The mix of poverty and piracy that turned Romania into Europe's software development powerhouse

The mix of poverty and piracy that turned Romania into Europe's software development powerhouse

Summary: Nearly two-thirds of Romania's computers run at least one piece of illegal software – a sign of a technological heritage that means it now has the most technology workers per capita in Europe.

TOPICS: Piracy, EU
Romania's piracy rate is twice that of the EU average, leading to crackdowns that have seen huge piles of CDs run over by bulldozers. Image: Shutterstock

Western Europe may be struggling with a shortage of developers, but Romania's unique technology history means it has no such worries.

The country currently has more than 64,000 certified IT professionals, according to Gartner, and plays host to large offices of companies including Oracle, Microsoft, IBM, Bitdefender, and Vodafone.

It may be the second poorest country in the European Union, but Romania is leading Europe in technology workers per capita, and ranks sixth in the world.

The language skills of its IT workers and the low cost of its technology services are the biggest selling points for the country's technology industry, research company Gartner reports.

However, its mix of technology savvy and poverty means that software piracy is rife in the country. Last year, 62 percent of the PCs in Romania ran illegal software, according to IDC — a figure which hasn't changed in the past two years.

Romania's piracy rate is twice that of the EU average, where illegal software is used on 31 percent of machines, and 50 percent higher than the global average of 43 percent.

"In 2007, it was 68 percent, so we have had a six percent drop in the last six years," says Magda Popescu, outside counsel for the anti-piracy Business Software Alliance (BSA). "Nevertheless, in 1996, the year when the new copyright law was adopted [including provisions applying to software], inspired by the EU and international laws, the software piracy rates in Romania reached 86 percent."

A culture created by the hackers of the 90s

With the 1989 revolution, the country became free after decades of communism, and it citizens suddenly gained access to foreign technology they had never dreamt of using before. A software market was bound to emerge.

However, legislation protecting intellectual property was scarce before 1996, and the country's software market developed to become one where anyone could buy, use, or even sell any computer program they could get their hands on.

Software piracy and the large numbers of developers are "absolutely" connected, says Mihai Moldovanu, lead developer for the first Romanian Linux distribution TFM Linux, launched in March 2001. Piracy, along with Romania's high-speed broadband environment and the country's tax exemption for programmers, have contributed to the large numbers of developers it has today.

"Software piracy for educational purposes created a collective knowledge about coding, algorithms, and everything that derives from that. Some [users] later chose to go for a paid version of the software, while others such as myself opted for open source," Moldovanu says.

Back in the 1990s, the first pirated operating system was MS-DOS. Then came OS/2, and later Windows. 

"In Romania, Windows appeared from the very early beta versions, via Russia, within two days after the official release," Moldovanu says.

"It never occurred to us that we were stealing. We only wanted to learn. At first, it was a culture of sharing; nobody made money out of it. Technically, we did free beta testing, and when we encountered a bug, we emailed the company."

Only several years later, when inflation skyrocketed in Romania to hit a maximum of 151 percent in 1997, did people begin to sell pirated software.

In downtown Bucharest's University Square, stalls sprang up covered in CDs for sale. For a fraction of the official retail price, shoppers could easily buy any of the latest software packages, interactive language courses, or even games on CD-Rom with a home-printed cover.

The technology skills developed in those early days were put to work in more than just local Romanian businesses.

"We recruit for companies outside Romania candidates willing to relocate abroad and for foreign companies who want to open bureaus in the country," says Maria Hostiuc, senior IT&C recruitment consultant at Brainspotting, a Romanian technology recruiter.

"Romanian developers prefer to move to the United Kingdom, Ireland, Belgium, Germany and Malta. Moreover, outsourcing companies have grown visibly in the past couple of years."

However, what once may have been considered a plus is now anything but. More and more software companies are opening offices in Romania, and local developers end up experiencing on a personal level the effects of piracy — sometimes their own code ends up being distributed through unofficial channels.

Software companies work closely with the police

The value of pirate software in Romania reached $208m last year, according to the BSA.

