Mihai Filip, OVES Enterprise: We anticipate a prolonged downturn in IT – the Romanian market is under dual pressure from global contraction and rising local taxation

• The local IT market is impacted by shrinking profit margins and increased taxes
• Clients are cutting budgets or freezing projects, prompting companies to seek optimization solutions
• Romania remains fiscally competitive, but pressure on freelancers and small firms is growing

The Romanian IT sector is going through one of the most difficult periods in recent years. Although IT remains one of the most robust pillars of the local economy, the current context is significantly weakening the industry. The decline in global demand, exacerbated by restructuring within major tech corporations, is disrupting the project pipeline. More and more companies are downsizing, focusing only on essential projects, or slashing budgets.

At the same time, new fiscal measures announced by the Government – while necessary in the context of budgetary consolidation – are increasing the pressure on an already affected sector. Industry players speak of a dual challenge: declining demand and a growing fiscal burden.

Global downturn reaches Romania: layoffs, frozen budgets, and shrinking rates

“I’ve been saying for months that the decline in IT demand wouldn’t stop at the U.S. border. It started there, but it always reaches us too, with a few months’ delay. The difference is that, in Romania, we’ve added an extra layer of fiscal pressure that creates instability – even in a traditionally solid sector”, says Mihai Filip, CEO of OVES Enterprise.

According to an IDC analysis, global IT spending growth has been revised downward to a range of 5–9% for 2025, below earlier forecasts. Meanwhile, Accelerance estimates that outsourcing rates will decrease by up to 16% in Southeast Asia and 9% in Eastern Europe, as a result of intense pricing pressure driven by budget cuts and the accelerated adoption of automation and AI.

For many small and medium-sized IT firms, profits have dropped sharply due to rising operational costs and aggressive competition from countries like India. In the absence of new projects or rapid portfolio diversification, many of these businesses are at risk of shutting down. The situation is made worse by the fact that large corporations are increasingly choosing to insource development teams to keep costs under control.

“We see how many companies are struggling to keep existing projects alive, and the idea of starting new ones seems almost out of reach. In a market where tech giants are announcing mass layoffs, terms like hiring or diversification have become meaningless. Everyone is hitting the brakes, waiting, cutting budgets, and hoping this phase passes quickly”, Mihai Filip adds.

Freelancers and IT entrepreneurs caught between frozen rates and higher taxes

Locally, the impact is felt even more strongly by freelancers and entrepreneurs working as a Self-Employed Professional (registered as a PFA in Romania) or through micro-enterprises. Recent changes to the fiscal regime are cutting into net income, without giving professionals the room to adjust their pricing. Logically, they should raise their rates – but the current market doesn’t allow for it, the OVES Enterprise CEO argues. Most companies are unwilling to pay higher fees, leading to stagnant rates and diminishing the appeal of this type of collaboration.

“For those not employed but working independently, the situation is even more complicated. Costs are up, taxes are up, but rates remain frozen. Not because they don’t want to charge more – but because the risk of losing the project is too high. Faced with the choice between a low rate or no project at all, many choose to stay put, even if the money doesn’t cover their needs anymore”, Filip underlines.

Frozen investments, relocated teams, and cautious optimism for year-end

Furthermore, many small and mid-sized firms – traditionally key subcontractors in the tech ecosystem – have started freezing investments or downsizing. The lack of clear medium-term fiscal visibility is delaying strategic decisions across the board. Internal restructuring, including relocating functions abroad, is becoming increasingly common as companies try to preserve profitability.

Nonetheless, Romania remains attractive for investors seeking a balance between cost and capabilities. But these competitive advantages can be easily lost in the absence of a predictable fiscal framework and consistent support policies. To navigate this critical phase, the sector must strengthen its resilience, diversify its revenue streams, and invest in projects that generate real added value, even under economic pressure.

According to OVES Enterprise representatives, there are positive signals for the end of the year. Many pending projects are expected to resume in Q4, forcing companies to restart deliveries. Optimization and increased efficiency will become priorities, and the market could gradually stabilize – provided that policymakers communicate economic expectations transparently and realistically. A transparent and predictable approach could help stabilize sentiment and restore confidence – both among investors and among professionals who choose to remain active in Romania.

About OVES Enterprise

OVES Enterprise is a Romanian software development company with expertise in creating complex software solutions and AI innovations for aerospace, defense, and cybersecurity industries, founded in 2015 in Cluj-Napoca. Since 2019, OVES’s strategy has included offering more complex software development services for projects in automotive, eCommerce, fintech, telecom, and international government institutions, becoming a technological partner for complex and technologically sophisticated projects. Last year, OVES Enterprise expanded its activities with a new business line focused on drone production.

Currently, more than half of the company’s revenue is generated by international projects integrating new technologies in artificial intelligence and big data. OVES Enterprise currently has over 200 employees and offices in Romania, Germany, the United Arab Emirates, the United Kingdom, the United States, and Norway.