Romanian companies falling behind the rest of Europe in digital transformation

18 June 2018 4 min. read

Romania has the lowest rate of digital integration in Europe – a scenario that is holding Romanian businesses back from increasing profits, according to the 2018 Barometer of Digitalisation of Companies in Romania. 

Digital advancement is driving economies all across the European Union, with the continent's economic stalwarts positioned at the top of both the Digital Economies and Society Index (DESI) and the rankings for GDP per capita. At a glance, this provides an indication of the benefits reaped by companies adapting to the EU's 'Digital Agenda for Europe' plan. The bottom end of these indices, however, tell another story.

Romania currently has the second lowest GDP per capita in the European Union, ahead of only Bulgaria. With only a fraction of businesses in Romania being digitally active, the country brings up the rear of this year’s DESI. Romanians are struggling to integrate digital business models with their businesses and, as a result, companies are lagging behind their European counterparts.

Romanian consulting firm Valoria Business Solutions has identified the groups of companies that are leading the way in the digital transformation, alongside the key problems areas. In the 2018 Barometer of Digitalisation of Companies in Romania, Valoria sought to determine whether a correlation exists between digitalisation and increased annual revenue. The results of the Barometer suggest that there is a correlation with the uptake in digital technologies and Romania’s economic shortcomings.

The consulting firm analyses three main digital trends, and examines them against the backdrop of a company’s annual revenue to understand where Romanian companies are at in terms of digital penetration. These include; the current influence of digitisation on a company, the know-how for digital transformation, and a company's existing digital business models.

Digital awareness on the rise

In terms of the impact that digitalisation has already had on a business, the respondents are both optimistic as well as realistic about their situation. 47% of Romanian companies – compared to 35% last year – say that digitisation has had a great influence on their business so far.

However only 42% of Romanian companies have a website for their business, indicating that there is still a way to go in this regard. Furthermore, only 33% of Romanian workers use a computer in their daily activities. In terms of e-commerce, the number of Romanian businesses that sell products online is even lower, sitting at 7% nationally.Romanian companies  falling behind the rest of Europe in digital transformationRomanians are becoming increasingly aware of the opportunities and challenges that digitisation brings. The greatest influence of digitalisation can be seen in firms with an annual revenue of €50-100 million at a digitalisation influence rate of 59%. This number was closely followed by companies with over €100 million of revenue with an uptake rate of 50%.

This is also the case when looking at how confident companies are of their own abilities to bring about digital change, albeit with a smaller margin. This year, 53% of companies overall – in comparison to 31% in 2017 – say that they are confident about digitisation and believe that they themselves have the knowledge to implement it.

However, companies with revenues higher than €50 million and lower than €1 million are higher than this average, showing that companies with revenues between €1-50 million are lagging behind the competition. The report suggests that this is due to the fact that “high-income firms are strongly interested in implementing digital solutions to strengthen their dominant position in the market. Small businesses are privileged because they either have a digital DNA or have very little change to be done in their business model for digitalisation.”

In terms of business models, 75% of companies with a turnover over €100 million stated that new and digitally endowed business models have greatly changed the industry in which they operate.

This is followed by a dramatic drop to 41% of companies with a turnover of between €50-100 million and 36% of those with turnover of €10-50 million. The majority of businesses within these three groups – with turnovers above €10 million – do not believe that digital business models are a threat.

Elena Badea, Managing Partner of Valoria Business Solutions, said in the report; “The digitisation barometer shows a concern for the growth level of digitisation in Romania, especially in comparison to the year previous.”