Ziarul Financiar, 2015: state aid, IT hiring and smaller local firms
Topics: Engineering talent and education
Read the article in Ziarul Financiar ↗Hanganu: Ajutorul de stat pentru granzi a dinamitat piaţa de muncă în IT
Interview, March 2015, on the state aid received by multinational IT companies under Government Decision 797/2012, which committed them to create at least 200 local jobs within three years. I was then co-founder and managing partner of Tremend and president of Different Angle Cluster, a newly founded group of Bucharest companies. My view: the aid destabilised the IT&C labour market. Topics: aid in a market where demand exceeded supply, salaries local companies could not match, a market polarised around the large employers, extending the scheme to smaller local firms.
Aid in a market where demand exceeds supply
“The facilities received by some of the large international players would have made sense in an industry with no jobs, but in this industry demand is far above supply. It almost comes to cannibalisation in order to meet the demand for IT specialists.” („Facilităţile primite de unii dintre marii jucători internaţionali (prezenţi pe plan local - n.red.) ar fi avut sens într-o industrie în care nu există locuri de muncă, însă în această industrie cererea este cu mult peste ofertă. Aproape că se ajunge la o canibalizare pentru a putea suplini cererea de specialişti IT“)
The bracketed note in the original (“present locally”) is the editor’s.
Salaries local companies could not match
“The state aid schemes allow them to pay huge salaries. How can a local company compete with multinationals that pay double salaries because they have no taxes, or very low taxes?” („Schemele de ajutor de stat le permit să dea salarii uriaşe. Cum poate o companie locală să concureze cu multinaţionalele care dau salarii duble pentru că nu au taxe, sau taxe foarte mici?”)
The fierce competition to recruit IT specialists had raised the salaries multinationals offered. Local software providers were in a very difficult position, with no international conglomerate behind them to support equally large pay packages.
Multinationals that had received state aid to create jobs in Romania: IBM, SAP, Dell, Microsoft, Atos, Endava, Siemens, Luxoft and Pentalog. Their commitments: more than 6,000 jobs over three years, for state funding of more than 50 million euros.
A market polarised around the large employers
“State aid schemes have only polarised the market around these multinationals, which were large anyway and had the strength behind them to enter the local market in other ways too.” („Scheme de ajutor de stat nu au făcut decât să polarizeze piaţa în jurul acestor multinaţionale, care oricum erau mari şi aveau o putere în spate ce le-ar fi permis să intre pe piaţa locală şi altfel”)
Quoted here as president of Different Angle Cluster.
Extending the scheme to smaller local firms
“In the cluster, for example, there are companies from a few dozen employees to about 100. It is hard for a company with 100 employees to open 200 jobs at once, even over the next 3 years. That means exponential growth, which does not happen overnight in business.” („În cluster spre exemplu sunt companii de de la câţiva zeci de angajaţi la circa 100. E greu pentru o companie cu 100 de angajaţi, să deschidă dintr-o dată 200 de locuri de muncă, chiar dacă vorbim de următorii 3 ani, dar acest lucru înseamnă să ai o creştere exponenţială care nu se întâmplă peste noapte în business”)
Proposal: generalise the state aid programme so that it applies to all software providers, including smaller local ones.
Read the article in Ziarul Financiar ↗
A summary of an external interview or article. Quotes are my words as published or spoken; the original is the reference.