According to recent studies of BMI (Business Monitor International) domestic IT spending is likely to grow during 2011. An entire report has been made available by the agency in the first quarter of 2011. A quick look at the overall data shows the opportunities lying in the Romanian IT market.
The key trend inferred by the research is that Romanian IT spending returned to growth in 2010, following the sharp contraction in 2009. In spite of this trend line both consumer and business IT spending is expected to remain constrained in H111 by deleveraging and the fiscal austerity programme, therefore keeping spending volumes below levels recorded in 2008.
As a quantitative factor of the overall indicators, in 2010 PC shipments achieved a growth situated at a double-digit rate, boosted by ground effects due to the stiff contraction in PC shipments noted in 2009. The same study reveals that H110 registered shipment rise by at least 20%, compared with H109. Nevertheless, due to an estimated 25% decline in average prices, revenues growth did not keep pace with shipments volumes.
The cautious conclusion deriving from the BMI report is that for the medium term, the Romanian IT market’s strong fundamentals of low computer penetration, rising incomes and the effects of EU membership should support resumed expansion. Positive IT spending growth is expected in 2011.
Romania IT Industry Outlooks
One o the most frightened measures during the previous year, did occur in July 2010, when IT sector companies faced the government’s introduction of a 24% value-added tax (VAT), which ultimately could have a negative impact on demand for IT products and services. Obviously, retail sales were expected to be most affected, because of the likelihood that retailers would pass on the tax to consumers in the form of higher prices. Meanwhile demand for IT services from companies in the consumer goods and retail sectors could also be affected. However as the study revealed, even in such circumstances the IT spending followed a shy ascending line.
The second major fact is the government tenacious determination to continue the implementation of its e-Romania agenda, despite fiscal pressures. The National Tax Administration Agency (ANAF) is rumored to be planning a major upgrade of its IT systems with support from the IMF. The IMF will assist ANAF officials to identify IT issues and to develop measures to improve revenues collection. As shown in the report, the digitization and the strive to enhance the integration in the information intensive European society will shape the domestic Romanian IT spending up to 2015.
In such context, we recall that in 2009, the Romanian government looked to EU structural funds to prevent stagnation in the domestic IT market and stimulate investment. In 2009, information and communication technology (ICT) projects worth EUR125mn had been approved for financing as of October. According to BMI report, a total of EUR383mn has been earmarked for Romania’s ICT sector for the 2007-2013 period. Around 70% of the money earmarked for the Ministry of Communications and IT is to expand broadband communications infrastructure.
Romanian Computer Sales
According to BMI forecasts, Romanian computer hardware market (including desktops, notebooks and accessories) will be worth US$3.5bn in 2011, with double-digit growth compared with 2010. In H110, PC shipments grew strongly, with a double-digit year-on-year increase driven by notebooks. However, average prices declined and Romanian demand for computer hardware will remain constrained in both consumer and business segments due to continued deleveraging and rising unemployment. Consequently, the ascending trend will be ostly the result of corporate and institutional clients.
Romanian Software Sales
For the software sales, the same report indicates positive trends. The market value of legal packaged software in 2011 is projected by BMI at about US$2.1bn, with double-digit growth from 2010. As the economy emerges from recession in the second half of 2011, investments by businesses and the public sector should see spending on software increase to US$3.2bn by 2015.
Romanian IT Services Sales
Another interesting aspect revealed from the study is that Romanian IT services market is projected to be worth US$3.4bn in 2011, accounting for around 26% of total IT spending in the country. Spending on IT services was expected by BMI to have contracted in 2009 as enterprises cancelled or postponed IT projects as a result of the economic situation. However, a gradual recovery was forecast for 2010 and 2011.
E-Readiness
As mentioned in the summary, the issuance of a WiMAX licence to National Radiocommunications Company in Q408 as well as a CDMA450 licence should help boost broadband growth in the country, particularly in the rural regions. After receiving no bids in its tender for two further WiMAX licences in Q109, the communications authority, the ANC, announced that it was slashing the licence fee and would relaunch the tender. This signalled the regulator’s intent to drive growth in the sector.
As to conclude the results shown by this report, it is clear that Romanian Government will continue to actively promote the modernization of the domestic IT infrastructure, to support growth of internal demand and to comply all requirements for fulfilling its integration in the e-Europe.
