion specifically for public services digitalisation.
    • A national interoperability platform to streamline administrative processes.
• Boosting Digital Skills
  • The National Recovery and Resilience Plan addresses digital literacy with skilling, upskilling, and reskilling programmes for:
    • 30,000 civil servants.
    • 100,000 citizens.
• Further measures include:
  • €808 million to raise basic digital skills.
  • Mandatory digital skills modules in schools and teacher training, implemented under Law no. 198/2023.
  • Investments in 1,100 Smart Labs and digital equipment for schools.
  • Training programmes for 2,000 SMEs in advanced technologies such as AI and robotics
• Support for Advanced Technologies 

• In July 2024, the Romanian government approved the National Artificial Intelligence Strategy for 2024–2027, aligning with EU ambitions to become a global leader in AI. The strategy emphasises collaboration between academia, businesses, research, and public administration.

• Cultural Sector Digitalisation
  • As part of the broader digital transformation agenda, efforts are underway to digitise the cultural sector, preserving heritage and improving access to cultural resources through digital technologies.
• Support for SMEs
  • Over €363 million from the RRP has been allocated to SME digitalisation, supplemented by €291 million from Cohesion Policy funds. Programmes such as Start-Up Nation and The Entrepreneur Woman promote entrepreneurship and digital innovation.

Private Investment: Powering Innovation-Driven Ventures

Romania’s private sector is pivotal to the growth of its technology industry, with a thriving startup ecosystem and increasing venture capital activity. The IT sector plays a significant role in the economy:

According to the report Software and ICT Services in Romania, commissioned by the Employers’ Association of the Software and Services Industry (ANIS), the IT sector contributed 14.2% of Romania’s GDP in 2021, factoring in direct, indirect, and induced effects. The direct contribution alone stood at 7.99%, underscoring its substantial impact on economic development.

Venture Capital Activity

Venture capital investments have experienced robust growth:

• In 2023, VC investments in Romania reached approximately €129.6 million across 61 deals, a 27.4% increase from 2022.
• In the first half of 2024, Romanian startups secured €71.7 million across 23 investment rounds, while foreign startups with Romanian founders attracted €28.74 million in six rounds.
• Notably, FintechOS raised $60 million (~€56 million) in a Series B+ round.

Sector Highlights

• Fintech – FintechOS’s substantial funding highlights the strength of Romania’s fintech sector. The company provides innovative technology solutions, enabling rapid digital transformation for banks and insurers.
• Enterprise Software – Romanian startups in enterprise software continue to attract investor interest. For example, FlowX.AI, specialising in AI-enabled application modernisation platforms, secured $35 million in a Series A round in 2023.

Key Success Stories

Romania has produced several noteworthy tech companies, including:

• FintechOS: Raised $60 million in 2024, playing a leading role in digitalising financial services.
• FlowX.AI: Secured $35 million in 2023 for its AI-driven enterprise solutions.
• Digitail: A pet tech startup automating veterinary workflows, which raised €10 million in a Series A round led by UK-based Atomico.
• Veridion: Focused on AI, ML, and big data, Veridion raised $6 million in a seed round led by LAUNCHub Ventures.

Regulatory Environment

Romania’s favourable regulatory framework, including competitive tax incentives for IT professionals and startups, has created an attractive investment environment. The government’s support for tech incubators and accelerators further drives innovation and entrepreneurial activity.

International Technology Sector Presence in Romania

Romania has become a significant hub for international technology companies, attracting numerous global players to establish operations within its borders. This influx is driven by the country’s skilled workforce, competitive costs, and strategic location within the European Union.

Major International Companies Operating in Romania:

• Amazon: Operates development centres in cities like Iași, contributing to the local tech ecosystem.
• Microsoft: Maintains a substantial presence with regional departments and global business support centres in Bucharest and Timișoara.
• IBM: Has established offices in Bucharest, engaging in various IT services and solutions.
• Oracle: Employs a significant workforce, with approximately 4,000 employees, making it one of the largest tech employers in the country.
• Adobe: Hosts its most prominent R&D centre outside the United States in Romania, focusing on software development and innovation.
• Google: Maintains offices in Timișoara, supporting local startups and SMEs through various digital initiatives.
• Siemens: Operates in Timișoara, contributing to the city’s status as a tech hub.
• Huawei: Has established operations in Timișoara, engaging in the local IT industry.
• Accenture: Present in multiple Romanian cities, including Timișoara, providing consulting and technology services.

