“There is a worrying trend of slowing down the rate of employment in Romanian IT” – it is stated in a study by Babeș-Bolyai University researchers. In the US, companies continue the wave of layoffs in the context of the development of artificial intelligence (AI).
The pace of IT employment has decreased in Romania. PHOTO: Shutterstock
Researchers from the Romanian Economic Monitor (REM), a research platform within Babeș-Bolyai University (UBB), claim that “the evolution of the population of IT employees from Romania will be able to reach a stagnation or even have a slight decrease in 2024″.
The causes of this development come against the background of international trends. “The global IT technology market is showing an obvious slowdown, and the effects of this slowdown are also felt in Romania. In order to understand the changes in the Romanian IT industry, it is imperative to analyze the developments in the American market, because they have a delayed but significant impact on the domestic market as well“, the study shows.
The US economy is surprising in its resilience, adding 353,000 new jobs in January, well above economists' estimates. Thus, the boom in artificial intelligence is noted which continues to develop at a rapid pace, and the Nasdaq index, with a strong technological component, has increased by more than 8% since the beginning of this year alone.
50,000 IT professionals laid off in the US
However, layoffs that started in 2024 continue this year in the IT industry.
“The number of tech layoffs in 2024 has surpassed that of 2023. This year alone, more than 50,000 tech workers have been laid off, according to data from Layoffs.fyi, which tracks tech layoffs. That's more than 684 layoffs every day of 2024. In the previous year, about 263,000 tech workers were laid off, with an average of about 720 layoffs per day“, the quoted analysis states.
The biggest reason for these layoffs is artificial intelligence (AI). “Companies are forced to free up financial resources to invest in the chips and servers that power the AI models behind these new technologies“, claim the researchers from UBB.
In addition, companies that made layoffs were not penalized on the stock market either because of the layoffs or based on possible lower performance. On the contrary, they were rewarded by increased investor confidence, which was reflected in rising share prices.
What is happening in Romania: a worrying trend
In recent years, the IT sector in Romania has experienced significant growth, attracting foreign investment and generating well-paid jobs. The researchers note, however, that the proportion of IT specialists in the total number of employees is lower in Romania than the EU average (under 3% in Romania compared to over 4% in the EU, according to Eurostat).
“However, there is a worrying trend of slowing hiring in this sector, raising questions about the underlying causes”claims the REM report.
Thus, in addition to the influence of trends in the USA, the researchers point out that due to the very high demand for specialists in Romania, a significant increase in salaries was reached, although part of the staff was on the “bench”, that is, they were not involved in the company's projects for certain periods of time.
“Analyzing salary dynamics, we can see that salaries in the IT field in Romania are more than double compared to the national average, being considered high even compared to other countries in the region”. the report shows.
“Romania as a whole will continue on a development trajectory”
In this context, REM's conclusion is that “the pace of IT employment growth is slowing significantly.”
According to the estimates of the Cluj researchers, the evolution of the number of employees in the IT field in Romania may reach a stagnation or may even have a slight decrease in 2024.
The report shows that we will also witness a reconfiguration of the market in which IT companies will have to move from outsourcing projects to creating their own innovations, a process already started by several important players in this sector.
UBB researchers claim that despite controversial news regarding staff reductions at several major companies in the domestic IT market, “we consider that, especially in the context in which companies will reorient towards their own innovative projects, the IT industry in Romania will continue on a path of further development.”
