The Romanian IT & software sector, one of the most dynamic segments of the local economy, tends to become the ring of big international players, as more and more Romanian start-ups, small and medium enterprises face the tougher market conditions, according to a recent KeysFin study.
They have to cope on the one hand the fierce competition among multinationals, and on the other the recent controversial fiscal decisions and lack of economic stimulus.
KeysFin data shows that, if overall, the Romanian software industry is on a positive trend, with the potential to secure over 10 percent of GDP in the coming years, from only 6 percent currently, within the industry, the business concentration phenomenon in favour of multinationals tends to become more and more intense.
Statistics show that more than 60 percent of the local software industry is controlled by large foreign investors. If in 2012, the bulk of the market belonged to SMEs, in 2016 the big players concentrate 36 percent and the trend is going to continue.
“The biggest 40 companies have come to dominate the market (36 percent), each with businesses over EUR 50 million per year. By comparison, the 17,000 micro-enterprises, generally start-ups, earn less than EUR 1 million per year. The middle segment, of small and medium-sized firms, has decreased substantially, adding only 1,216 firms, most with revenues below EUR 8 million”, said the experts.
The latest data, from September 2017 shows that there were 19,068 active software companies in Romania, 1,000 more when compared to 2016 (17,421) and 8,000 more than the 2012 level (11,090 companies). The market turnover was EUR 4.8 billion last year, compared to EUR 3 billion in 2012, with a profit of EUR 571 million in 2016, double when compared to five years ago.
From the geographical distribution point of view, more than 42 percent of the companies were active in Bucharest (7,771 companies) followed by Northwest (15.2 percent) where there were 2809 companies registered.
KeysFin survey shows that Oracle is the leader of the Romanian IT & software sector. The IT giant has relocated to Romania a significant part of its activity, and thus the company’s business on the local market has surpassed the EUR 200 million threshold in 2016.
In the top of biggest players, the company is followed by IBM, with EUR 179 million in turnover, Ericsson (EUR 160 million), Bitdefender (EUR 100 million) and Endava (EUR 69 million).
Statistics also show that 60 percent of the market currently belongs to foreign firms, with the top three major investors (Holland, Germany and the US) concentrating more than half of the overall business.
In terms of the number of foreign-owned companies, most of them have German owners (324), followed by investors from Italy (260), France (209) and the US (176).
The presence of foreign players also caused a spectacular increase in labour costs by 42 percent compared to 2012. If five years ago the firms paid an average cost of EUR 13,600 /employee, in 2016 the level increased to EUR 19,394.