The Government is using EU structural funds to draw investors and to encourage the ongoing development in the information technology sector. In 2011 alone, Romania was provided with EUR 252 million in EU funds for IT&C projects. In July 2012, the government made public its intention to support the IT companies, both multinationals and local ones, to create new jobs in the sector through a state aid scheme of EUR 100 million.
Growth should emerge from several areas of opportunity since there is an ongoing transformation of political and economic structures. We expect to encounter such opportunities in nearly all economic sectors, government bodies and state-owned enterprises, along with telecom companies and banks, while the utilities sector is a spending leader. The public sector generates about half of local sales of software, service and equipment in the IT market.
Credit unavailability made the private businesses reluctant to commit to new projects that require large investment of time and money leading to a slowdown of the market. The mix between tighter credit conditions, rising unemployment and deteriorating economic outlook limited the consumers’ demand in the household segment. The decline of the local currency impacted prices which further increased the pressure on consumers.
The projections shows that the Romanian hardware market will worth EUR 618 million in 2012, with almost 5% more as compared to prior year. According to vendors, SMEs account for an estimated of 35% of the Romanian PC market, while corporations account for about 15%. The retail PC segment still holds a promising footprint supplying almost half of the existing demand. With a nationwide figure for computer penetration of less than 25%, retailers could find in this an opportunity for hardware sales. This could be further exploited with better results if the government would spend more on IT education, since 70% of Romanians lack basic computing skills. Similarly with other countries in the region, a government scheme was implemented for granting young people from poor families aid of up to EUR 200 to buy a PC. However, the results are still expected to come, as this scheme did not meet vendors’ expectations.
The software market is estimated to be flat, at EUR177 million, after a promising year such as 2011. The current demand is driven by applications that incorporate high flexibility of response to customer needs, efficient solutions and process optimization at reduced costs, thus creating a business environment for native solutions. The ERP market is still in its early phase where larger companies and organizations provide most of the demand, mainly due to high prices. Growth of packaged software sales will depend much on the actions taken by the Romanian government for limiting software piracy incidents, as a BMI report reveals that 70% of sales for Windows products are subject to piracy compared to 20% in Germany.
The expansion of e-cash environment, through increased utilization of bank cards by 38% and the growing volume of online purchases by 24%, fuel the demand of Romanian companies for back-office platforms.
The cloud computing system which proved to be an efficient solution in the West-European countries is starting to be appealing for Romanian companies as well. However, for the moment, cloud computing is limited to applications such as mail, phone systems and document management.
Despite the fiscal constraints, one of the main drivers in the software segment consists of e-government and e-public services projects. A mid-term project is represented by e-Romania agenda aimed to decentralize public services, increase efficiency in interactions between citizens and state institutions, simplify access to public services and lower the costs in the system.
The IT services segment is perceived by the Romanian government as an opportunity to develop the domestic economy through general economic reform, consolidation of the public system and privatization.
The negative financial outlook for the last years, combined with an increased level of piracy and low PC penetration, positioned Romania’s IT market as one of the smallest and most immature in the Eastern Europe area. However, in the medium term, on the basis of financial recovery, economic reform, coherent policy for the public sector combined with a good absorption rate of EU funds, Romania is potentially the country that will attract the highest interest for providing informatics services and solutions, as well as investments in technology in all segments.
