1st July
2007
Betfair Taps Romania for Offshoring
At the online gambling company's software development center in Romania, staffing
costs are 25% to 30% cheaper than in London
Online betting and gaming company Betfair has set up an offshore software development
centre in Romania to cope with the demands of its rapidly expanding product portfolio.
Betfair opened the 50-person facility earlier this year with just eight developers.
Already it is up to 35 staff and the company expects the facility to be full by
September. Although the cost of the staff is around 25 to 30 per cent cheaper
than in London, Betfair said the main reason for setting up in Romania was to
tap into extra skills and resources.
Eachan Fletcher, director of Betfair development in Romania, said there is so
much work on the company's product roadmap that decisions were having to be made
on what couldn't be done.
He told silicon.com: "We just didn't have the capacity to deliver all of
it. It makes no sense to stick another 200 developers in London. We have almost
reached a critical mass. You have to attract them away from city banks and it
is costly and takes a long time."
Betfair looked at various countries including China, India and the Ukraine but
opted for Romania because of the high-quality skills available, its relatively
untapped potential as an offshore location and its recent EU membership.
Fletcher said: "It's virgin territory we were looking for. It's not stupidly
cheap but it is cost-effective. We compared lots of locations. Many were cheaper
but didn't have the quality versus investment you put in."
Betfair also decided to build and run the Romanian offshore facility itself rather
than outsource it to a third party -- and chose to locate it in the city of Cluj-Napoca.
In February silicon.com's Steve Ranger visited the Indian tech hotspots of Bangalore,
Mumbai, Pune and Hyderabad. Click on the links below to see photo galleries of
the cities and companies visited.
He said: "One of the strengths of Betfair is culture and the way we work
as a team and we already have a well-oiled machine for setting up offices overseas.
It is important for us to maintain control over the technical output, culture
and work environment."
Some of the skills Betfair is tapping into in Romania include Microsoft .Net and
SQL, Java and specialist areas such as mobile driver development.
Fletcher said: "The quality of the people is really high. They have a fantastic
university [Babes Bolyai] and they have a really great engineering programme.
They are of the calibre of the guys in London."
Unlike many offshore software development centres the Betfair staff in Romania
won't just be doing the boring 'grunt' work. Fletcher said they will be working
on a new sporting platform, the booming poker and gaming products and support
for the mobile platform.
But setting up in a relatively undeveloped offshore location such as Romania also
comes with its challenges, particularly around employment law, accounting practices
and setting up legal entities.
Fletcher said: "It's arcane knowledge locked in the heads of people. Having
a senior person on the ground you trust is important, and getting contacts in
the commerce ministry."
The language barrier also wasn't an issue for Betfair, with many of the university
courses taught in English. Fletcher said: "It's stilting my efforts to learn
Romanian. We never had a communication barrier and this makes a difference."
Betfair said it will continue to expand the Romanian facility in blocks of 50
people in line with product roadmap demand.
Source: Businessweek.com
A property to sink your teeth into
Large castle, views, previous owner undead: Transylvania's Bran Castle, which
inspired Bram Stoker's tale about Dracula, is for sale. Owner Archduke Dominic
Habsburg says its upkeep would put him in the red. It's not every day that somebody
puts a "for sale" sign on Dracula's castle.
Michael Gardner, chairman and CEO of New York-based Baytree Capital Associates,
is looking for just the right buyer for Transylvania's Bran Castle.
The price hasn't been decided, but previous bids reportedly hit $78 million (stakes,
crosses and garlic not included).
The fortress, built in 1377, is Romania's top tourism attraction. That's because
it inspired Bram Stoker's tale about a bloodsucking aristocrat. The novel shook
the world when it was first published in 1897. It has never been out of print
and has inspired hundreds of films, from "Nosferatu" to "Buffy
the Vampire Slayer."
Bran Castle is also said to be the former haunt of Vlad the Impaler, a medieval
warlord who, history records, championed the lost art of human shish kabob.
What sort of buyer would be looking for this kind of gore lore?
