The solution for the “crisis” of Cluj IT: “Hungary convinced BMW to bend their boards, we convinced them to invest in our intelligence”

The founder of an important IT company in Romania, Daniel Metz, draws attention to the fact that IT in Cluj is facing a wall that it must climb. One solution would be collaborations, such as the joint venture with BMW, in which specialists use top expertise.

If BMWs are “bending the tin” in Hungary, new cars will be designed in Romania. PHOTO: BMW

The local press announced that two companies from Cluj – NTT and Cognizant Softvision. – started discussions with the employees during this period for the amicable conclusion of the employment contracts with some of the employees, in order to avoid their dismissal. “The share of employees to whom the company has proposed an amicable termination solution does not exceed 2% of the total number of employees and collaborators,” stated NTT's management.

The company stated that these developments were determined by real and natural changes in the market of car manufacturers. On the other hand, NTT also showed that the flow of personnel at NTT DATA level is positive, and in 2023 twice as many professionals were hired compared to the number of colleagues who chose to continue their career in other companies.

A cycle of evolution of Cluj IT has ended

Since it is not the first signal from the IT market in Cluj that shows that the companies in the field are going through a period of challenges, “Adevărul” spoke with Daniel Metz, the founder of one of the most important IT companies in Romania and the former CEO of NTT Romania , who resigned from the management position in the company and is now a teacher at Babeș-Bolyai University.

Metz claims that what is happening at NTT is a normal situation of adaptation to the activity in the automotive industry, but emphasizes that IT in Cluj will no longer be successful if it does not move to the next stage.

At the moment, a cycle of IT evolution in Cluj has ended and another cycle is entering. We don't know what the next cycle is, companies don't know what the next cycle will be. We need a leap, we are on a plateau and there is a wall that IT in Cluj must climb to reach the next plateauu”, he specified.

The main problem that the Cluj IT has is, according to the expert, that it has reached such high costs that, in order to be satisfied, the companies must reach another level of complexity of the activity.

“Cluj is no longer attractive because of the very high costs, but it is no longer attractive because of what we have done so far. Just like what we did in the 2000s when we started the company can no longer be implemented today“, he explained.

The situation at the moment

The former CEO stated that it is mainly about employee costs, which have become very high. A mid-level IT-ist ended up earning 2,500 – 3,000 euros.

Metz claims that he has not seen a financial report from NTT for three years, but he sees clear signs in the Cluj IT market regarding the new state of affairs.

“I know that the profitability of IT companies in Cluj has become worryingly low. This is a sign. Why? I remember from my time, when we had a margin (ed. – profit margin) of 35-38%, we could generate liquidity, we could invest, we could develop“, he claims.

At the moment, the profit margin has narrowed due to global competition, globalization, cost pressures.

“The costs have already reached, at the level of Cluj, here in the mouths of the entrepreneurs. It's a little bit longer and they start taking water instead of oxygen. This is the situation of Cluj at the moment“, he also claimed.

Effects of this state of affairs: “If you want to start an investment project, you don't have enough resources in Cluj. Two, if you find resources, you have to come up with significant value-add to be able to pay for those resources. And such projects are few. There are very few of them in Europe. BMWis an exception, by the way, it is not representative”, claims Metz.

Daniel Metz, former CEO of NTT Romania, teaching staff at UBB.  PHOTO: Personal archive

Daniel Metz, former CEO of NTT Romania, teaching staff at UBB. PHOTO: Personal archive

The solution for Cluj IT

The former CEO claims that the joint venture project between BMW and NTT is the solution for IT in Cluj. A few days ago, the companies announced the creation of a software development center in Cluj, where approximately 250 software developers will be employed by the end of 2024 and they plan to reach approximately 1,000 employees by 2027.

“What we did with the BMW is an example of what needs to happen for Cluj to remain a center of innovation and a center of well-being in Romania. Because prosperity means long-term well-paid jobs, sustainable jobse”, said the specialist.

He made a comparison between BMW's investment in a car factory in Hungary and the development center in Cluj.

“The Hungarian state convinced them, with a lot of money, with enormous subsidies, to come to Hungary to bend the sheet metal. We convinced them to come to Cluj and invest in our intelligence and that of our young people, who mean the future. And bending the board is important, but today you bend the board here, tomorrow beyond. But creating cars, designing them is something else”explained the former CEO.

Metz, who claims that he was involved in bringing BMW to Cluj thanks to the relationship he developed with the company's management over time, states that the first projects carried out with the car giant in 2005 were third- or fourth-rate .

“Now we brought the first-hand projects to Cluj. And these are the projects that mean significant added value. This must come to Cluj”he concluded.

Cluj has a problem

Metz claims that, in fact, Cluj has a systemic problem, considering that 60% of GDP is obtained from knowledge-based activities. In the context of high prices in Cluj, mainly real estate, employees will put pressure on companies.

“Costs for employees in Cluj are already very high, so the high costs will continue to put a lot of pressure on companies' salary costs. It is not normal that in Cluj the costs per square meter of housing are higher than in Bucharest. We have a systemic problem, we have to solve it“, he detailed.

Metz argues that the solution would be to increase the supply of housing which would lead to a decrease in the price.

In conclusion, the entrepreneur claims that Cluj IT needs to reinvent itself and has this ability to reinvent itself, but a systemic effort is needed.