InvesT in Romania Aurel NETIN State Secretary for IT

Overview on IT market Source European IT Observatory 2005

SWOT Analysis - Strengths Increasing usage of Hi- Tech solutions in the business community Internationally recognized and award winning software products on IT services Still competitive labor costs Ideal geographic location to collaborate with EU countries and the CIS countries Good education system generating more than IT profile graduates per year Highly skilled and motivated human resource Large pool of extremely efficient multi-language speakers Workforce mobility and flexibility

SWOT Analysis - Weaknesses Limited incentives in stimulating local IT industry and FDI Lack of specialized management capabilities in the IT industry. No relevant training in place Insufficient match between education curricula and IT industry needs Limited understanding of the importance of the certifications, process management, standards and quality control. High cost for use of internet and telephone infrastructure Low productivity but steadily increasing per employee compared to regional competitors Insufficient found absorption capability of the IT industry due to low demand and lack of entrepreneurship No marketing and brand building strategy. Insufficient promotion and market development founding resources

SWOT Analysis - Opportunities Growing domestic demand for complex IT solution -> enabling the development of competences and internationally successful products Growing demand in Western Europe for IT services and software products Cultural proximity and understanding is a great asset Growing world market demand for BPO, IT enabled services and development outsourcing Growing competition on fixed and mobile communications market will encourage quality and lower service costs Growing number of IT clusters: Bucharest, Timisoara, Cluj-Napoca, Galati Great potential for e-commerce market

SWOT Analysis – Threats Growing labor cost on medium and long term Lack of relevant market information and market analysis capabilities No consolidated/result oriented marketing and branding programmes for Romanian IT Strengthening regional competition among traditional and emerging IT exporters

Romanian competitiveness on the global IT&C market Romania has a long history of education and research in all fields of engineering and software: 116 universities, 36 have a computer science related faculty Romanian graduates are multi- lingual (1 st place in the Certificate of Proficiency in English exam at Cambridge University) and world class concerning their competencies Romanias legal system and culture - similar to those in Europe and US. Romanias location is an advantage in itself Romanias density of software graduates per thousand inhabitants is significantly higher than in USA, five times higher than in Russia and nearly seven times bigger than in India. The cost of IT-skilled professionals = 1/3 in US and Europe Made in Romania

Main governmental objectives Increasing the competitiveness of the Romanian economy, by encouraging the use of the latest information technology Strengthening of the IT&C industry Increasing the institutional performance of the public administration by the coherent and generalized implementation of integrated information systems Increasing the citizens comfort

Some actions in order to boost IT industry (1) IT&C export strategy targeting sustainable economic development main objectives of the sector in the period are : –extend into new service lines; –tap new and under penetrated customer segments; –move up to the value chain from maintaining and implementing outside orders to implementing and designing creative solutions, customer tailored and from piece parts to full projects. IT national brand

Some actions in order to boost IT industry (2) National State Aid Strategy –Technological transfer and R&D investments support –IT industry boost policy –Software parks –Broadband acces –IT clusters

Some actions in order to boost IT industry (3) Information Society Development After accession 2007 – Structural Founds* available for IT&C in order to increase competitiveness of Romanian companies through 3 line directions –Stimulating IT usage –Building a modern, efficient, effective and inclusive government –Boosting e-business * More than 300 M Euro

Software market: $124 mil în 2004, growth rate 22% comparing to Software spending today represent 15% of the total IT spending market in Romania and is growing by more than 12% annually Labor force in IT in 2004: , is going to increase with more than 7,000 jobs generated by software industry opportunities. Forecast 2009: Software employees , representing 52% among all IT employees. Forecast for 2009: Source: IDC IT Economic Impact Study, 2005, 6 South East European Countries Romanian Software Market Features

Software applications demand growth Software applications: more than 50% from all software spending. Impact factors that will contribute to the increase of software applications demand: –Changes in IT based infrastructure type –Complete solutions demand coming from public administration and private sector –Sophisticated software applications demand induced by foreign direct investments, especially manufacturing –Integration and alignment to NATO and EU standards –Investments in advanced applications like security –Document management, storage, BI, CRM still limited –Investments in accounting and stock managements applications continue. Accounting application growth was induced by legislation and taxes changes –Security software is dominated by antivirus solutions –Management application market (system, network, input, output, jobs) is limited. Increase of demand for this kind of applications are registered in telecommunications sector and financial services –Telecommunications services market liberalization, banking sector privatization, growth of competition in many sectors due to UE accession will induce CRM solutions increase

IT growth generates jobs growth *Total Software Employees include Software Vendors, Software-related Services and Channels and Software-related IT Professionals In Romania, software related employment will account for 64% of all IT employment by 2009 Romania SEE Other Services and ChannelsIT Hardware Other IT ProfessionalsTotal Software Employees Source: IDC IT Economic Impact Study, 2005, 6 South East European Countries General IT employee opportunity will increase from 124,000 jobs today to over 159,000 jobs in 2009 Over 50% of these jobs will be software or software related employment

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