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[ Can the Tech industry lead the way in the future of the Romanian economy? ]

EN, News 21.07.2021

Background

With more than 1,000 new companies springing up every year in the IT&C (Information Technology & Communications) sector in Romania, it is no surprise that the tech industry is very much one of the bastions of Romanian business innovation.

Tech multinationals moving to and settling in Romania have helped to create a strong tech ecosystem that we see today all over the country, with R&D hubs and accelerator programmes across all major cities. Their presence has helped to foster an environment of innovation within the start-up scene, and has aided the development of huge success stories, such as UiPath, Elrond, and Zitec over recent years.

2020 has been a hugely challenging period for governments, businesses and individuals who have all had to adapt to the fallout from the pandemic. However, one of the consequences during this period has been to serve to accelerate both innovation and trigger the development of the digitalisation process, as companies and individuals have rushed to embrace new operational norms.

In spite of the various challenges laid bare over the last 18 months, Romania has still seen 59 venture transactions with a total volume of EUR 30.4 million invested in 2020. Compared to 2019, the landscape has seen a 6% growth in investment volume, but a 51% increase in transactions, meaning that the market has seen smaller investments into more tech start-ups, spread across a wider ecosystem. Access to more local capital is one of the key identifiers to a strong business environment, and with more start-ups raising funds (39 in 2020 from 18 in 2019), and 150% growth in volume investments, the last year has laid the foundations for a much more robust local investment environment as Romania returns to some form of normality.

Education & Workforce

Owing to Romania’s openness to internationalisation, since the fall of communism, the education system has embraced multilingual and technical skills, with Romania 6th in world per capita of IT specialists, and the 2nd most multilingual country in Europe, positioning the country at the top of outsourcing destinations.

The English fluency rate is greater than 80% in the I.T. sector. Multinational companies have recognised these impressive strengths of the country, and with a strong representation of women in tech in Romania, far outweighing that of other European countries, the future looks rosy.

Trends in the Tech Industry during Covid-19

There are some clear areas within the tech sector that will play a significant part in the development of the industry in Romania, as the country moves forward:

  • AI (Artificial Intelligence) & ML (Machine Learning) have been two of the biggest drivers of start-ups within the tech sector over the last 18 months, whether it be facilitating innovation or optimising processes.
  • Cybersecurity will position Romania as the European hub for research and development in the industry in 2021, as voted recently by the EU.
  • 5G has been in the news for a while now, however the advent of its launch will significantly impact the tech industry in Romania. With broadband speeds up to 100 times faster than 4G technology, its capabilities around AI machine learning applications, and 3D video calls becoming a normality, 5G will also make all cable and fibre-based networks completely redundant, dependent upon how soon Romania embraces it.
  • Cloud Systems have played a huge part in updating operational processes due to the Covid-19 pandemic, and will continue to be a priority in companies’ I.T. infrastructure modelling.
  • Edtech  – the education landscape has been transformed due to the pandemic, with remote learning becoming an immediate necessity. Although there has been a cautious return to the classroom, it is unclear how the last 18 months has permanently evolved the industry
  • Marketing – Surprisingly, under most challenging economic conditions, marketing budgets are usually the first to be cut back, however the tech industry has generally seen across-the-board an increase in marketing budgets, leveraged by cost-cutting in other areas of the business, primarily operations-related.

Techcelerating into the post-pandemic landscape

If common sense and solid business acumen play a role over the next 18 months, Romania is well-positioned to leverage off the strength and resilience of the tech industry in the country during the pandemic, as operational processes, the investment landscape, and a host of new initiatives and bodies combine to create a strong ecosystem.

As of 2021, Bucharest will host the European Cybersecurity Industrial, Technology and Research Competence Centre, a future hub to distribute national funding, and to access research and development. The EU Digital Europe Programme, of which Romania is a part,  has allocated more than EUR 2 billion to cybersecurity research, around which Romania will be sitting at the top table.

In spite of all of the positivity around the tech sector, the public and private sector must take a leading role in developing a more robust investment environment for start-ups and rapid growth companies. Examples such as UiPath show that Romania can pave the way for a more confident backdrop in both the Romanian tech sector, and the investment community at large, if the various pieces of the puzzle are in place.

It is imperative that the building blocks of the last 3 years are further developed in order that Romania hits that tipping point. Then, we may be able to say with confidence, that the future of the Romanian tech industry will look extremely bright.

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