The Hungarian economy has seen better days, given that 2024 witnessed a technical recession for the second time in three years. The business services sector is one of the few with a reputation for being crisis-proof, as evidenced by its uninterrupted growth even during the darkest hours of the pandemic.
The latest survey of the sector by the Hungarian Investment Promotion Agency underscores that trend, with two-thirds of respondents playing with further expansion, defying the grim circumstances. Other experts, however, have expressed skepticism about the level of optimism, claiming the glory days of rapid development are over.
István Lenk, president of the Association of Business Leaders in Hungary, agrees that compared to the Big Bang era of the 2010s, when new investors entered the market in droves, Hungary is now in a different phase of evolution. COVID and geopolitical conflicts have taken a toll, after all.
“We are headed in the direction of making use of the sector’s resilience, which is to showcase how to resist economic challenges,” he tells the Budapest Business Journal.
The ever-prevalent cost-productivity equation is of even more significant importance now; digitization (especially regarding AI) remains key because of the cost aspect and compliance. When it comes to market growth, Lenk points out that, although new projects are still being delivered, the sector’s development is instead driven by continuous transformation and activities that are ever more oriented toward value creation.
The history of what is now called business services started with call centers back in the day when hundreds were handling orders, Lenk recalls. All that now happens in an online environment and at a much higher speed.
“Customer care has been altered, and it took a turn in the direction of knowledge-intensive services,” the ABSL Hungary president says. Those changes did not mean workers were laid off, however; on the contrary, more hands were needed to deal with tasks requiring process-related decision-making.
“Due to the high number of processes that need simplification, parallel legacy systems exist that make it difficult for AI-powered tools to find their way through them. That’s when human oversight comes in,” Lenk explains.
In many cases, the question “Where is my product?” can’t be answered by machines, no matter how simple it sounds. “Humans have a better sense of how fast supply chains operate and what delivery date might be realistic, based on hands-on experience.”
This functional shift took place in finance functions as well. From purchase-to-pay or accounts payable, BSCs were pushed towards more sophisticated tasks such as statutory, treasury, transfer price, and financial planning functions. The idea behind this process has always been to find a way to get things done as cost-effectively as possible, either by automation or business process outsourcing. However, quality should always be in focus.
“The latter can be either another company or a country in the Far East,” Lenk notes, highlighting that businesses won’t rest to optimize and restructure. “Permanent transformation is part of the growth agenda.”
However, while companies are busy keeping the expenses column under control, they can’t afford to ignore a key human factor: career expectations.
“We employ a white-collar workforce, and they have very high expectations when it comes to work content,” the president says. Many seek stability simultaneously, and the mix of those elements should be a winning formula for an inspiring work environment.
“The multinational talent pool, the availability of new career and learning paths, and the alternative locations offer an attractive package for staff, not to mention the power of remote working that adds extra flexibility to working conditions. All these factors have the potential to make the sector popular with many in the long run,” Lenk concludes.
The business services sector is known for being a frontrunner when adopting new technologies, although that is more of a necessity than a choice. High-end clientele require top-notch services, which assumes the widespread use of optimized, fast, and cost-effective solutions. Since artificial intelligence is hailed for those features, BSCs became early adopters.
“Companies realized quickly how essential it is to integrate AI into their day-to-day operations; they have invested heavily into ensuring colleagues can master these competencies,” ABSL Hungary president István Lenk says. As a result, it is not only presentations that are delivered to staff; an internal training platform is also available where a wide range of modules can be accessed. Chat GPT is part of the deal as well.
“We also use it for in-house purposes, and there’s an algorithm in place that monitors to ensure thatno sensitive company data lands there,” Lenk points out.
He adds that there used to be automation solutions in Excel and various code languages that are now being replaced by language processing.
“We need professionals to run it so that the digital marketing department improves and customer service’s data analysis gets better.” AI offers more efficiency, less repetitive tasks, and precision, and it cuts costs, which can lead to faster and more complex services, Lenk adds.
“We need to learn the most possible about the technology, and ever more people will be needed that are capable of understanding these data-fueled AI systems and can establish connections between different departments,” he says.
“What will matter is how to use AI-generated data efficiently and integrate it in different processes. And that’s what we will need people for, who can understand and implement all of that. Therefore, reskilling will be key so that these partial or full-function tasks can be carried out, and only those familiar with the base process, who know what AI gets done and can interpret all that data for other departments, will be able to perform that,” Lenk concludes.
This article was first published in the Budapest Business Journal print issue of February 7, 2025.
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