The Software and IT Services Market in Romania

Septembrie 2008

EUGEN SCHWAB-CHESARU - Partner & Managing Director PIERRE AUDOIN CONSULTANTS

The Romanian IT market had a late start, caused by the difficult economic situation in the last decade. Since the late 90s, the evolution has accelerated, but the volume of the IT expenditure has remained much lower than in other countries in the region (the Czech Republic, Hungary or even Slovakia), which, theoretically, have an even lesser market potential.

However, in the last couple of years, the Romanian IT market has taken several steps further in its development. Nevertheless, the structure of IT expenditure, with a still high share of hardware, shows that there is rather long until the market matures.

For 2008, PAC expects the Romanian IT expenditure (IT-related personnel, hardware, software, IT services and miscellaneous) to go up to EUR 2.3 billion, which is 20% more than the level of 2007.

Software and IT services will represent the main area of growth, but hardware will still have a good evolution; altogether, the two classes stood for more than 70% of the IT expenditure in Romania, with hardware still bigger than SITS. Both segments will be driven by some large projects for the upgrade and extension of IT systems in large Romanian companies, in banking, telecom, utilities or manufacturing, areas where the privatization process or fierce competition play key roles in IT adoption.

Besides, the improved performances of the Romanian companies, including SMBs, allowed for IT investments to take place – infrastructure, integrated ERP systems or additional modules, industry solutions, related services etc.

However, as the market is still small, the impact of big projects is particularly high; basically, they are accessible only to few companies that may act as main contractors, but the smaller players benefit as well, working as sub-contractors.

In spite of the good development in the last few years and of the country’s size, IT expenditure (everything related to IT needs, including personnel, hardware, software, services and miscellaneous) in Romania represents only 5% of the Eastern European region.

In Romania, software and IT services have relatively equal shares, showing once again the rather low maturity of the market - quite high weight for system infrastructure software and application software products, above the levels recorded in the more developed countries in the CEE region. For 2008, the PAC researches indicate that 51% of total SITS revenues came from software products (including system infrastructure software, tools and application software products), while, by comparison, software represented 27% in Western Europe and around 36% in Hungary or the Czech Republic.

It is worth mentioning that the large IT investments carried out lately have included a great part of infrastructure that has boosted the system infrastructure software - operating systems and system management software, mainly.

Application software products stood for half of the software market, while SIS and tools are expected to secure 31% and 18%, respectively.

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