Crisis brings accountants new clients

The Hungarian accounting firms’ market remains highly concentrated, with the top players unchanged over the past few years. Process Solutions (PS) still tops the Budapest Business Journal’s market list, followed by TMF, UCMS Group Hungary Kft (formerly HeziHold Kft), RSM DTM Hungary and HLB Klient. These companies dominate the market, followed by firms with international backgrounds as well as countless smaller local providers. 

“Through our clients we feel Hungary’s exposure to financial difficulties within the EU and hope that the country can respond to the current challenges and keep attracting investors by reducing administrative burdens and maintaining predictability in the business environment,” PS partner and managing director András Szalai said. Next year, his company expects a modest increase in revenues from this year’s HUF 2.1 billion.  

“Our profession is one of the few that is able to grow even in an economic downturn,” UCMS Group Hungary business development manager Balázs Zoltán Nagy said. “We believe that accounting service providers are the main advisors and confidantes of decision makers and managers during hard times,” he added. 

Going regional

“Providers with an international background have the necessary expertise and contacts to serve multinational firms,” stressed Ernő Varga, head of operations at local accounting firm Colling Kft.

While PS is building its own network, other main providers belong to large international associations. Colling, for instance, is a member of Morison International, while DTM and Klient belong to RSM and HLB, respectively. 

PS provides regional support within the CEE for its clients, with unified services offering the same accounting platform, Szalai said. “We expect that CEE will continue to be an attractive investment target for international clients from Europe and overseas.” 

What was HeziHold became a regional provider in 2008, when it joined the UCMS Group through an acquisition. The company has offices in Poland, Ukraine, Russia and Romania and an established network of partners throughout the region. In addition, the group set up its service center in Hungary, so it is primarily local employees who participate in regional implementations and, after that, in the coordination of everyday services. UCMS Group Hungary foresees increasing revenues in 2011 and an expanding customer base in the accounting and payroll business lines. 

Segmentation

Another major challenge on the market is segmentation. Clients with in-house accounting operations demand specific services rather than full outsourcing, such as tax compliance, transfer price documentation and payroll administration services. “Clients typically outsource high value-added functions, which involve higher risks or require specific expertise,” Colling’s Varga said.

These new market trends have given smaller providers access to large international firms that previously were tied to one of the Big Four auditing houses (Deloitte, Ernst & Young, KPMG, or PwC) via their parent companies. After the global financial crisis, as price became the decisive factor, multinationals become more accommodating and let their affiliates choose less expensive, smaller providers, according to Varga. “We provide these services at fair prices rather than at an unjustifiable discount,” he stressed. 

“In 2011, we have also seen clients returning who switched accountants at once when the crisis hit and later regretted that decision,” Varga said. “They realized that you get what you pay for.”

Colling has adopted a different strategy from the market leader. PS is sticking to its core business, which includes accounting, tax compliance and management reporting. Instead of getting involved in auditing, international tax advisory or legal counseling, the company cooperates with the Big Four auditors and international law firms. Colling, in turn, aims to serve a wider range of clients.