EY ROMANIA

 | 

CONSTANTIN MAGDALINA

  |  08.09.2015

The outperforming Romanian IT&C market: gaining momentum

In Romania, the IT&C industry accounts for 6% of GDP with the potential to reach up to 10% in the coming years. This depends largely on the local entrepreneurs in the industry to develop their own products and winning in the global market to capitalize on this potential.

Page 1/2
 1 2   

Market overview
The present added value of the IT&C sector to GDP reached EUR 9 billion in 2014. It has doubled up compared to 2011, and overpassed agriculture sector’s contribution to GDP, coming close to the one of the construction sector. In 2014, IT&C had the most rapid growth of all economic sectors, compared to 2013 and had the second largest contribution to the overall Romania’s economic growth of 2.9%.

 

Romania continues to be extremely well positioned for medium-term outperformance with the domestic IT hardware market, including desktops, notebooks, tablets, servers and accessories, set to grow at a compound annual growth rate (CAGR) of 5.4% 2015-2019 to reach a total of EUR 844 million.


Spurred by price erosion of notebooks and monitors over recent years, computer hardware sales are expected to outperform Romanian economic growth with negative impact on the margins of vendors.


Despite its strong growth, the software segment will continue to be the smallest segment of the IT&C market in Romania. It is expected that the software market will expand by 10% to a value of EUR 293 million in 2015, up from EUR 266 million in 2014. 


The combination of intense price competition in the PC market and medium-term Romanian income growth is deepening the market to new segments of the population. The result is consisting in spending growth above the rate observed in Western European markets as vendors tap into the relatively low PC penetration rate. Many international companies (particularly hardware vendors) are positioning themselves to capitalize on this surge, setting up local offices and units in Romania, as devices penetration shows room for growth. Rural communities in particular will reap the benefits of EU funding, with broadband internet to cover a wider portion of the country.


Telecom operator promotions help catalyze demand as they seek returns on investments in fixed and wireless data networks. Competition between fixedline providers using DSL and cable technologies means Romania has one of the highest average connection speeds in Central and Eastern Europe (CEE), while LTE networks are being constructed by mobile operators.

 

 

The enterprise market began to recover some growth momentum in 2014 after a slowdown and lack of confidence due to domestic economic conditions and the wider Eurozone crisis. Indicators were already positive in early 2014. A survey carried out in February revealed that 45% of IT managers in Romania expected budget expansion from 2014-2017, with a further 17% expecting strong growth.

 

Talent pool

In Romania, there are over 95,000 IT&C specialists at national level. Technical education includes 5 of the top polytechnic universities, 59 domain-specific universities, and 174 private colleges. Romanian universities have been top 3 in the IEEE Design Competition every year since 2001. The number of engineers per capita is greater in Romania than the US, India, China, or Russia. 27% of IT bachelor and master students start obtaining technical certifications while in college. The country is in the top 10 globally in the number of certified IT specialists, while almost 90% of IT professionals speak English. This recommends Romania as a hot spot for IT&C sector rapid development over the next decades.


Bucharest occupies the first position in the Romanian IT&C industry, giving 67% of the country’s turnover, 56% of the number of employees and over 60% of the GDP contribution of all three subsectors – software and services, hardware and telecom. 27 of the 30 biggest companies in software and services are based in Bucharest; the city is home to local companies, integrators and solution providers, as well as support and R&D centers of IT multinational companies.

 

After Bucharest, Cluj-Napoca is the second city by the number of software and services companies based here. Corporations opened new R&D centers or expanded existing ones. Cluj-Napoca ranks amongst the first 31 world destinations for investments in the field of IT. 

 

Among the key aspects that make the city a location of choice are: professional labor pool, attractive costs and geographic proximity. Hosting around 250 IT&C companies, with roughly 5,000 active software engineers, Cluj-Napoca’s software market has expanded by 48.8% in the last two years. Other important IT hubs are Timisoara, Iasi, Craiova and Brasov.

 

 

Romania is positioned to benefit from regionalization of the cloud computing market, due to its strong networking infrastructure, low cost and especially to the local labor skills base. A large percentage of IT specialists are software developers (47%), followed by technical support skills (21%) and quality assurance/ testers (16%). An additional advantage of the country is represented by the diversified and highly required programming languages Romanian experts own. PHP, .NET C#, Java and C/ C++ rank the highest in the top of programming languages and of expertise. Although Romania aims to be a regional IT hub, the pool of talents seems to not commensurate this goal. The over 7,000 IT&C graduates are insufficient to cover the needs of the market. This shortage may deepen over the longer term as qualified workers migrate to other parts of the EU in search of higher pay and better employment opportunities.

 

 

Page 1/2
 1 2   

COMMENT ON THIS ARTICLE:




Load new captcha.