Endava: Maintains offices in Timișoara, supporting local startups and SMEs in the tech sector.

Software developers in Romania

Romania boasts the highest number of certified IT specialists in Europe and ranks 6th globally. With more tech specialists per 1,000 residents than the United States, the country has established itself as a powerhouse for IT talent. Romania’s IT industry employs around 202,000 ICT professionals, recognised for delivering high-quality IT services. This is reflected in Romania’s 23rd place in the SkillValue rankings and 12th place on TopCoder.

Impact on the Romanian Tech Ecosystem

The presence of these international companies has significantly contributed to the growth and diversification of Romania’s tech industry. They have introduced best practices, advanced technologies, and global standards, fostering a competitive and innovative environment. Additionally, their investments have created numerous employment opportunities, attracting and retaining local talent.

Furthermore, the collaboration between multinational corporations and local startups has led to knowledge transfer and the development of a robust entrepreneurial ecosystem. This synergy has been instrumental in positioning Romania as a leading destination for technology and innovation in Eastern Europe.

Education sector: building a skilled workforce for the future

Romania’s higher education system plays a vital role in developing the country’s tech talent. When it comes to education spending, Romania allocates around 3.1% of its GDP to education. This is below the EU average, where many countries invest significantly more. Let’s break it down and see what this means for Romania’s education system.

Romania’s education budget is spread across different levels of education, and here’s how it looks:

1. Pre-primary and primary education (nursery and primary schools):
   • This takes up the largest share of Romania’s spending. It’s similar to what we see in other EU countries and reflects the importance of early education.
2. Secondary education (middle and high schools):
   • A significant portion of the budget goes here, focusing on helping students develop key skills for further education or the job market.
3. Tertiary education (universities and higher education):
   • Compared to other EU countries, Romania spends less on higher education. This leaves room for improvement, especially as demand for highly skilled graduates in areas like IT and engineering grows.
4. Other areas:
   • Spending on research and development in education (R&D) is very limited. This is quite different from countries like Sweden or Iceland, where educational research receives strong support.

Romania’s education spending is one of the lowest in the EU, while countries like Sweden, Finland, and Iceland invest 6–7% of their GDP. These countries prioritise education as a foundation for economic growth, innovation, and overall development. 

Why Does This Matter? It matters because education is key to a country’s future, especially in areas like IT, technology, and science. Romania is already well known for its high-quality IT talent and strong university graduates in STEM (Science, Technology, Engineering, and Maths). However, to stay competitive and attract more international opportunities, Romania needs to invest more in:

• Higher education (universities).
• Research and development to drive innovation.

Romania is home to 49 public and 8 private universities, with the Babeș-Bolyai University, the University of Bucharest, and Alexandru Ioan Cuza University ranking as the top three institutions, according to the QS World Universities Ranking 2023. These universities supply highly skilled IT professionals to major Romanian tech hubs, including Cluj-Napoca, Bucharest, and Iași.

In recent years, there has been significant growth in ICT education:

• In 2021, Romania had 40,000 ICT students and over 9,300 graduates, marking a 20% increase in students and a 65% growth in graduates compared to 2015.
• Romania also boasts one of the highest proportions of ICT and STEM graduates in the European Union.

This impressive influx of ambitious, tech-savvy professionals, combined with an innovation-friendly environment, has fuelled the growth of Romania’s thriving start-up ecosystem.

Resources

• Digital Decade 2024: Romania reports
• Vestbee: Romanian Startup & VC Ecosystem Report
• The Recursive: Fresh Data About Romania’s IT&C Industry: ANIS Presents Its New Study and Awards the Change-Makers
• The Recursive: Top 10 Biggest Funding Rounds in Romania in H1 2023
• N-iX: Software development in Romania: a market overview
• Education at a Glance 2024 – Country notes: Romania