"We thought you were," Gardner laughed when I called him Friday.
He said he'd confused me with another Al Lewis, the late actor who played the
vampire Grandpa on "The Munsters."
"You're living a second life," he alleged.
When he's not making killings on Wall Street, Gardner is a theatrical producer
in London, New York and Las Vegas.
He was nominated for a Tony in 2003 for his Broadway production "A Year with
Frog and Toad." More recently he produced "Sinatra at the Palladium"
in London. But in 2002, Gardner produced "Dance of the Vampires" on
Broadway, staring Michael Crawford.
Crawford gave a Tony-winning performance in "The Phantom of the Opera,"
but "Vampires" went fast into the red.
"It isn't ... just the undead who salivate at the smell of blood," wrote
a New York Times theater reviewer in 2002. "Theater disaster cultists, a
breed that makes Vlad the Impaler look small-time, have had their fangs at the
ready ever since the early buzz began on 'Vampires."'
"It was actually a $14 million loss," Gardner said. "It was painful
enough."
I asked Mark Meyer, a New York attorney representing the castle's current owner,
if he'd known of Gardner's previous dealings with vampires before engaging him
to sell Drac's shack.
"I always thought he was a vampire," said Meyer of Gardner, plainly
enough.
"Actually, when I'm doing a deal, I'm always out for blood," Gardner
laughed.
Gardner and Meyer represent the Habsburgs, a dynastic family that has ruled Europe
for centuries.
Last year, the Romanian government gave the castle to Archduke Dominic Habsburg,
who spent part of his childhood years in the castle but is now a New York-area
suburbanite who works as an industrial designer.
Communists seized the castle from the archduke's grandmother in 1948 and turned
it into a museum in 1950. But now that Romania has joined the European Union,
private property is back in vogue.
The archduke, however, says the castle is too expensive for him to maintain, so
he's hoping to find someone who will develop it with historic preservation and
the people of Romania in mind.
Gardner said likely buyers include private equity firms, hotel chains and real
estate developers.
Gaming is legal. There's a ski resort in the nearby Carpathian Mountains. And
there's plenty of land to develop around the castle - none of it as gloomy or
foreboding as Bram Stoker portrayed.
Romania is doing what it can to draw investment dollars as it joins the Western
world. A year ago, the Romanian government wanted to build a Count Dracula theme
park near Bucharest but couldn't quite secure the funding.
Still, privatization remains the buzzword of the day - whether it's nonprofit
hospitals in the United States or assets once seized by communists in the former
Soviet Union.
Perhaps one day we'll privatize the White House, too. The sale of Dracula's castle
shows not even the undead can escape this trend.
"A lot of people appear to be having problems with the idea of the privatization
of it," said Gardner. "They think of it as a national treasure. We will
be as sensitive to that as we can be. But privatization is now a reality, and
title (to the property) is very, very clear."
Source: Denverpost.com
Report Predicts Growth of 23.4% for Romanian Food
& Drink Market
Romania's mass grocery retail (MGR) and food sector saw booming sales in 2006
ahead of European Union (EU) accession. The final green light to entry, given
in September by the European Commission, followed by approval by the member states,
added additional stability to the market. A delay would have been both unexpected
and costly, in both monetary and political terms. In the meantime, Romanians are
on something of a spending spree, thanks to both rising wages and the easier availability
of consumer credit. Along with food and beverages, of course, consumers are also
investing in white goods and home improvement. Overall retail sales are expected
to have grown by at least 16% for FY06. We have revisited its MGR forecast and
now predict compound annual growth (CAGR) in the market of 23.4% for the period
2005 to 2010.
MGR players continue to invest in the Romanian market, with around 10 large chains
and many smaller ones fighting for a fast-growing market. Carrefour Hyparlo opened
a seventh hypermarket outlet and reported a 35% rise in its first half sales,
after hitting break-even in 2005. The hypermarket segment has proved highly profitable
and represents a key short- to medium-term strategy for reaching better-off consumers
and concentrating investment and logistics on fewer locations, useful in an infrastructure-poor
country. Still, even Carrefour has warned of significantly increased competition
in the segment, and discounters are moving in quickly, looking to target urban
markets and many shoppers without cars who are particularly price-sensitive.
