Technology startups in Romania are facing not only the competition of multinational companies, but also the authorities’ controversial fiscal decisions and the lack of economic stimulation measures.
Over 60% of the software industry is currently controlled by large foreign investors. If in 2012, the bulk of the market was covered by the small and medium-sized enterprises (SMEs), in 2016, large players came to account for 36% and the phenomenon tends to intensify.
“If SMEs generated 25% of the turnover in 2012, higher by 10% compared with corporations, in 2016, the percentages changed significantly. The 40 biggest firms on the market came to dominate the market (36%), with a turnover of over EUR50 million each. By comparison, the 17.000 micro-enterprises, mostly startups, register revenues below EUR1 million. The middle segment, of small and medium-sized firms, shrank significantly, with just 1,216 firms, most of which reporting revenues below EUR8 million”, according to KeysFin experts.
The latest market data, of September 2017, show a total 19,068 software firms active in Romania, over 1,000 more than in 2016 (17,421) and over 8,000 more than in 2012 (11,090 active firms). In 2016, the software sector posted a turnover of EUR4.8 billion, compared with EUR3 billion in 2012, and a profit of EUR571 million, double against five years ago.
KeysFin data show that Oracle reports the highest turnover in the Romanian IT&software sector. The company relocated the bulk of activity to Romania and its turnover on the local market exceeded EUR200 million in 2016.
The ranking of investors shows Oracle is followed by IBM, with a turnover of EUR179 million, Ericsson (EUR160 million), Bitdefender (EUR100 million) and Endava (EUR69 million).
KeysFin data show the perspectives of the industry are positive and the sector is expected to double its turnover in the next ten years and to become a significant component of the gross domestic product.
According to European Commission data, the European software market is expected to significantly grow in the next three years and reach EUR280 billion in 2020, higher by over EUR30 billion than this year’s level.