In the heart of Europe, boasting a sophisticated IT and telecommunications infrastructure and renowned for its highly educated and productive workforce, Hungary has already attracted a host of international companies. It’s no wonder a third of new shared service centres established in Central and Eastern Europe have been set up in Hungary.
The service sector - briefly
The first regional service centres appeared in Hungary in 2000. So far, around 60 companies have established their long-term presence here, employing a total of 30,000 employees, including ExxonMobil, IBM, GE, Morgan Stanley, Diageo, Avis, Lexmark, KCI and Celanese.
Service centres are usually founded with a relatively low registered capital and gradually build up and expand their operations adding new, high value-added activities to those initially introduced.
Employing mainly fresh graduates and those speaking foreign-languages, each of these companies create several hundreds of new jobs. They establish a captive centre in Hungary for serving their own subsidiaries whose clients are mainly firms from Europe and US.
Most of the regional centres established in Hungary are involved in financial, accounting, HR, IT and other back-office activities.
Source: Central Statistical Office, 2011
Key arguments why to invest in the Hungarian Service Sector
-
Availability of skilled labour
-
Cost savings
-
Cultural compatibility and language skills
-
Expertise in particular back-office or service sectors
-
Technological and other infrastructure
-
Business security and intellectual property regulation
Cost savings
Although it cannot compete with the likes of India in terms of labour and real estate costs, Hungary compares very favourably to Western Europe and the US. Not only is the average gross wage in Hungary just 771 euro per month (Central Statistical Office, Q1 2011), labour productivity is high.
Availability of skilled labour
With a population of 10 million, Hungary is a small country in global and even regional terms, but in Budapest and its abundance of university towns, a new generation of young, talented and highly educated Hungarians has emerged. In many towns, unemployment is as high as 10 per cent, meaning that a wage spiral is unlikely for some time.
Hungary has always been renowned for its extremely high standards of schooling and further education – reflected in the groundbreaking contributions to science and technology made by dozens of world-famous Hungarians. In addition to an aptitude for problem-solving and innovation, international companies also report that Hungarians are inquisitive, quick to learn and eager to understand.
Cultural compatibility and language skills
Historically, this small country has always been a melting pot of cultures, influences and even languages. Despite more than four decades of isolation, today’s Hungary is embracing its ancient cosmopolitan roots once again. Its university towns are attracting ever increasing numbers of foreign students, while Hungarian graduates score highly for their language ability in international comparisons.
Expertise in particular back-office or service sectors
With almost a quarter of all students majoring in business and administration and a further 31,000 specialising in IT or automation, Hungary has a large pool of graduates with a profound understanding of international business processes. Thanks to their natural discipline, analytical, technical and business skills, they can also be put to work on higher value-added tasks.
Technological and other infrastructure
Hungary leads the way in the region for investment in telecommunications. Broadband and particularly wireless Internet are rapidly growing in penetration and coverage. The office market is currently enjoying a construction boom and Hungary already has 200 state-of-the-art industrial parks that have proved popular with multinational companies. In terms of physical infrastructure, the motorway network was recently expanded to reach all major cities, while Budapest, Lake Balaton and Debrecen are now served by a host of international air carriers.
Business security and intellectual property regulation
Hungarian business practices and taxation policies are closely aligned to those of the EU, so there are no major barriers to transferring tasks to Hungary. While banks and other financial institutions who have offshored sensitive client transaction systems to Asia have encountered concerns over data security, Hungary ranks ahead of all of its rivals in this area.