Romania’s IT Industry Caught Between Tax Pressures and AI Opportunities
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Loading... - Sylvie Payet
- 14 Feb 2025
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At the beginning of 2025, Romania's IT industry is facing significant challenges due to the abrupt removal of tax breaks that had supported the sector for over two decades. This policy shift comes at a time when the industry has been a crucial contributor to the Romanian economy, accounting for over 8% of the country’s GDP last year. The sudden changes have raised concerns among companies, many of which are bracing for potential layoffs and bankruptcies in the coming year.
Impact of Tax Changes
The phasing out of tax breaks began in 2023, with immediate effects felt throughout the year. A survey conducted by the Software Industry Employers’ Association (ANIS) revealed that over 80% of member companies reported negative impacts on their financial performance due to the tax measures introduced in 2023. The situation worsened with additional tax rulings announced at the end of 2024, leading to heightened uncertainty within the industry.
Key findings from the ANIS survey include:
- 63.2% of companies reported a negative impact on financial performance in 2024.
- 57.9% identified increased labor costs as a major challenge.
- Only 34.2% managed to grow their teams, significantly lower than the initial estimate of over 64%.
- 21.1% ended 2024 with declining revenues, a sharp increase from the 10% that had anticipated such outcomes at the start of the year.
Concerns and Future Outlook
The fiscal decisions made at the end of 2024 caught the industry off guard, with 81.6% of respondents citing potential tax increases as the biggest threat to their business. Additionally, 71.1% expressed concerns about a lack of tax predictability. Voicu Oprean, CEO of AROBS Transilvania Software, emphasized the need for alignment with forward-thinking government policies and effective use of European funding to foster growth in the sector.
Despite these challenges, there is cautious optimism regarding the potential for moderate growth in 2025. According to the ANIS survey:
- 44.7% of respondents expect revenue growth, while 47.4% anticipate stagnation.
- 36.8% of companies expect to expand their teams, but the majority (52.6%) believe their employee numbers will remain stable.
Opportunities in AI and Digital Transformation
The demand for innovation remains strong, particularly in areas such as cybersecurity, automation, and artificial intelligence (AI). Florin Stefan, Application Development Director at Stefanini Group, noted that the demand for IT solutions that deliver efficiency and security will continue to drive investments. However, the demand is expected to become more polarized, with companies prioritizing investments that offer a clear cost-to-value ratio.
The rise of Generative AI (Gen AI) presents a significant opportunity for the Romanian IT sector. A Deloitte study indicates that 67% of organizations are increasing their investment in Gen AI due to its strong value proposition. Key benefits reported include improved efficiency and productivity, increased innovation, and enhanced customer relationships. However, many organizations are still in the early stages of implementing Gen AI initiatives, with 68% stating that they have moved 30% or fewer of their Gen AI experiments into full production.
Romania’s IT industry stands at a critical juncture, facing the dual pressures of tax changes and the need to adapt to emerging technologies like AI. The future success of the sector will depend on coherent public policies, fiscal predictability, and support for innovation. As the industry navigates these challenges, it must also leverage opportunities in digital transformation and AI to maintain its position as a key driver of the Romanian economy. The ongoing dialogue between the government and the private sector will be essential in creating a supportive environment for growth and competitiveness in the rapidly evolving tech landscape.
