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Cluj now has an IT Cluster similar to the one in Silicon Valley.
It is the first national cluster and it is meant to transform Cluj into an important IT research and development hub.
Cluj IT Innovation Cluster unites 23 companies, 2 Universities and 6 public institutions.
It is a modern complex meant for IT and technology companies which will bring together business and research activities.
The Cluj IT Association was also founded which coordinates the Cluster's projects.
The Association supports and promotes IT&C companies.
It also supports institutions from North-Western Transylvania which are active on a national and international level.
The cluster was created in order to increase research and development capabilities.
Cooperation between institutions will also be stimulated while harnessing the potential of information and communication technology.
Another goal would be applying this potential to public institutions and the private sector.
Competitiveness between IT&C companies will be increased.
Economic exchanges and commercial activities between members of the Cluster will be supported.
The cluster also aims to attract development investments.
The Cluster was created in Cluj because it is the largest Romanian IT service exporter.
Bucuresti has the largest turnover rate but a large part of that turnover is a result of business carried out with the state.
There are also two partner Universities in Cluj, the Technical University and the Babes-Bolyai University.
They will be involved in research and development programmes.
Good morning and welcome back to our show.
We are talking about an IT Cluster in Cluj, an initiative started by several entrepreneurs.
Two universities and six public institutions are also involved.
They have united into a group.
Their goal is to promote the development of the IT&C industry in Cluj-Napoca.
Our guest today is Alexandru Tulai.
He is the president of the board of directors of the Cluj IT Innovation Cluster.
Good morning. What can you tell us about your initiative?
We have recognised the opportunity to use a business model that is different from the one we have used until now.
This new model will certainly award us new opportunities for growth.
These opportunities are not available to us with our current business model, namely outsourcing.
I can name an example.
There is a major difference between what we want to do and what is happening at the moment.
Outsourcing is still a succesful model.
It is however not certain how long it will remain that way.
There are certain threats on the market right now.
Large companies have a tendency to internalise IT services because of the economic crisis.
On the other hand, Asian IT companies have a strong presence.
They are gaining strength in Western Europe, which is also our main market.
They are opening locations that give clients direct access to IT specialists.
That is a relatively hard thing to do for us.
That would be the reason why we want to use innovation as our vehicle.
It would surely make a difference because it would place the copyrights in our area.
Efforts would be reusable as opposed to upper-class outsourcing.
The client holds the copyright when it comes to outsourcing services.
We want to use the image we have created for ourselves in Western Europe and the United States.
I am talking about our image as an individual company.
We want to introduce ourselves as a flexible structure that can complete projects which would not be acessible to the individual companies.
Who are the cluster members?
How strong is it?
I understand the cumulative turnover is around 100 Million Euros split between the 23 companies.
That is right, the cumulative turnover of the members is a little over 100 Million Euros.
As you have said earlier, the largest part of our business comes from the export of IT services.
We are mostly active in Western Europe.
So along with these 23 companies you have also managed to get the Universities involved.
What is the state's involvement?
The Universities were a major factor in our decision.
One of our biggest problems is finding the right people.
It is difficult for us to find the people we need.
We are not able to find enough people and the quality standards are too low for our business needs.
We have started collaborating with the two Universities from Cluj-Napoca.
They are our specialist recruitment sources.
We have activities together and the Universities felt the need to have a singular message from us.
They did not want to deal with a multitude of different companies anymore because they all had their specific requirements.
The Universities cannot meet each company's specific requirements.
Their message was quite clear. They wanted us to come up with a single message for them.
That was the coagulator.
Then we found out about this opportunity to use a different business model.
It was an ADR Nord-Vest project.
There is also another factor, which has appeared recently and is something of an accelerator.
Both the local and the central government have helped.
They have felt that important things need to be done.
They have been supportive.
The Indian IT clusters created a precedent.
They use an offset mechanism, which means that they are supported by the state in their economic activities with other states.
We will buy that Boeing airplane but we will trade you IT services for it.
That is the type of transaction I was talking about.
We currently only have around 3000 specialists.
We hope that things will evolve in a positive manner.
The image our country can project in this discussion is the image of a very powerful IT area.
The goal is to create a flexible business vertical on a project level.
I am talking about large projects.
We will keep our traditional services because competition helps us maintain our high quality standards.
Let's go back to those young men and women you say are so hard to find.
What should one of these young people do in order to be able to have an IT career?
Should they study mathematics? Should they move to Cluj and study computer science?
Can the Universities in Cluj gain from this proejct?
Companies are basically providing added value to Universities by getting involved.
Will Cluj become more attractive from this point of view?
Can young people from the surrounding villages find jobs in this industry?
