1. Doing IT in Moldova
– what’s ready, what to plan for
Mark Yates
Lead Analyst, IDC Government Insights

2. IDC: Getting Data to Reveal IT’s Secrets
Central and Eastern Europe Middle East/Africa
Albania Moldova Turkey Egypt
Azerbaijan Montenegro UAE Morocco
Belarus Poland Saudi Arabia Algeria
Bosnia & Herz. Romania Kuwait Tunisia
Bulgaria Russia Qatar Libya
Croatia Serbia Oman Ghana
Cyprus Slovakia Bahrain Kenya
Czech Republic Slovenia Lebanon Uganda
Estonia Tajikistan Syria Nigeria
FYROM Turkmenistan Iran Namibia
Georgia Ukraine Jordan Ivory Coast
Greece Uzbekistan Israel Ethiopia
Hungary Rest of CEE Rest of ME Tanzania
Kazakhstan Botswana
Kyrgyzstan South Africa
Latvia Rest of Africa
Lithuania
Malta  220+ staff
 Offices in more than 20 Countries
 Research coverage of 60 countries
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3. Knowing the users across verticals
 Industry-focused units within IDC.
 More than 80 analysts WW.
 Dedicated Insights team in CEE and MEA.
 Industry experience and local knowledge.
 Understanding of IT priorities and how IT is
deployed by users.
 Leveraging more than 45 years of IDC
research methods and processes.
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4. Outsourcng vs. internal nearshore center
– traditional matrix
Complexity
Complex Simple
Mission critical
Keep in house Keep in house
Yes – automate
No Outsource In or out
– automate
Sometimes outsourcing is the wrong thing to do.
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5. Opening a nearshore center
Why? Why start an IT support or development center abroad when I can
outsource? For mission critical tasks, the answer is self-evident. But the same
reasons apply to non-mission critical tasks:
Reduce risk Control projects Save on costs
– platform/tech changes – – resource allocation – – office space –
– info leakage &security – – skills concentration – – recruitment –
– turnover and training– – consistent methods– – payroll –
– project management – – skills development – – taxes –
– task prioritization – – task assignment –
– version control – – confidentiality –
– quality control –
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6. Opening a nearshore center
What are my primary concerns with opening a center abroad?
Economic and financial
Government stability
and incentives
People and skills
IT environment
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7. Opening a nearshore center
What are my primary concerns with opening a center abroad?
Economic and financial
Government , institutions,
and business
People and skills
IT environment
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8. Opening a nearshore center
Economic and financial – real GDP growth
2011 2012 2013
Moldova 6.4% 2.8% 3.4%
Romania 2.5% 1.0% 3.0%
Bulgaria 1.7% 0.8% 2.4%
Slovenia 0.5% -0.2% 1.2%
Czech Rep 1.7% 0.3% 2.0%
France 1.7% 0.1% 0.7%
Data from EUI, 2012
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9. Opening a nearshore center
Economic and financial – Cost indicators
GDP per cap Avg monthly
as PPP 2012 wages 2011
Moldova $3,233 $267
Romania $12,749 $608
Bulgaria $13,438 $467
Slovenia $28,818 $1,978
Czech Rep $25,893 $1,269
France $36,814 $2,422*
PPP projections from EUI, 2012; Wage data from EUI, 2012;
©*France wage data for 2009, does not include entrepreneurs;authorized. All rights reserved. Office, 2012
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10. Opening a nearshore center
Government, institutions, and business
All set Plan for it
 Free economic zones – discounts on X Institutional paralysis in government
infrastructure; tax and duty exemptions; over the past few years.
legal protection from changes in law.
X Opposition boycotts and resistance to
 Corporate tax rate of 12% – regionally parliament and president create risk
only Bulgaria is better. of social unrest.
 No personal income tax on portion of X Brain drain among IT workers.
income above 7,100 leu/month for IT
specialists. X Infrastructure outside the capital still
needs improvement – across the
 Ease of doing business greatly improved board.
– jumped 18 slots in World Bank rankings.
X Ease of doing business – at 81, still
 Mulitple free trade agreements with CIS, lowest among BU, CRO, CZ, PO, RO,
regional states, and EU.
© IDC Government Insights. Reproduction is forbidden unless authorized. All rights reserved. SL, and PO.
SK, Page 10

11. Opening a nearshore center
People and skills
All set Plan for it
 Languages, culture, location Χ Leadership and management
Romanian, Russian, English (46% of Providing purpose, vision, inspiration,
graduates), French (51.3% of grads); mentoring, a “management culture”,
European. Two hours to Germany. task breakdown still developing.
 Education Χ Experience
Historically respected universities – IT – smart & educated Moldovans still
long tradition of technical education. lack skills IT development firms seek.
General – skills for international client
 Graduates and their skills management and teamwork incipient.
5,900 ICT-related grads in past 3
years; Proportionally more computing Χ Productivity in IT services
grads than RO, BU, CRO, UR, SL; USD 30k in 2010 vs. USD 71k for SEE
number of IT graduates on the rise. per worker per year.
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12. Opening a nearshore center
IT environment
Strong Growth: 6.6%/year avg to 2015
- ICT spend as % of GDP 2x BU, CRO, SL
- ICT spend as % of GDP 3x RO
IT Spending in Moldova
200 Hardware dominated
- 74.2% hardware (2011)
180
- 14.6% IT services (2011)
160 - 11.2% software (2011)
140
Competition heating up
120 Telco competition fierce – driving network infr.
100
Government
80
Investing in egoverment and creation of cloud
60 services platform – likely jump over legacies.
40
Communications
20
In capital – exceptional broadband. Outside
0 capital, a lot left to be done.
2010 2011 2012 2013 2014 2015
Prognosis: boom ahead
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Page 12

13. What it all means
Moldova a solid nearshoring destination
The combination of education, IT skills, location, and languages makes it ideally suited
to organizations looking for a cost-effective alternative to WE and CEE locations. But it
comes with a few caveats:
• Better for higher-end service, development, and R&D
The country is too small to support massive support or call centers or what might
be called “sweatshop programming”. Training will be necessary; but skills base
well in place.
• Management tradition still developing
Solid processes, work structures, task assignments, and leadership will be needed
top ensure coherent, goal-directed teams. Mentoring and leadership programs a
good idea in the beginning.
• Salaries will be rising – make employees happy
For IT professionals, monthly salary could be double or triple the average. While
still lower than other countries in region, with a boom on the horizon, competition
for headcount will grow. Interesting work, training programs, and other incentives
a good idea.
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14. Thank you
Mark Yates, Lead Analyst
IDC Government Insights CEMA
myates@idc.com
+420 221 423 208
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