"The level of salaries in the Central and Eastern Europe countries where S&T operates has skyrocketed over the last few years, which is a nightmare from an entrepreneurial standpoint; the main issue here is that prices on the market do not go up as fast as salaries do," Christian Rosner, S&T Austria's chief executive told ZF in an interview.
"This has to happen at some point, because you cannot keep on raising salaries indefinitely," he added.
On the domestic market, salaries on the integrator segment have witnessed some of the highest increases. For instance, a project manager can earn up to 2,500 euros per month.
Rosner has an over 27-year management experience in Central and Eastern Europe, a region that generated 82 million euros in revenues last year, after Romania and Bulgaria witnessed the fastest growth rates. "I am impressed with what is happening in the region, the business landscape has fundamentally changed over the last 15 years. Yet everybody has to understand that at some point prices on the market have to be line with salaries," Rosner explained.
S&T has approximately 1,300 employees, of which 250 work in Romania.
The local subsidiary of the Austrian group ended 2007 with 1.8 million euros in profit and a turnover of 58.4 million euros. The figure is not representative of the entire business of the company.
The group, which is the biggest IT integrator in Central and Eastern Europe and the leader of the local market, saw its business in Romania grow more slowly than in the previous year (12% compared with 48%). Its forecast for 2008 remains the same.
Officials of the local subsidiary warned that it might stagnate this year as a result of delays in projects in the public sector and because of the saturation of the private sector.
However, chief executive Christian Rosner says that he is still optimistic about the trend of the Romanian market.
"The team in Romania has been focusing a great deal on sales, we hired more people for this department, as well as new managers," Rosner explained, and added: "What happens in Romania, a market that is reaching maturity and starting to rely on sales of services instead of infrastructure, has to be a model for other countries where we operate."
The S&T representative says Romania is a semi-mature market, having outgrown the emerging market status one or two years ago. Three years ago, the company's business chiefly relied on infrastructure projects. According to S&T, the privatisation of the major clients of the company in Romania, such as OMV or BCR, led to a shift of demand towards services and business IT solutions.
"Romania will need three to five years to become what we deem to be a mature market. I don't think it can happen faster, because there are not enough resources on the market. There is a severe shortage of resources," Rosner explained.
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