IT industry keeps growing despite ongoing crises

The information technology (IT) industry is going through difficult times, just like many other industries around the world. US giants appear to be the most cautious at the beginning of 2023, announcing layoffs in the tens of thousands and citing concerns about a potential economic recession. Fortunately, this has not been the case in Romania, where the deficit of qualified employees is estimated at around 10,000 every year.

By Aurel Constantin

According to the Software and Services Industry Employers’ Association (ANIS) there are over 270,000 employees in the Romanian IT industry, with a 6.2 percent contribution to the GDP in 2021 (and 7 percent in 2022, according to estimations). The industry grew at a yearly pace of 17 percent between 2015 and 2020, while GDP growth stood at 6 percent yearly.

Will the industry keep up the pace or is it in turmoil? “The main challenges on the IT market in 2023 are related to the overall macroeconomic and political troubles. One of the biggest issues in 2022 was the supply chain, affected by delivery delays. For some components, the usual delivery period increased by up to three months. Manufacturers were affected by the war in Ukraine or the covid restrictions maintained by China, as well as by the recession that continues to be a threat all over the world. Inflation affected consumption and led companies to reconsider their business targets and strategies. So, all things considered, we have a challenging year ahead, especially the first half,” says Bogdan Constantinescu, General Manager at ASBIS Romania.

But there are positive elements in the crisis as well. “The IT industry has been profoundly impacted by the recent geopolitical and economic uncertainties. These developments have had a significant effect on the industry's growth and evolution. Since 2020, the covid-19 pandemic has accelerated the adoption of business software solutions at an unprecedented rate. In 2022, Romanian businesses’ approach to technology became more measured due to the new geopolitical climate, with the war in Ukraine and the resulting energy crisis,” says Alexandra Lucescu, General Manager at SoftOne Romania. “Despite the fact that the situation in Ukraine remains uncertain, 2023 could be a defining year for technology companies in Romania, as the government has set forth several initiatives to help digitalize small and medium-sized enterprises. The ‘PNRR Digitalization of SMEs’ programme is a key part of this effort, and it could have a major impact on the country's tech sector. The programme could open up new opportunities for tech companies to provide services and products to these businesses,” she adds.

Hopes For A Revival

Zemy Apfelbaum, Managing Director at Wizrom Software, also looks to the positive aspects of the situation and states that the industry will come out stronger in the end. “One of the biggest challenges for 2023—not just for the IT sector, but for the business environment in general—will continue to stem from the effects of the war in Ukraine and the unpredictability it brings about. From our point of view, the end of the war will be what will trigger bigger investments, a return to normality, and an exit out of the energy crisis, which, in turn, will lead to the revival of the IT industry.”

The revival may not come in the sense of resuming growth after a recession, but in terms of a change in the way companies do business. “In 2023 and beyond, we’ll see IT departments relying more and more on the ‘business technologist,’ i.e., someone who doesn't have advanced knowledge of writing code, but who will use a suite like SAP Build to create the applications and solutions that are needed in their business. This will allow developers to focus on supporting large projects that require special attention,” says Diana David, Managing Director at SAP Romania.

Business technologists, AI, cloud computing, digitalization: these things are on everyone’s minds when it comes to the future of the IT industry. “As technology continues to evolve, Artificial Intelligence (AI) solutions are becoming increasingly accessible to businesses of all sizes. By 2023, AI is expected to be deployed in many organisations, allowing them to make more informed decisions and optimise their IT systems for greater reliability. At the same time, businesses are also looking to become more sustainable by investing in green technologies. This shift towards sustainability is driven by the need to reduce their environmental impact and make their operations more efficient,” Alexandra Lucescu explains. “AI will definitely become the solution to many of the present challenges and, at the same time, it will continue to be a challenge in itself, in terms of the relationship between humans and AI,” Bogdan Constantinescu argues.

“In the medium term, cloud computing is expected to become increasingly important as more businesses move their operations online and digitalize their services. The demand for software development services will also rise significantly due to increased automation and digitalization initiatives being undertaken across industries,” Lucescu notes. “The IT industry is undoubtedly on the rise and it will continue to attract investments as many organisations are accelerating their digitalization and cloud migration efforts,” Zemy Apfelbaum says.

THE FUTURE DOESN’T LOOK BAD AT ALL

The pandemic “helped” the IT industry by showing people and businesses the importance of digitalization. Government agencies, schools, and universities also acknowledged the need for digitalization. Now, the Ukraine war is pushing Romania to become a major software exporter. And speaking about the good that may come out of a crisis, we can also say that inflation and the economic recession gloom may end up convincing companies of the need for automation tools, digital platforms, efficient resource management, and business intelligence. The IT sector continues to be extremely dynamic, which is why we are optimistic about the future, and at the same time we are taking the necessary steps to prepare for any developments in the local economy,” Wizrom Software’s managing director explains.

“The software industry has adapted very quickly to the changes of the recent years, and it has also supported other businesses in this transformation process. We are fully aware that every company has its own unique path and challenges, and this helps us offer customised solutions to a wide range of business problems,” Diana David says.

The IT industry’s adaptability is just one of the elements that make it one of the most important sectors for the future of the Romanian economy. ANIS estimates that the industry’s GDP contribution could reach a gross added value of about EUR 17.4 billion by 2025, compared to a total of EUR 13.6 billion today. And the value could even go up to EUR 20.4 billion if the situation gets better and competitiveness grows.