What I understood

from 2009, as well as what I think will happen in 2010. My opinion.

First of all I would like to comment on how differently various countries reacted to a crisis that – at first – seemed to strike equally worldwide. What seemed to be the biggest crisis of the century, the only one on a global level, was treated by some countries very seriously and by others with indifference. And the consequences were different. Let’s take them one by one:

America: they figured out about the crisis as early as the end of 2007 / the beginning of 2008. They made plans and they took measures when they could still take them. They chose a President from the first round, without leaving the country ungoverned for even a moment (anyway, you remember that for them the President is also the Prime Minister…). The measures taken were very aggressive at first, both in the visibly bad part (October 2008 – bankrupt financial institutions, massive declines at the stock market…), as well as in the less visible, good part (infrastructure constructions, efficient help for SMEs, investments). From the very beginning, they understood there was a problem and they retreated and headed towards efficiency and rationalization (both at the level of companies and at a personal level) where appropriate. This shouldn’t be confused with the decreased costs that we have seen in Romania. They have worked this year (2009) more than previous years, perhaps for lower pay. They were scared (and they still are) and they constantly asked themselves: What can each of us do to overcome the crisis? Because the crisis exists, it’s not a fad. The end of 2009 probably caught them at the bottom of the pit. It seems the slide stopped and they are not going down anymore. The stock markets cooled down, the good companies started hiring again. After a year with zero transactions (M&A, other than emergency ones), we have had a month of December in which everyone is working for progress and profit, which is bringing money into the system (a few examples: Skype, AVG). Of course there is still one nasty element to come in 2010 – namely, with the due date of the lease contracts for office spaces, many spaces will be left empty, with the ensuing consequences. But, compared to what happened until now, it’s only a last effort of the crisis to show its malice. All in all, the Americans will probably have a 2010H1 like 2009 (the important thing is that it won’t be worse than 2009 :-)) and an H2 with an increase on the horizon. The IT industry will probably be growing from the beginning of the year, we’ll have consolidations, newly launched products (developed during 2009 – see above, investments), spectacular exits.

Romania: we are barely figuring out all about the crisis. This moment surprises us with empty pockets, when there isn’t much to be done. We’ll start by cutting costs (see the difference compared to rationalization from the previous paragraph), which will lead to a snowball effect – people without jobs, companies in bankruptcy (see Flamingo for starters). Fortunately, the indebtedness level is very low so we’re not really falling from high up. Good people will probably not face problems, but those who don’t fancy working will suffer (this is one of the more beneficial effects of the crisis :-)). The IT industry still relies heavily on government orders, and so we will depend on “them” finance-wise (fortunately, GECAD isn’t related to the topic :-)). In 2010H1, we will probably face the worst, including emergency acquisitions and bankruptcies, in H2 we might get to the bottom of the pit. What we can do is head towards economies that have already emerged from the crisis (America, China) and try to bring money from there. If I were in TAROM’s place, I would make a direct Bucharest – San Francisco flight. It would be full of IT people.

Others in Europe: Hungary is in a much worse situation than we are. “Misery loves company” so, as the saying says, let’s enjoy. In fact, this is bad for us too, since we also have many relationships – including economic relationships – with them. Poland is getting better already. Germany and France seem to have gone through the crisis without getting too wet… they probably managed to use the markets and resources of Eastern countries. Great Britain is stuck, as usual, between America and Europe. It almost received a major hit because of this undecided position, but it came through all right. London probably received the hardest hit at the end of last year, but it is slowly recovering with the recovery of the financial markets.

China: deserves a separate chapter because although, at first, it seemed to be affected by the crisis, it was actually among those who benefited from it. China today is much higher than the China two years ago and it is on an upward path that is somewhat surprising for those who did not follow their evolution. Probably by learning the best and the worst from the Russians, the Chinese managed to benefit from all the advantages of centralization, without letting the disadvantages show – yet. It’s a seemingly perfect market, if it wasn’t so hard to understand from a cultural point of view (I am referring especially to business culture).

India: is also growing. Cheap labor helped (especially in IT, BPO) in bringing contracts. What is more, Indians are very popular in the US IT industry (in the 60-70 meetings that I have attended in America in the last two or three months, few were those where no Indian participated). And they have a way of helping each other out. All in all, I think the Indians also benefited from the crisis. By finding the right product, it is a market worth exploring.

South America: I have no idea…

DISCLAIMER: the above represents my subjective opinion that is unquantifiable and unproven. I have especially decided not to include figures or enter into details – in order not to lose the perspective above.

Happy New Year! And make good business in 2010!

(English version by Teodora Popescu)