Spotlight Romania: A strong digital infrastructure lacks acceptance

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6 min read

Although it ranks low in the European Digital Economy and Society Index, Romania has the right foundation to become a digital power player on the market.

Info: The Digital Economy and Society Index (DESI) summarizes indicator's on Europe's digital performance and tracks the progress of EU countries. It covers topics such as infrastructure, education, public services as well as economic digital strategies (see more here).

Content: 

  1. The bad news first: There's Not enough digital education
  2. The good news: Romania has the infrastructure
  3. The Romanian economy needs to digitalize

In the 2021 DESI report*, Romania ranks last out of 27 EU member states. Now, this should be cause for concern but a closer look shows that despite some obvious areas that lag behind other states, Romania also has quite a few strengths that it could leverage in the following years to gain more influence and develop as a digital force.

* https://digital-strategy.ec.europa.eu/en/policies/desi-romania

The bad news first: There's Not enough digital education

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Romania has a shortage of Information and Communications Technology (ICT) specialists even though it's ranked 4th when it comes to ICT graduates. This implies that although the educational system is there to train ICT experts, the current job situation is not as attractive as in other states. Another problem pointed out by the study seems to be that both the organizations, educational institutions and companies don't do enough to train people basic digital skills. In fact, only 6% of all companies train their employees (compared to 20% Europe-wide).

Broadband isn't being used widely

The lack of digital education and know-how might also be the reason why - despite a very strong infrastructure when it comes to coverage and broadband - Romania has a very low percentage of households with fixed broadband (67%, compared to EU-wide 77%). This also goes for mobile broadband take-up, despite comparatively fair prices. In fact, Romania ranks first in terms of broadband prices.

Romanian business & institutions are not very digital

Adding to the lack of know-how as well as adoption is the low integration of digital technology in business activities. Romania ranks 25th overall with only every third of small and medium sized enterprises having a basic level of digitalization (compared to EU-wide 60%). In almost all categories, Romanian enterprises are not as likely to use digital channels, tools and means to shape, market and expand their business.

This is in par with the lack of digitalization in public services where Romania ranks last EU-wide. This is not just due to a lack of services but also a lack of usage. Hardly any online users take advantage of the e-government services (16%, compared to EU-wide 64%).

To summarize:

Romania's main problem seems to be the lack of education and knowledge about digital tools and possibilities which creates a "chicken & egg"-scenario were organizations, schools, and enterprises don't educate about digital options which in turn keeps the interest in digital solutions and services low. That way, digital services are not being used and their advantages can't be leveraged and shared.

However, since Romania's infrastructure as well as ICT training for specialists is actually higher ranked, a shift in public perception of the digital possibilities could result in a very sudden and strong change across all industries, markets and public sectors.


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The good news: Romania has the infrastructure

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As already mentioned, Romania has all the tools it needs to become a digital leader. All it needs is the training and education to convince people, organizations and enterprises of the many advantages of digitalized services, processes and channels.

Romania has strong ICT graduates

Romania has an incredibly high number of ICT graduates and ranks 4th EU-wide. Even moreso, female ICT specialists are high in numbers and do have great working conditions. Along with Bulgaria, Romania has one of the highest numbers of women working in the ICT industry with nearly one third of all ICT workers being women (source: emerging-europe.com).

The number of female ICT experts is high

Additionally, more and more women in Romania are starting their own businesses in the industry. European wide, Romania has the highest rate of women studying IT (13%) and employment opportunities due to a high outsourcing demand in Europe for Romanian resources.

This means that despite its low ranking, Romanian has a very strong ICT workforce. However, it predominantly seems to move to other countries since the possibilities in Romania are rather limited (partly also due to the IT resources moving to other countries).

Romania is working on reforms & investments

Romania is currently working on a number of reforms and investments to change their education system and set up professional routes to both educate public service employees and citizens and increase their digital competence. Furthermore, Romania wants to offer grant schemes to help enterprises to upskill/reskill their employees. In general, investments in digital education will increase in the next years across all industries and public sectors.

With this, it is very likely that the usage of the already existing infrastructure will increase. Given that Romania has even higher coverage than the EU coverage (in urban and rural areas), it's just a matter of adoption of the already existing broadband services.

The Romanian economy needs to digitalize

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One of the most important issues will be the adoption of digital solutions via enterprises. Hardly any Romanian companies are using cloudbased solutions, social media or make use of big data. One exception is the use of artificial intelligence that surpasses the EU-wide average (31% vs. 25%) and ICT technologies for sustainability (68% vs. 66%).

The question is, whether AI technologies can be fully leveraged without the adoption of cloud technologies or the development of big data capabilities. Every AI solution is only as smart as the data it is being fed which usually necessitates big data sources.

Romanian enterprises need to be attractive for ICT experts

One reason for the lack of digital projects might be the lack of ICT experts within Romanian companies. Without the know-how what exactly the digital transformation can achieve, there is no motivation to adapt it. This means that enterprises are in need of internal (through recruiting) or external (through consulting & training) resources to gain more digital know-how.

At the same time, ICT professionals will continue to prefer international companies as long as local enterprises cannot offer attractive digital projects and training programs. 

A survey by Valoria (via amcham.ro) shows that enterprises are willing to take the step towards digital transformation - but not in all industries.

Some industries are further digitalized than others

According to the study, especially telecommunication and media & advertising companies say that "digitalization has had a great influence on them." However, in other industries such as industrial production, chemical and construction, only approx. one third are confident that they will profit from digitalization (even though these industries in particular can increase productivity and decrease costs with smart data & process automation).

As such, the majority of construction, real estate and industrial production companies have not yet put digitalization into their overall strategy, opposed to pharma & healthcare companies (every second company has digitalization as a central goal).

But digitalization is not just relevant for a select few industries. Especially in the production and construction segments, transparency over supply chains and ways to decrease costs by optimizing processes and using data to anticipate demands are crucial for the long-term success of a business.


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by Juliane Waack

Juliane Waack is Editor in Chief at DIGITALL and writes about the digital transformation, megatrends and why a healthy culture is essential for a successful business.

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