"The main obstacle we encounter is the mentality. Intellectual property needs to be respected the same way we respect physical property," Popescu says.

A report posted on the alliance's website claims that a one percent rise in sales of legal software would mean an extra $108m for the Romanian economy. 

The anti-piracy campaign is now being fought on several fronts. The BSA is working with the Romanian police to reduce the piracy, while a number of companies have run information campaigns talking about the dangers of using illegal copies of software.

Romanian police have also been teaming up with software companies to try to restrain software piracy, leading to news reports on the country's TV stations showing piles of pirate CDs being run over by bulldozers.

The police are mainly targeting the business sector, with one notable case this year this year involving a company in Galati, 240km north-east of Bucharest, which was using illegal software worth more than €1m.

"Companies who use pirate software affect both the software industry and the Romanian state," the Bureau of Fraud Investigation says in a statement to ZDNet.

During the first eight months of last year, the Romanian Police together with the BSA conducted a total of 587 software assessments — essentially looking for pirate software in use in businesses — half of which resulted in lawsuits. 

Apart from joint action with the police, members of the BSA are running their own education campaigns. Microsoft's Romanian arm, for instance, starts its messaging very early, talking to hundreds of children and teenagers in schools about the benefits of legal software.

How expensive is software in Romania?

Educating future users about piracy is one thing, making sure legal software is affordable is another. Romanians that want to buy a legal version of Windows 8.1, for example, would have to spend a third of their monthly pay — the software costs the equivalent of €112.45, while Romania's average monthly salary was less than €380 in June this year, according to the National Institute of Statistics in Romania.

For UK or US consumers, buying a software licence won't jeopardise the family's budget. In the UK, Windows 8.1 costs £99.99 and the average salary exceeds £2,200 a month, while in the US, Windows 8.1 is priced at $119.99 compared to a salary of $4,250; in both cases, shoppers need only spend a small percentage of their salary for their slice of legitimate software.

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Topics: Piracy, EU

Andrada Fiscutean

About Andrada Fiscutean

Andrada Fiscutean has been covering science and technology for more than six years. She also writes for PRO TV Group, the largest media organization in Romania.

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  • Software Piracy. Its too easy….

    As an example.

    Clean copies of Windows 7 are readily available (all versions from Home Premium to Ultimate 32bit and 64bit). No matter how the ISP's attempt to block torrent sites additional Proxies are created overnight so it would seem it is unlikely to be eradicated.

    In some circumstances providing you have the original Product Key for your copy of Windows 7 and your original installation disk has become damaged and you need a copy urgently in theory it is I would say it is acceptable to obtain a clean image using this or a similar method as it would be unreasonable to be expected to purchase another installation disk. Remember Microsoft are not in the habit of giving things away.

    Yes we all know torrent sites are abused but in certain circumstances they can be used legally.
  • piracy ? how about excelent IT education starting with the early 70s

    piracy ?

    how about
    1. motivation
    2. excelent IT education since the early 1970s
  • It's not piracy and neither education: the real answer is money.

    Having first-hand witnessed the Romanian & other western IT education systems, I can tell you that the Romanian software sector is not booming because of it. You can count the halfway decent (at max) Romanian IT universities on the digits of one hand. There is a good reason why none of them make it at all in top 300 world rankings.

    Anyway, let's get to the point: money. Romanian work in general is dirt cheap with an average monthly income around 350-400 euros. Remember, Romania is in Europe at about 1300 km or 800 miles from Berlin. That's why the software sector is over 90% outsourcing and off-shoring from mainly Germany and USA in second place.

    Romanians simply provide the best cost while also remaining relatively close from a cultural point of view to the ones doing the off-shoring. Sure, the projects can be sent to India/Asia but there you always hit a cultural wall even if the work is cheaper than Romania.

    So it's not about piracy, education, Robin Hood or other dreams, it's just about the money: near-shore development at off-shore prices. This perfectly describes the Romanian software industry.

