IVSZ: Rebooting the Digital Economy is a Priority

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Photo by Peshkova / Shutterstock.com

The ICT Association of Hungary has taken a survey of 150 CEOs to look into the challenges the coronavirus pandemic is throwing up, and how digitalization can help find a way out of the crisis, while also putting the country on a stronger, tech-driven path.

With more people WFH (working from home), steps must be taken to protect the digital economy, the IVSZ warns. Photo by Peshkova / Shutterstock.com

IVSZ, as the ICT association is known, has called for immediate initiatives and the launch of a program to support the restart of the digital economy, which it worries could suffer due to the current economic slowdown caused by today’s unprecedented times.

The association says it believes that digitalization will not only help to alleviate the likely economic crisis caused by the coronavirus pandemic, but also represents a unique opportunity.

To that end, the association is promoting the launch of a program that includes education, increasing the digital preparedness of workers and small businesses, and the digital development of those sectors hardest hit by the crisis, based on a survey of 150 executives over the course of two days.

The research was carried out to assess the effects of the crisis on the digital economy and to gather the challenges the sector faces, so the association can offer solutions to address the real world difficulties.

More than three-quarters of the IVSZ respondents said they already feel insecure about the loyalty of their customers, with 70% mentioning deferred orders and 28% canceled orders due to the current situation. Some 44% said they have postponed development and investments while 23% have reduced their capacities.

Short-term Measures

The majority of respondents have already taken short-term measures to cope with the current situation: 93% have set up the technical conditions for working from home (now widely known by the letters WFH), 80% have started remote working and 90% use online and video tools to substitute for face-to-face meetings.

A third of executives IVSZ spoke to introduced new working hours (or shifted work schedules), while more than a third have closed offices and set up crisis teams.

In the long run, approximately 80% expect the current situation to have a negative financial impact on their businesses, 71% have a negative view of the revenue outlook for the ICT sector as a whole, and 64% are pessimistic about the industry’s employment prospects.

Those surveyed by IVSZ are even more pessimistic about the national economy as a whole: more than 90% expect negative effects on both employment and GDP. While a wide range of economic rescue measures have already been announced by the government, IVSZ says that a large proportion of respondents believe that schemes specifically related to digitization are also necessary.

The association points out that dozens of proposals have been prepared in this regard. Going further, respondents believe that the role of the EU will also be essential in three key areas: financial support, investments and regulatory issues.

In agreement with the players in the sector, IVSZ also urges that support for the IT sector and the digital economy should become an integral part of public economic protection measures; digital solutions, it says, are essential for economic recovery.

Help for the Self-employed

IVSZ found that the executives they spoke to were looking forward to the general (sector-neutral) economic rescue package – announced by the Prime Minister this week, after the survey had closed –, hoping for support relating to wages and contribution to keep businesses operational and help retain jobs.

Bosses further noted that the self-employed also need to receive support, being an important part of the national economy. Businesses anticipate the acceleration of the disbursement of already awarded or still eligible EU funds, as well as the creation of new funding opportunities, and the introduction of packages supporting digital development.

Additionally, many respondents called for the acceleration of municipal and state orders, the launch of new public procurement tenders and the rapid execution of payments.

Executives also emphasized the importance of digital education and retraining, the development of digital competences and the digitalization of education. They say the some of the digital solutions that have emerged for overcoming the current challenges in education, such as remote working and communication, must be improved and changed once the passes, so that both the economy and society can become more prepared for similar shocks in the future.

Battling with high fixed costs (such as paying office rental) and trying to pay invoices and finance debts can cause a crisis of business confidence, which might result in cost cuts leading to redundancies, the leaders surveyed by the association have warned.

Based on the findings and proposals, IVSZ has created a summary it has made available for government decision-makers to help manage crisis in the digital sector. At the same time the association says it is initiating the joint development of a program with the government and industry players to support the digital relaunch of the economy.

In a study published last year based on the analysis of weight of the digital economy, IVSZ said that the national economy could achieve thousands of billion forints in GDP growth within a few years through the consistent digitalization of processes and businesses supported by government policies and measures. If anything, that message is even more important today, the associations insists.  

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