What is happening on the IT market? Amazon, the largest employer in Iasi, reports serious losses again. Specialist: “Other surprises are coming”

The deadline by which companies can submit their financial statements for the previous year is May 29, and Amazon Development Center is one of the few Iași companies that have already fulfilled this obligation. However, the specialists in the field of Iesian IT say that other “surprises” are to be expected, as the financial balance sheets will be submitted by the companies and published by the Ministry of Public Finance.

Amazon: “Success is measured by the possible, not the probable”

“We are a company of pioneers. (…) Success is measured in relation to the possible, not the probable”, is the determined statement made by the Amazon Development Center on its own website, where it also emphasizes that, “opened in 2005, the Amazon Development Center in Iasi was Amazon’s first research and development unit in Eastern Europe. It plays a major role in the city’s thriving technology industry, employing skilled experts who are inventing exciting new technologies in the fields of Cloud Computing, Information Security, Machine Learning and data analysis.”

Amazon’s pioneering arrival in Iasi was the signal sent to other large IT companies that this county can become an important center in the IT industry in Eastern Europe. Especially since until the end of 2022, the Amazon Development Center reported consistent earnings, and profits increased from year to year. In 2022, Amazon surprised with a declared loss of 8,220,876 lei. In 2023, according to the new data, the loss recorded by the Amazon Development Center was 52,531,324 lei (over 10.5 million euros), while the number of employees decreased from 4,232 in 2022 to 3,770 in 2023). At the same time, the turnover increased by over 17 million euros (from 616.7 million lei in 2022 to 702.4 million lei in 2023).

Also last year, Amazon Development Center, the company owned by Amazon.com Sales, Inc. and Amazon Int’l., Inc. from the State of Delaware, USA, crossed the street from Palas, to palas Campus – and moved from United Business Center 5 Buildings (where it occupied floors 1, 3-6) and Unique Business Center (floors 3-8), in Palas Campus, in block C (ground floor and floors 1, 3-6) and D (ground floor + floors 1-6).

The decrease in orders from the automotive industry in Europe and America was also felt in Iasi

“I don’t know why they had such big losses at Amazon, but I know, from what is happening in other companies in Iasi, that there will be surprises in the balance sheets that will be published for the year 2023”, Gabriel told Ziarul de Iasi Mardarasevici, one of the “veterans” of the IT industry in Iasi, founder of the Focality company, who detailed: “The decrease in orders from the automotive industry in Europe and America was reflected by a reduction in the activity of some companies in Iasi. This is because the automotive industry followed this trend of electric cars 2-3 years ago. An electric car needs a different kind of software than a classic car, and a good electric car uses about eight processors to solve all the applications inside.

Many car manufacturers started to develop electric cars that needed new software, but the public’s enthusiasm for these cars decreased quite quickly, for many reasons. That the battery doesn’t last, for example, or that it’s more expensive to insure an electric car than a classic one, or that there aren’t enough charging stations, or that maintenance costs are higher. And their low adoption by the population also affected the budgets of car manufacturers. Apple, for example, which wanted to develop its own electric car, abandoned the project a few months ago. And there were other electric cars expected. Their release date on the market has been extended. In parallel, the production of the big classic manufacturers in the car industry also decreased”. Overall, however, believes Gabriel Mardarasevici, these changes in trends will not lead to a decrease in the number of IT employees in Iași, but to a “resettlement”, to a reorientation of IT specialists to other industries: “Health-Pharma, the financial sector, the energy sector, for example”.

And other big companies, with reduced profit

Among the first IT companies that have already submitted their financial statements for the year 2023 are Code932, Midnight Works and IColdo-Ro SRL, all of which have as their main object of activity “custom software development activities (customer-oriented software)”. And these companies saw their profit decrease in 2023, compared to that in 2022 (in the case of Midnight Works by almost 85%, IColdo-Ro’s profit decreased by 53%, from 4.6 million lei in 2022, to 2 .1 million lei in 2023, and Code932 recorded a profit of 427,125 lei, over 1.1 million lei lower than the previous year).

And the sales figures of the Midnight Works and IColdo-Ro companies also decreased by more than 30% in 2023 (however, the turnover achieved by Midnight Works, of almost 26 million lei, with only 3 employees, remains impressive). Code932, on the other hand, recorded a small increase in turnover (+1.3%).

“For me it was about investments. We made investments, we made a development plan”, explained the founder of Code932, Andrei Dănilă, the reduced profit figure and the increase in debts (from almost 697,546 lei in 2022, to 1.5 million lei in 2023), however, he says he, “the year 2023 was not an easy year for IT entrepreneurs from Ieși. Those who managed to keep their turnover from the previous year were lucky. Working from home has led to a decrease in productivity, orders have also decreased – we, in outsourcing, are “fed” by the US, UK or Nordic markets. This decrease in activity was felt there two years ago, and the effects reached us last year.

The IT market remains a very flexible one

“The IT market is very flexible and can adapt to changes,” says Gabriel Mardarasevici, but he points out a possible danger, “the costs in the European area and the quality of work, which are no longer so efficient, could make us assist to a move of operations in the Asian area”. These changes, if they occur, will be reflected in the financial statements of the following years. For the time being, the year 2023 has not yet revealed all its mysteries from the financial statements of IT professionals from Iași, which can still be submitted until May 29.