    Poverty and piracy are definitely related because most Romanians do not afford Windows licenses or games on Steam BUT piracy and the booming software industry are unrelated. Just because piracy is related to poverty and poverty is also related to the booming outsourcing industry does NOT mean that piracy helped turn the industry into a powerhouse.

    It's just how information economies and globalization work and guess what: it's all about the money, nothing new here :) It's not like the mix of piracy and poverty magically turned Romanians into wizards lol
  • It'a all about the cost of software

    Romanian developer here.
    If i were to go right now, pay my bills and debt, and fetch a legitimate copy of Windows 8.1 and Office 2013, i would not have any money left for food or anything else for that matter for that month.
    When i was young i used to use non-legitimate software, but now i'm relaying on open-source, free and "gifted" software. Being a Microsoft partner grants me access keys for a lot of things that i use daily. Not the same can be said for 99% of people that i know and that take illegal software for granted without even thinking about it.
  • Cost

    Software must always be much cheaper than hardware.

    It takes a lot of resources to make hardware compared to software.
    • Such a sweeping statement...

      Hey, let's remain with our feet on earth. Or are you trolling/flaming? :)

      It really depends on what hardware and software are we talking about. What purpose and specs the hard/soft systems have determine their price, among many other factors.

      Mission-critical software like those which automate railways or route airplanes are very expensive to develop, test and maintain.. Much more than the little incremental improvements done on their hardware over the years..
  • As others said, it's about the money

    As a romanian student I can say that it's clearly about the money.
    Here the salary for an avg. person is for living, nothing else.
    In germany the avg. salary is 2000 euros, here it's under 400.
    Now, pay the bills from that 400, buy food, clothes, etc, and then you'll see how much money you have to buy software/ other fancy stuff.
    No wonders everyone is going away from here, since 1990 the population decreased by 2 million, approx 10%.

    Romania is an european country at the level of an asian one, people work for virtually nothing..
  • Romania is not the poorest in EU

    I quote, Romania is not the second poorest country in EU, if Romania is the poorest in EU what is Ireland? what is Norway? In Ireland only the rent itself is 500 euros for rent as an average, how much you earn as a minimum wage per month, I'll tell you around 800 euros, how much is the food in supermarkets, I tell you if you go you spend at least 20 euros for 3-4 items which don't last for long on your meal. What about norway where only the Hostel is 30-40 euros per night and the salaries are 2-3000 euros per month but what do you save at the end of the month that's the question? Romania has seen exotic cars, and there is so much gold in the mountains that some other countries dream of having. There is no point in getting a 5k salary per month if the rent itself is 3,5 k and the rest you pay for you meals and other bills, in conclusion it's not the way you have to rate a country making comparison of how much people earn in different countries cause it makes no sense. Did you ever consider the inflation and everything?
    • Sure

      We are talking about software here, about paying 60 euros on a steam game out of a 350-400 euro avg. salary. This is what happens in Romania and the matter is very clear: rampant piracy.

      Now, if you want to go into deep economic details about the cost & standard of living the situation gets very complex very fast. This is not the place to discuss such things.

      And are you really comparing the economies of Norway and Romania while talking about HOTEL prices? Are you joking? In Romania the vast majority of people don't afford to sleep a few nights at a hotel lol
  • Piracy

    In order to remove or decrease piracy in Romania, you the biggest brands should offer your products that you sell in rapport to the prices of our salaries there not the same as other earning countries, that's how you can reduce loans to be taken from the banks for buying tvs or cars for the average or poor people. you have windows in Belgium selling for 300 euros, sell it in Romania for 40 euros , you will see how people will buy it and still make some money. But why do companies allow piracy? Why are the biggest brands involved in file sharing businesses and big brands selling blank dvds and cds in hundreds of millions? why,,, cause there is always an interest a purpose behind, like an old friend told me awhile ago, there's no such thing in this world not working without a reason.

    take care.
  • It's not that simple

    Mister, you speak like a child without any understanding of how economics works. This is the last time I'm replying to you.

    If in your example a 300 euro windows is sold in Romania with even 200 (not to mention 40) the vast majority of windows users will magically "become Romanian".