Market analyses for the Industry of Software and IT Services în România

1. Market area.

This comprehensive research evaluates the main segments Industry of Software and IT Services on Romanian market.

The software industry is a complex one, which can be comprehended in different ways and according to different perspectives .

Romanian tradition in this field is one of the most respectable in the CEE region. A high standard of education generates a well-qualified workforce and it can count on a considerable number of engineers; something that is always appreciated abroad. Despite the economic crisis, the IT sector has kept growing and its low labour costs are attracting more and more investors.

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. Other important IT hubs are Timisoara, Iasi, Craiova and Brasov.

In contrast with Bucharest ,the shares of on-demand computer programming companies are the highest in Ilfov, Cluj, Sibiu and Timis,. The activity of publishing packaged software is carried out in all main counties, but it is quite limited. Computer consultancy is provided more in Brasov, Bucharest and Iasi and is rare in Sibiu.

We observe,that national boarders are inexistent in this market, which makes the opportunity of going international thrilling, but also risky

In parallel, the government’s support in creating industrial parks, free zones, and incubators is seen as a fundamental stimulator of the commercial packaged software industry in Romania.

2. Market structure.

Basicly market structure are software and services, computer consultancy, hardware and telecom

The traditional packaged software industry is represented by its three main components: applications, system infrastructure software, and application and development software.

Local software companies in Romania are still largely focused on custom development projects, which usually have a quicker turnaround and generate the majority of operational revenue streams.

In terms of commercial packaged software, ERM applications (enterprise resource management) are the most popular among Romanian companies, with 54% of all respondents mentioning their involvement in developing this kind of application, followed by OMA (Operations Management Application) (41%) and CRM (Customer Relationship Management (38%).

The least popular commercial packaged software applications developed locally are, as expected, security and storage applications, with international vendors dominating the market.

In terms of vertical split, the top three most popular vertical industries wich use software and IT products are manufacturing, finance (including banking, insurance, and other financial services), and retail and wholesale, each with approximately 13%, followed by government (11%) and business and personal services (10%). The least popular target sectors for the development of local packaged commercial applications are construction, education, and telecommunication.

In terms of revenue models, the traditional licensing model based on fixed license fees and recurrent maintenance is still predominant when it comes to selling commercial packaged applications (accounting for close to 80% of packaged software revenues). Subscription-based revenue specific to cloud delivery accounts only for 18.8% of all revenue stemming from commercial packaged software.

Domestically developed software mostly targets international markets, in which demand is expected to grow much faster than in Romania.

Also,Enterprise mobile apps (particularly industry-specific, ecommerce, and office and productivity apps) appear to play a significant role in Romania, and local companies have therefore started to pay greater attention to this segment, as it has the highest growth potential

3. Market capacity.

The local private market is concentrated around multinationals, in terms of potential multi-million IT deals, albeit local budget spending is uncertain, even for them. Nevertheless, there are clear signs of an increasing local IT market maturity, increasingly educated IT managers and Chief Information Officers, as well as top executives. The types of solutions and IT tools required show a growing interest in business-oriented technologies, with lower Total cost of ownership (TCO) and faster Return on investment (ROI).

The Romanian software and IT services market has been affected by several strong internal and external factors, which have influenced its development and the chances of the IT suppliers to grow or even to continue to exist.

With an overall maturity still behind Poland, the Czech Republic, Hungary or Slovakia, Romania has been the only country in the region where very few IT suppliers have captured almost the full market for complex IT solutions in the public sector and state-controlled companies, especially in energy, but also in transportation, relationship with the political power playing the most important role