The prospect of a new global economic crisis in the near future, anticipated by the war in Ukraine, the increase in energy prices, inflation and higher costs for everyday life, is already prompting the activation of protective mechanisms among companies, which blocks the innovation projects in the IT sector, considered non-essential to the current activity.
“Customers are more restrained, during this period, and become more careful about how they spend their money. But this does not indicate a lack of funds, because there is money in the market. If, before, companies focused on project delivery, development speed and contractually required teams with many developers to complete projects quickly, now they want smaller teams with multidisciplinary expertise to deliver in an acceptable time, in a budget, however, smaller. What will be different, however, in a future crisis, with a potentially major impact on the IT industry in the region, is related to the increase in the salaries of developers here, which are approaching those in the West, an aspect that can determine the direction of projects in countries with lower costs, such as India”, stated Mihai Filip, CEO of OVES Enterprise, noting that he expects, this time, a dwindling demand for projects over the next period by up to 20%.
As for programmers, the decrease in demand and the redirection of projects from Romania and the region to other countries will cause more changes. At first, developers will try to change the projects in which they are involved, in search of higher fees, after which they will reduce the costs incurred, in order to be able to access interesting projects that motivate them. This will occur if companies are not be willing to pay installments at the same level and developers will have to make a decision in this respect in an attempt to reduce the risk of losing projects.
Changes will also appear among software companies that will modify the structure of teams by introducing projects and less-experienced developers with and assuming a longer duration for their realization. At the same time, they will also diversify the portfolio of products and services, targeting more industries, but also companies from more countries.
“Right now, at OVES Enterprise we are maintaining our plan to reach 200 developers by the end of the year and we are trying to diversify our portfolio as much as possible. At the same time, we increased the sales and marketing team to accelerate the growth of the number of customers. We hope, with the opening of the US office, at the end of the year, to get even more clients from this region and we are adapting our strategy for allocating resources to clients, trying to be as efficient as possible, maintaining the current fees”, stated Mihai Filip.
As for the companies, in addition to managing their budgets more carefully, they are also turning to other countries in the region, such as Serbia, Bulgaria, Poland, in an attempt to reduce risks. Large firms try to minimize development risk by spreading globally, having development centers scattered across the globe: in this part of Europe, in India, the US and, more recently, even in Africa.
Thus, in just seven months after the start of the war in Ukraine the dynamics of the Romanian IT industry has changed radically, from a high demand for programmers and projects that needed to be delivered as quickly as possible, to a decrease in demand that causes a market reset at all levels.