Hungarian tech sector on the up
Hungarian industry research[1] shows that there is significant demand abroad for the products and services of Hungarian IT companies. The sector could be a breakout point for the Hungarian economy, despite the ongoing challenge for companies to find suitably skilled workers.
The coronavirus epidemic has accelerated the demand for digitalisation while Hungarian IT firms could also benefit from this trend with their products and services in high demand internationally. Fifty-two percent of the companies surveyed in the industry research export abroad, mainly to European target markets such as Germany, the UK and Romania. The customer base of Hungarian tech firms is mainly from the competitive market, typically non-state-owned SMEs and large corporations, but they also serve the digitalisation needs of almost all sectors of the economy.
One emerging tech company is Seon, a fraud prevention system developer, which could be one of the new stars of the Hungarian IT sector after Prezi, Ustream or LogMeIn, and which was named one of the world’s 200 best fintech companies by CNBC this year. Gloster is another representative of successful Hungarian tech companies looking to break into the global market. In 20 years, it has grown into one of the most promising exporting IT large companies on the Budapest Stock Exchange. Its turnover is now several billion forints, it employs hundreds of people and its customers include Audi and BMW. It is aiming for global success by merging small Hungarian IT companies and has already established itself as a software development specialist in Germany.
The IT sector makes a major contribution to Hungary’s added value production. It employs around 85,000 people in nearly 42,000 companies. Of the companies surveyed, 69% are engaged in solution and software development, 44% in hardware sales, but there is also a significant proportion of companies that offer their customers completely customized, in-house developments.
The abovementioned industry survey shows that nearly a third of tech companies have a presence in other countries, which mostly involves sales activities, a foreign development base, the use of a foreign distributor and maintaining an office. Furthermore, Hungarian firms in the sector are typically competing against each other, with only 33% of respondents having a foreign competitor.
Apart from the success, the tech firms surveyed mainly report difficulties in the labour market. They identify the integration of recent graduates into the market as a challenge and are increasingly developing their employees through internal training, as the IT sector is the fastest changing technology sector. Despite this, experts say that the Hungarian IT sector remains on solid ground and tech firms focusing on their own exportable developments could be an important breakout point for the Hungarian economy in the future.
[1] Industry research of Makronóm Institute, 2023: https://index.hu/gazdasag/2023/02/06/kulfold-export-technologia-ceg-vallalat-magyar/
