Cluj IT CEO: Companies have kind of closed their “reserve bank” and are no longer hiring juniors/ The market is “in a certain difficulty”

In the context of a wave of layoffs globally, but also in Romania, the IT services market is “in a certain difficulty”, says Andrei Kelemen, CEO of Cluj IT Cluster, one of the representative associations for the Romanian market, reports Economedia. For Romanian programmers there are other novelties, brought by the legislation last year. Only 37% of IT companies fully cover the decrease in net salary after giving up tax privileges in the sector, according to the preliminary data of a specialized analysis of the sector’s labor market. It also claims that, further, average salary increases are estimated at 10% for 2024.

The company Cteq, active in recruitment services in the IT segment, presented some of the preliminary results of this year’s PayTable salary study, according to data published by the Employers’ Association of the Software and Services Industry. According to this analysis, only 37% of IT companies fully cover the decrease in net salary after capping tax deductions, from separately allocated budgets or from the budget for salary increases. “The good news is that going forward, average salary increases are still estimated at 10% for 2024. However, the actual impact of wage increases in the industry will be noticeably more modest than in past years“, the analysis shows.

We remind you that IT in Romania also went through fiscal changes, after years of privileges. Starting from November 2023, legal provisions entered into force according to which the application of certain tax facilities for some fields of activity was eliminated. From November 1, the income tax exemption for IT professionals was eliminated (however, this is maintained for incomes below 10,000 gross lei). The most significant decreases in the average net salary in November compared to the previous month were registered precisely in areas affected by the elimination of fiscal facilities, with a 5.4% decrease in publishing activities (CAEN which includes the activities of publishing software products ).

The IT services market is “in a certain difficulty”, says Andrei Kelemen, CEO of Cluj IT Cluster, one of the representative associations for the Romanian market, for Economedia. This in the conditions where the wave of layoffs started last year in the United States continues in 2024.

“There is pressure, it’s quite clear. The IT services market is in some trouble and we’ve seen it. It is also an effect of the change in the tax regime. I have seen that there are companies that lay people off, this also happens. What we found, empirically, from the discussions, is that the companies kind of closed their “reserve bank”, they gave up on people they kept for situations when they wanted to scale. And they don’t hire juniors anymore. But there is still a search for senior expertise, for specialists. The difficulty is for the beginner area, for people who are now entering or want to enter the industry. But this is also a signal,” Kelemen mentions.

How many employees does Romania have in the IT sector and what are their salaries? Official data

The number of employees in the IT sector reached 147,200 people at the end of 2023, an increase of 5.1% compared to the previous year. However, the rate of growth is much lower than in previous years, when the annual increase was over 10%, with a peak during the pandemic, in 2021 (+15%), as shown by the data synthesized by the team of economists of the Faculty of Sciences Economic and Business Management (FSEGA) of UBB in Cluj, which runs the Romanian Economic Monitor research project. Researchers anticipate that the number of employees in the IT field in Romania could stagnate or even decrease slightly in 2024, according to an analysis sent to Economedia. Also, we should witness a reconfiguration of the market, where IT companies abandon outsourcing and rely on innovation, a move that has been talked about for years in the field.

Salaries have evolved since the beginning of the year, according to data from the National Institute of Statistics, consulted by Economedia. Thus, in March the average net wage earned in information technology service activities (including IT service activities) was 11,193 lei, down slightly from 11,268 in February, but above that at the beginning of the year, in January, when it was 10,935 lei.

On the IT market, the beginning of spring was marked by the news that one of the largest companies in the country, NTT Data, based in Cluj, is laying off people. And she’s not the only one.

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