Because that's what Romania is. It is a semi-rural country with half the people living in rural areas.
Their children can go to school, study computer and science and then find a job in the Romanian version of Silicon Valley.
You are actually not very far from the truth.
Our cluster is an open structure and we will not limit ourselves to only collaborating with these two Universities.
We want to create a pool that can generate a workforce.
When we first started recruiting we were only looking at students in their last years of school.
We are now even considering first-year students.
These companies are currently offering 8 to 18 months of training.
That's how long it takes to bring that young person to the level of productivity required by their businesses
On the other hand, your intuition is perfect.
The only effort a young person needs is to receive a specific type of education.
I am talking about the fields of mathematics or computer science.
Infrastructure is not an important part of this equation anymore.
The most important factor is the person's willingness to progress.
I think the current situation is positive as far as that resource is concerned.
We could become a much larger exporter of IT services than we are now.
So this is basically a development solution for Romania, right?
The cluster currently has a total of 3000 employees.
Is it possible to use the accelerators, facilitators and the integration you were talking about to constantly grow?
I am glad you brought that up.
What we want to become is an innovation hub.
An area that anyone who is interested can connect to.
Of course there are certain conditions which are vaild for the entire cluster.
They include a code of ethics.
What we want to build is called Cluj IT Innovation City.
It is a small town with a population if around 20 to 25 thousand specialists.
They should be from different fields, not just IT.
Our goal is innovation and it does just come from technology.
It comes from several different functional fields.
We also want to work with other Universities in our city and from around the country.
These Universities currently have high-rated projects.
Their specialists are making significant contributions.
We want to co-opt them into competency centres.
We will group these centres into this small town.
There are also other things which need to be set up.
There are also other things which need to be set up.
We are thinking about company buildings developed in a way that would make discussions and common projects easier to manage.
Conference and event areas.
Of course, we would also like to add hotels.
I think it is important to think ahead and not just about the collaboration.
The next step would be the brand and delivering a product with the adjacent copyrights.
That would be the goal, right?
Yes, if we were to compare services you would see that outsourcing is a linear business model.
You can only sell the number of people you have. You can only go lower than that, not higher.
Meanwhile, if you create products, there are no limits to the number of times you can reuse that effort.
That would make all the difference as far as turnover goes.
We are thinking about export but we are also taking the situation in Romania into consideration.
The eGovernment solutions are not exactly our greatest achievement at this time.
I understand your perspective but what are the project's first practical steps?
I think it would take about 5 years to get to the stage you were talkng about.
It could even take 15 years.
What are going to do tomorrow or next year?
We are working on the Innovation Hub development area.
We have started working on developing a feasibility study and a master plan.
They should ensure a coherent and open implementation of our project.
Let's say that we have estimated that we would need a few dozen hectares of land.
We think the structure could grow to several hundred hectares.
We would like to have the development unfold without artificial constraints.
On the other hand there is something the business world has taught us.
As long as there are only plans no project will last very long.
As a result, we are already working with members of the cluster on the first projects we will be collaborating on.
We will be partners in some areas and rivals in other areas.
Everything will be regulated by a code of conduct belonging to the cluster.
Most of the members are Romanian companies, right?
Most of them are Romanian companies, that's right, but there are also some foreign companies.
They want to participate mainly for the resource sharing aspect.
I am talking about educational resources. Most of the difficult competencies.
There are certain roles in high-level solutions which are very hard to cover.
They require lots of experience and specific competencies.
I am talking about roles such as solution architect, business analyst, programme or project manager.
These are all areas where good people are hard to find.
What the cluster can offer is a fast response to market needs.
We can create robust and coherent architectures quickly.
We can also quickly assemble a team that can work on the implementation.
Will the proceeds be shared?
Yes, they are shared.
On the other hand I think that it is normal that a part of the profits should be used for the development of the cluster.
I think it is something worth paying attention to.
Ladies and gentlemen what we should take away from this conversation is the fact that there is a powerful IT force being created in Cluj.
3000 engineers, 23 companies, business worth around 100 million Euros, 2 Universities are also involved.
Maybe we will have access to a new, small town within the next 15 years.
That is what Mr. Alexandru Tulai, the President of the Board of Directors for the Cluj IT Cluster has told us.
It will be a small town comprised of IT companies in Cluj.
What we should remember is that young people will have lots of employment opportunities.
All you have to do is study computer science or other related fields.
Cluj needs that kind of people according to Mr. Tulai.
We think that young people from around the country will be looking for jobs there.
It is an ongoing phenomenon.
Thank you Mr. Tulai for being here.
I will see you again tomorrow morning.
Goodbye!