Germany's Tengelmann groups Plus hard-discount chain opened four new outlets in
December 2006 alone, with the chain reaching 34 stores. Delhaizes Profi, Aldi
and Rewes Penny Market are all expanding rapidly. This quarter, our new Central
and Eastern Europe (CEE) special focus on discount retailing underlines the strength
of the discount format in penetrating smaller, regional markets - as well as the
challenges posed in Romania and elsewhere to the discount format. Notably, Germanys
Lidl; Schwarz, which has successfully rolled out its Kaufland hypermarket chain
in the country, has delayed the launch of its Lidl discount chain for the time
being, citing high real estate costs. This underlines the current shortage of
modern retail space, despite a large number of building projects currently under
way.
Romania's pork industry is another area that has seen major investment, particularly
from US meat processing giant Smithfield. The country's meat processing sector
got a needed boost in late November, when the EU approved Romania's contingency
plans for animal disease outbreaks. Given Romania's recent experience (and deft
handling) of an avian flu outbreak, this is a key development. Still, the country
will need significant additional investment if it is to eliminate its current
trade deficits in pork, beef and veal over the next decade. Whatever the challenges,
Romania's prospects as an investment destination have only improved in recent
months, with the country now fourth in our Business Environment Rankings, compared
to ninth just last quarter.
Source: Business Wire
BASF: Romanian market, the "rising star"
of Europe
Germany's BASF group, the world's biggest chemical producer, forecasts it will
reach a turnover of 557m-euros on the Romanian market this year, with its two
units (industrial and oil and gas), a 60% increase on last year's results, due
to expansion and economic growth.
"This year, we expect the turnover to go up by around 60% owing to Romanian
market opportunities and the expansion of our activity portfolio. Last year, turnover
on the industrial segment reached 60m euros, accounting for a 63% increase. For
BASF, this turns Romania into 'the rising star' of Europe," Herbert Frankenstein,
manager of the Business Centre for Central Europe at BASF, told ZF.
Based on the 60% growth rate announced by the company, the Germans' turnover on
the segment of industrial products is estimated to reach 100m euros this year.
Whereas the industrial product unit contributes less than 10% to the company's
turnover, the oil and gas unit, WIEE Romania, boasts the biggest percentage, having
generated turnover worth 497m euros last year. WIEE Romania is the domestic subsidiary
of Germany's Wintershall company set up as a joint venture between BASF and Gazprom
Russian group.
BASF yesterday launched its first production facility in Romania, in Ploiesti,
which makes concrete additives, an investment of 2m euros. "Romania is boasting
promising growth rates, particularly in the constructions industry, which is our
main target. Ploiesti was chosen as a location due to its position, allowing us
to distribute products across Romania and in the vicinity of Bucharest,"
says Harald Pflanzl, BASF manager of the adhesives unit for Northern Europe.
The construction of the plant, lab and offices started in June 2006 and ended
in June 2007.
The plant has a production capacity of 5,000 tonnes per annum in a single shift,
but plans to raise its capacity, either by adding shifts or further production
facilities.
The Romanian production is destined to the domestic market and to the markets
of Bulgaria and Moldova.
"The new facility will help us not only exceed the growth rate of the Romanian
market, but also turn BASF into Romania's main chemical product company,"
specifies Pflanzl.
For the construction unit, BASF Construction Chemicals, Pflanz projects a 20-30%
increase.
Now that the new plant has opened, BASF plans to cut adhesive imports to the minimum
and cover Romanian market demand entirely by domestic production for 2-3 years.
BASF opened its first office in Romania in 1968, and in 1993 the first company,
BASF Romania SRL, was set up. The German group generated 52.6m-euro sales last
year, up 23%, and employs a staff of 95,000.
Source: ZF.ro
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