Analysis: Software and services industry slows growth to 5-10% in 2023 and undergoes massive staff restructuring

Two years of the pandemic, followed by a period of high inflation, with war on the border, aspects that generated significant disruptions in economic chains, especially due to the increase in production costs, produced their effects in full this year in the software market and services from Romania.   Thus, the local profile industry slowed its growth rate to 5 – 10% in 2023 and was marked by massive personnel restructuring, problems regarding the recruitment and retention of employees, but also by the adaptation to hybrid work.   On the other hand, the development of the software and services industry in Romania this year was under the auspices of cost efficiency through digitization, automation, RPA implementation, but also the migration of cloud services.   Vlad Lepadatu, Managing Partner at TARA Interactive, mentions that “automation” was the watchword that moved the software and services industry in Romania the most this year. “Demands on the automation side of processes have increased, especially in the second half of the year, with implementations started or will start in Q1 2024. We also have an increase in requests to replace old systems, complicated from the point of view of user experience and difficult to maintain, which involves developing platforms from scratch”.   The implementation of artificial intelligence, its use for the improvement of processes both within companies and at the individual level, was another trend fully manifested in 2023.   Also, more and more IT companies have taken into account the integration of AI solutions in their own products, or their use for the benefit of customers. However, this also came with the flip side of the coin, in the sense that, this year, more and more IT companies in Romania operated personnel restructuring.   IT firms also used AI for code generation, so they needed fewer and fewer programmers. And the layoffs will continue in the next period, especially in the departments that deal with adjacent projects, research on segments that now do not bring income, preserving the core business that is profitable. Competitiveness was at a higher level in 2023 among Romanian IT companies.   As they have become “more expensive” for the West and the US, there is a tendency in the market to look for solutions to remain competitive. In this context, more and more IT companies put emphasis in 2023 on diversifying their product and service portfolio, choosing to go outside the borders, either by opening new offices or by contracting clients for projects with a greater degree of complexity .