The IT sector in Romania at the beginning of 2025: current challenges and future strategies

The IT industry in Romania, which has long been an essential driver of the national economy, has been facing significant changes over the past few years. Known for its rapid growth and ability to attract foreign investments, this sector now faces challenges related to fiscal changes, rising wages, and the loss of competitiveness in pricing.

Evolution of the IT sector: a retrospective view

According to the National Institute of Statistics (INS), the IT&C sector contributed approximately 7% to Romania’s GDP in 2022, generating revenues of over 15.5 billion euros. Growth was driven by international demand for outsourcing services and software development. Also, according to a report from ANIS, the number of IT specialists in Romania exceeded 220,000, with the majority involved in outsourcing projects for Western European and North American markets.

However, starting in 2023, several significant changes have put pressure on the sector:

1. Fiscal Changes: The elimination of the income tax exemption for IT employees has increased operational costs.

2. Outsourcing Market Stagnation: Rising wages and service price increases have reduced Romania’s competitiveness compared to other Central and Eastern European (CEE) countries like Poland and Bulgaria.

3. Globalized Labor Market: IT specialists in Romania can now work remotely for companies from all over the world, increasing labor mobility but reducing loyalty to local employers.

IT services that have performed and those that have lost relevance

In the past, outsourcing and software development were the main growth drivers for the IT sector:

• IT Outsourcing: According to INS data, in 2020, over 60% of the IT sector’s revenue came from outsourcing. International clients appreciated the low costs and quality of services offered by Romanian firms.

• Team Augmentation: Hiring dedicated teams for external clients was a widely used model, allowing companies to offer flexible and scalable services.

Currently, these services have lost some of their relevance due to rising salaries and fiscal pressure. Additionally, many companies are facing difficulties in differentiating themselves from local and regional competitors.

On the other hand, a few emerging technological niches have gained traction:

• AI and Machine Learning-Based Solutions: Investment in R&D for developing innovative products has grown significantly.

• Cybersecurity: More and more companies are specializing in cybersecurity services, given the rise in cyberattacks.

• Cloud Services: The demand for cloud migration and management continues to grow, making it a profitable niche.

Key challenges for IT companies in Romania

• Loss of Competitiveness in Pricing: Average salaries in the IT sector have exceeded 2,000 euros net per month, making outsourcing less attractive.

• Talent Loss Risk: International companies offer higher salaries and remote opportunities, attracting Romanian specialists.

• Excessive Dependence on Outsourcing: Most companies rely on outsourcing contracts, making them vulnerable in the face of a global economic slowdown.

Solutions for survival and growth

I see some solutions for the mid and long-term revitalization of the competitiveness of local IT companies, like:

• Development of Proprietary Products: Companies should invest in creating software products and proprietary solutions that can generate recurring revenue. Successful examples include SaaS platforms and mobile applications developed by Romanian start-ups.

• Specialization in Technological Niches: Focusing on areas such as AI, blockchain, or cybersecurity can add value and differentiate Romanian firms from CEE competitors.

• Investment in R&D: According to Eurostat, firms that allocate budgets for research and development are more likely to survive economic shocks.

• International Collaborations: Partnerships with universities and business accelerators can facilitate access to new markets and technologies.

• Building a Strong Brand: Companies need a clear identity and strong differentiators to attract clients who prioritize quality, not just cost.

• Adoption of a Hybrid Business Model: Combining outsourcing with the development of proprietary products and premium services can ensure long-term sustainability.

Conclusion

The IT sector in Romania still has the potential to remain competitive in a constantly changing global context, but it can no longer continue with the strategies of recent years. Instead, it must adopt a new strategy based at least on: diversifying offers, investing in innovation, and developing proprietary products.

Only through this approach will Romanian companies be able to overcome the current challenges, withstand increasing competition, and contribute significantly to the national economy, despite the fragile and often unpredictable economic and fiscal context.