Hungary Information Technology Report Q3 2014
Meanwhile, the dispersal of EU funds for projects and Hungarian IT firms, the modernisation by Hungarian enterprises as they face the pressures of international competition and cloud computing demand will all drive spending growth.
Headline Expenditure Projections
Computer Hardware Sales: HUF296.5bn in 2013 to HUF303.8bn in 2014, an increase of 2.5% in local currency terms. We expect tablet volume growth will slow slightly in 2014, but this will be offset by the deceleration in the decline in desktop and notebook volumes.
Software Sales: HUF176.5bn in 2013 to HUF187.8bn in 2014, an increase of 6.4% in local currency terms. Software is forecast to be the outperforming segment in 2014, driven by demand for ERP and security software.
IT Services Sales: HUF233bn in 2013 to HUF247.6bn in 2014, an increase of 6.3% in local currency terms. Cloud computing services are the fastest area of growth, but outsourcing is also growing in popularity among Hungarian enterprises.
Key Trends And Developments
The government in Hungary is continuing reforms to create a more supportive policy environment for IT market expansion. For instance, in March 2014 the government announced a set of measures to bolster Budapest's credentials as a startup hub, as it hopes to position the city as a regional startup centre for Central and Eastern Europe. The measures were created via the BudapestHub working group, which contains representatives of domestic startups and staff from the Ministry for National Economy. The first set of measures for 2014 include the incubator program, which will connect start-ups with innovation centres, and the Open/Living Labs program, which will link start-ups with large enterprises.
Despite the fact the Hungarian IT market has been stymied by economic weakness in recent years, several innovative domestic IT companies have expanded rapidly. One example is NEXON, the leading HR software provider in the domestic market. According to IDC NEXON lead the market for payroll outsourcing in Hungary with a 33.9% share of revenue and 35.8% share of processed headcount in 2013. Its nearest competitors were SAP, VT-Soft and Soft Consulting. While NEXON is well established by 2013, there is also a vibrant start-up scene in Hungary, centred on Budapest. The leading of the new generation of Hungarian IT enterprises is Prezi, a provider of presentation software using a SaaS freemium business model to challenge the dominance of Microsoft's PowerPoint. Prezi is expanding rapidly, reporting in April 2014 that it had 40mn users from 190 countries who used Prezi on desktops, browsers and Apple iPads/ iPhones.
The economic environment will become more supportive of IT market expansion in 2014, however with business and consumer confidence remaining fragile in the context of external risks we do not expect a sharp uptick in spending. Despite these challenges there are solid fundamentals for medium-term growth. In the retail market relatively low penetration rates, combined with declining device prices, particularly in the tablet market, will see Hungary outperform developed markets in terms of growth rates.
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