Keysfin: Local software industry to grow by 10% in 2021 and reach a new record level of over 9.2 billion euros

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Romania’s software industry grew by about 10% in 2020 compared to 2019 and was 250% above 2010 levels, surpassing the €8.3 billion threshold, according to data from the Ministry of Finance, a Keysfin analysis shows.

Keysfin analysts expect the uninterrupted growth trend of the last 10 years to continue and reach a new historical high in 2021, of more than €9.2 billion.

In 2020, almost 27 thousand software companies were active in Romania, 9% more than in 2019 and 104% more than in 2010. Of these 25.3 thousand are micro enterprises, 1.1 thousand small companies, 353 medium-sized companies and 21 large companies.

Reaching a new historical high in the local software market reveals that, although the industry as a whole saw an 8% decrease as a result of the COVID-19 pandemic, software companies have managed to adapt to the pandemic context, continuing this year the trend of digitization in many key areas in Romania, analysts point out.

Software sector booming

“Beyond the major impact of the health crisis, risks in the political sphere and the associated fiscal unpredictability or recent inflationary pressures, the local software industry is consolidating its key role in the development of the economy and turning Romania into a regional hub, after one of the fastest growth rates, if not the fastest in the last 10 years, of over 250%,” said Diana Florescu, economic analyst at KeysFin, one of the leading business information solutions providers in Romania.

The share of turnover generated by Romanian software companies in the IT&C sector increased from 32% in 2010 to over 57% in 2020 due to the much faster advance of the software component, with a 3.5 times increase compared to the doubling of turnover in the IT&C sector compared to 2010.

In terms of total turnover generated by non-financial companies in Romania, the share of the software industry has increased from 1.1% in 2010 to over 2.4% of the total in 2020.

The net result of software companies reached almost 986 million euros in 2020, 3.5% more than in 2019 and more than 6 times higher than in 2010.
Also, in 2020, companies in the software industry generated 77% of the net result recorded by the entire IT&C sector and 4.6% of the net result of all non-financial companies in Romania.

Top software companies in Romania

For the first time in recent years, the largest local software company became IBM ROMÂNIA SRL, with a turnover of almost EUR 196 million in 2020, dethroning the leader ORACLE ROMÂNIA SRL, which recorded the largest decrease in the Top 10, of 16%, and dropped to the third position, with a turnover of EUR 168 million in 2020. After the largest advance in the Top 5, i.e. 27%, BITDEFENDER SRL climbed to the second place, with a turnover of EUR 178.5 million in 2020.

The 10 largest companies in the industry combined a turnover of around €1.4 billion, representing 16.4% of the total.

“At the time of writing, the 2020 results of UiPath SRL (CUI: 34737997, subsidiary of UiPath Inc. indirectly controlled through UiPath Netherlands Holding B.V.) were not available. The company was ranked 6th by Turnover in 2019, and for 2020, based on the data reported by UiPath, Inc. we estimate a climb in the Top 10 and do not rule out crossing the EUR 200 million threshold, which means that UiPath could become the new leader of the local software market by turnover,” said Diana Florescu, KeysFin economic analyst.

The number of employees in the software industry increased by 4% compared to 2019 and was 170% above the 2010 level, to almost 138 thousand employees in 2020, which represents 70% of the total IT&C workforce and 3.4% of the number of employees in all non-financial companies in Romania in 2020.

According to the latest data from Eurostat in 2019, Romania ranked 4th in terms of the share of IT graduates in total tertiary graduates (ISCED 5-8) per country in the European Union (after Estonia with 8%, Ireland with 7.8% and Finland with 7.4%), with around 7,900 graduates per year out of a total of 125,000.

At EU level, there were 158 thousand graduates with IT&C specialization out of a total of 4 million graduates with higher education in 2019, and Romania ranked 5th in terms of share of IT graduates out of total IT graduates at EU level (after Germany with 18.7%, France with 18.3%, Spain 12.2% and Poland with 11% of total EU IT graduates).

The KeysFin analysis is based on annual, unadjusted, aggregated financial data reported by companies to the Ministry of Finance (at the end of the period) whose main field of activity is one of the CAEN codes: 5821 (Publishing activities of computer games), 5829 (Publishing activities of other software products), 6201 (Custom software development activities), 6202 (Information technology consultancy activities), 6203 (Management and operation of computers), 6209 (Other information technology service activities), 6311 (Data processing, web page administration and related activities) or 6312 (Web portal activities). All figures are expressed in euro and the exchange rate used was the official exchange rate published by the National Bank of Romania (end of period).

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