Regional cluster wants to upgrade Romanian IT sector

The IT sector will transform the economy in the Cluj region by “increasing efficiency of businesses and social life,” but inconsistent public policies and a lack of long-term government strategies in e-government and smart cities means local IT innovations may not end up serving citizens and companies across Romania as a whole, Stelian Brad, president of Cluj IT Cluster told delegates at the Cluj Innovation Days last month.

To date, public investment in e-government has not been based on a clear national strategy and even the most basic IT infrastructure is not maintained and upgraded on a regular basis. As a result the government’s IT systems “are no longer sustainable,” Brad told Science|Business.

As one case in point, the IT infrastructure of ANAF, the national agency in charge of collecting taxes, is working at 99 per cent of capacity, well above the technical recommendation of 70 per cent. The agency fears that without an upgrade, its IT system may break down and some tax data could be lost.

The government has spent more than €11 million on eRomania, an online portal that was supposed to become a hub for digital services in the country, but it has failed to deliver. An audit in 2014 revealed that “the website feels abandoned, and many pages are not complete or lack basic navigation functions.”  

The situation is seen as being so bad that last year former prime minister Dacian Cioloș brought together over 1,000 volunteer IT experts and 40 companies to fix existing e-government systems and to develop new ones. However, the programme was discontinued by the new government in January.

Brad is calling for public consultations to agree an integrated national approach to the development of e-government services, but he also expects local authorities to take the lead and agree on an action plan together with the government. “Bottom-up approaches should be considered,” he said.

As an example, local authorities in Cluj have teamed up with IT companies to develop a smart parking system throughout the city and digitised the tax collection systems. Both systems were launched this year and thousands of users have embraced the technology already.

“Just like Alice in wonderland, we have to move very fast just to stay in the same place,” said the mayor of Cluj-Napoca, Emil Boc. The mayor, who was prime minister between 2008 and 2012, is working with the cluster to implement IT systems that have put the city ahead of the capital Bucharest.

“We want to use technology to solve the problems of citizens,” Boc said.

Brad described how the Cluj IT Cluster has close contacts in the Netherlands from where it can draw upon Dutch success stories in smart city technology and e-government.

Building on this, the Cluj cluster is now helping other cities in the region to develop e-government and smart city systems. Last year, the cluster teamed up with local authorities in Oradea to develop the first integrated smart city strategy in Romania. “The project is the most complex in the country,” said Oradea’s city manager Eduard Florea.

The IT sector is going through a revamp

In the past 20 years, the IT sector in the region has consolidated around outsourcing contracts for simple programming projects in which it was able to offer lower costs. But now the cluster wants to strengthen its collaboration with local universities to trigger innovative projects. “We want to engage academia with business,” said Andrei Kelemen the cluster’s executive director.

Many local companies that take up outsourcing contracts from abroad are thinking of relocating to lower cost cities in Romania and neighbouring countries such as Bulgaria and Ukraine, as the cost of living in Cluj is increasing and IT experts are demanding higher salaries.

Leading companies will continue to be headquartered in Cluj, but “they will come up with more specialized products and services,” said Brad. The cost of living is increasing at a faster rate than the value of the outsourcing contracts, which “is forcing the [IT] sector to reinvent itself.”

Companies are working on the development of proprietary software and looking for partners abroad. Examples include the car sharing app PONY and fact checking and trustworthiness algorithms developed by local IT company Zetta Cloud, with the help of a Google grant.

Brad expects that in the next few years these companies in the cluster will come up with more innovative products in e-government services, industrial software, transport and big data analysis and management.

To support this move into higher value-added products, the cluster is working closely with the technology transfer office of the Technical University of Cluj which has seen “an exponential growth of the number of researcher applications,” said Brad.

Until recently, university students choose to join big IT firms before completing their studies, making it hard for small companies and start-ups attract the skills needed to innovate.

But recent fundamental shifts in the sector are forcing companies and young IT experts to think outside the box, while universities are encouraging talented students to consolidate their creative thinking skills.