Overview of the Romanian Software and IT Services Industry

Overview of the Romanian Software and IT Services IndustryForum IT Romania – Austria, Vienna, June 4-5

Valerica Dragomir

Executive Director of ANIS

Agenda About ANIS Software and IT Services in Romania Software and IT Services Ecosystem Romania’s Competitive Assessment

About ANIS

About ANIS – who we are Association of software companies in Romania Established in 1998 +100 member companies, with national representation Members’ combined revenue represents +35% of the sector Members’ combined no. of employees is about 10,000 / 16%

of the sector

About ANIS – what we do Strategic mission: grow the Romanian software industry Strategic priorities:

• Promote Romania as a high value added software outsourcing destination

• Inform and assist member companies in developing new business models, including developing products, spin-offs, etc.

• Growing the domestic software market by promoting enhanced technology use towards SMBs

Software and IT Services in Romania

Romanian Technology Market in Brief Government is still among the biggest buyers, along

Manufacturing and Utilities sectors Local companies are taking the upper hand on large

international technology vendors Romania is a solid near-shore/ offshore services center

• Delivery for offshore/near-shore clients in the U.S., WesternEurope (France, Italy, Germany, Benelux, United Kingdom) and recently the Middle East• ~50 offshore centers – 30% IT services + 20% R&D centers• ~50.000 people working in this segment (2012 estimate)

*Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

IT in Romania – quick facts and figures• Romanian IT market - 2.1 billion EUR in 2012 (4.3% growth)• Overall projected growth for the next 3-5 years: 2.4%• Software projected growth for the next 3-5 years: 3.3%

70.30%

14.80%

14.90%

HardwareSoftwareIT Services

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Software in Romania – quick facts and figures• Custom application development ~ 43M Eur in 2012 (10%

growth)• Packaged software in 2012: 312M Eur (7.5% growth)

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

52.25%

31.70%

16.00%Applications segmentSystem infra-structure soft-wareApplication and development software

Types of Packaged Software Developed

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

ERM Applic

ations

Operations a

nd Man

ufacturin

g applic

ations

CRM applic

ations

SCM ap

plicati

ons

Content applic

ations

eCommerce

Business

analytics

software

Collaborati

ve ap

plicati

ons

Engin

eering applic

ations

Consumer s

oftware

Storage

software

0%

10%

20%

30%

40%

50%

60% 54%

41% 38%33% 32% 31%

27% 24% 23% 22%

13%

Package Software Revenue Split by Verticals

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Manufacturin

g

Finance

Retail &

Wholesal

e

Government

Business

& personal

service

s

Enterta

inment & m

edia

Healthcar

e

Constructi

on

Education

Teleco

m0%

2%

4%

6%

8%

10%

12%

14% 13% 13% 13%

11%10%

9%8%

6%5%

3%

Packaged software vs. Custom developmentNo. of companies: there is still focus on custom software development projects

11%

43%

46%

Development of commercial packaged soft-wareCustom software development for third partiesBoth commercial packaged software and custom devel-opment

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Packaged software vs. Custom developmentRevenue split: proprietary software is more productive in revenue generation

30%

53%

16%

Sales of proprietary commercial packaged softwareCustom software development for third partiesProvision of other IT services

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Software and IT Services Ecosystem

Software and IT Services EcosystemIntl. vendors Revenues derive from L&M

for own applications Production not localized in

Romania They do not contribute to the

local production Examples: HP, IBM,

Microsoft, Oracle, SAP, Siebel

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

International vendors

Software and IT Services EcosystemR&D Centers Revenues derive from L&M

for own applications They do not contribute to the

local production Production IS localized in

Romania, through captive R&D Centers

Examples: Adobe, Freescale, Intel, IXIA

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

International vendors R&D Centers

Software and IT Services EcosystemOutsourcing companies Revenue derives from

custom development for third parties

Contribute to the size of outsourcing business located in Romania

They do not contribute to the local production of software

Examples: companies present at the meeting

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

International vendors R&D Centers

Outsourcing companies

Software and IT Services EcosystemProduct companies Revenue derives from L&M

from their own applications Production of applications is

localized in Romania Contribute greatly to the local

production Examples: Bitdefender,

Gecad, Siveco, Total Soft, Wizrom

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

International vendors R&D Centers

Outsourcing companies

Product companies

Romania’s Competitive Assessment

Romania’s Competitive AssessmentRomania’s IT services offshore market 350 M Eur in 2012 (excluding the export of pure licenses)Structure of offshore/ near-shore market:

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

62%

29%

9%

IT services BPO ServicesR&D (engineering)

Romania’s Competitive Assessment - HR• Largest pool of human resources in CEE – 65.000 employees in

software and IT services companies in 2013 (estimate)• 300,000 tertiary education graduates/ year, of which +8000 are

pure computing graduates (source: DasCloud.ro study)• Technical studies distribution:

o Computer Science/ Automation ~30%o Mathematics/ Informatics ~29%o Engineering ~21%o Economic Studies ~9%o Other ~8%

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Romania’s Competitive Assessment - HR• 44% of local companies expanded their teams over the last 3

years, while 64% will still expand for the next 3 years• Staff turn-over rates decreased in the last 3 years• Drawbacks: constant need of highly skilled specialists, salaries

and benefits are growing

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Romania’s Competitive Assessment – Business Environment• Sectors with growing IT budgets in the next 5 years:

manufacturing, utilities, insurance, healthcare, education, business services

• Sectors with steady IT budgets in the next 5 years: transport, communications and utilities, finance, and the public sector

• SMB Sector will be forced into spending more on and outsource IT operations to be competitive

• The Public Sector will have projects openings, under the influence of the EU Digital Agenda 2020

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Drivers for the Romanian Software Industry Going Mobile Hardware Usage Pent-up Demand EU Funds Increased Internet Penetration New Technology and Delivery Models

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Main Factors Stimulating the Growth

Source: “Software and IT Services in Romania”, ANIS-IDC, 2013

Foreign investment in the local companies

increasing availability of IT skills

Specialized curricula in universities

Government incetives

Access to newer technologies

Increasing number of software development incubators

Industry events/ workshops

Improvements to IP legislation

0% 10% 20% 30% 40% 50% 60% 70% 80%

67%

61%

58%

57%

56%

46%

45%

44%

Software and IT Services in Romania - 2013

• Study on the development of the industry of software and IT services in Romania

• Commissioned by ANIS and rolled out by IDC• Published in November 2013• For more info: http://bit.ly/ITstudy

Romanian Software Outsourcing Index - 2013

• Catalogue of companies active in the outsourcing business• 55 detailed companies’ profiles• 1st edition was published by ANIS in October 2013• Accessible online at: www.anis.ro/rsoi

Nicolae Filipescu 39-41, 1st floor,sector 2, Bucharest, 020961+40-21-3121397www.anis.ro

www.facebook.com/anis.romaniawww.twitter.com/ANIS_RO

Valerica Dragomirexecutive directorvalerica.dragomir@anis.ro

Thank you !