“The biggest danger we are seeing is that we risk exporting brains for nothing, because they are in services centers that serve all the cities of the world without generating added value. Did we turn Romania into a Silicon Valley? There is a major project, Laser Valley, in Magurele. The intention is to create a development center there,” said Ionut Simion, country managing partner with PwC Romania.
“It should be an important project for Romania. If we do this, we will develop the research and applied development in that field. We have no research and development in Romania. Why aren’t there any tax incentives for R&D?”
“I’m afraid we are beginning to export the most important resource we still have: the Romanian brain. Look at how Romanians work abroad, what their evaluation reports say. All foreign companies are hiring Romanians. When they get there, they work two times harder, because they are better paid. The work/reward ratio is better there,” he added.
The local software and IT services industry is currently employing about 120,000 people, 100,000 of which salaried employees and the rest of them independent contractors, according to the software and services industry association ANIS data. Seven years ago, about 13,000 people were working for the local IT industry. Average productivity per employee has gone up from $19,000 in 2000 to EUR45,000 this year.
“Out of the EUR40 billion the IT&C market accounts for, more than EUR3 billion are exports of IT services. Software solutions and technologies sold in Romania amount to less than EUR1 billion,” said Valerica Dragomir, executive director of ANIS.
As for the fiscal changes, she said that unlike other industries that will not feel the impact, the software and IT services industry would have to deal with additional costs.
“I’ve talked with people in the advisory business and there are a number of scenarios; basically, if the companies raise the gross salaries, the net incomes of programmers will be 6.5% to 7% lower. The impact of the employers in the industry is not zero or something like that, as it might be for other companies. If you want to keep the net salary unchanged, the impact on overall salary fund is almost 10%. They also dropped the social security tax cap early this year, which led to more cost changes. The increase of the salary fund may go to as much as 15% in January 2018.”
However, major technology companies operating in Romania continue to hire, as demand for labor in the IT industry is much greater than the supply in the country.
“We want to keep our employees motivated, we are looking at options to do it. We are still hiring, we have 50 positions open at SAP Romania. We want to grow to more than 600 employees this year. We are looking optimistically at things, from a point of view that has recently emerged: development of intellectual property in Romania – we take the expertise we gained abroad and apply it locally,” said Cristian Popescu, managing director with SAP Romania.
“The cloud is growing. We need engineers. We are injecting expertise into the Romanian market and the Romanian youth. After having spent four or five years in a services center, the young people are usually confident enough to go look for something on their own,” said Bogdan Popescu, marketing & operations director with Microsoft Romania.
For the local software and IT services industry, including the intellectual property area, to continue to develop, the government must have a stable policy so as the market could grow to more than EUR6 billion in 2020, according to ANIS estimates.
(English version by Loredana Fratila-Cristescu)