Despite Labor Worries, Hungarian ICT Punches its Weight Internationally
As the Hungarian ICT sector keeps its gloves tight in defense against European competition, it is also challenged by a quickly-changing labor market that lacks skilled talent.
The Hungarian information and communications technology sector is not only a strong player in terms of the local economy, but is also a worthy contender in the European market.
The approximately 400,000-strong sector in manpower sees Hungary placed number five globally across all hacker rank challenges, and has the country at the top in terms of scientific research institutions in the Central and Eastern Europe region, according to figures by the Hungarian Investment Promotion Agency, a state-owned entity nested in the Ministry of Foreign Affairs and Trade.
The country benefits from a wide selection of advantages. “A mature economy within the European Union, with proximity to the industrial clusters in Central Europe and a predictable business climate, make Hungary a more favorable and stable choice than some other former Eastern bloc countries,” Carl Vikingsson, CEO Sigma Technology Group, tells the Budapest Business Journal when placing Hungary on the ICT map in Europe.
Beyond a well-performing local economy (unadjusted growth in Hungary’s gross domestic product was 4.9% in the second quarter of 2019, according to a flash estimate from the Central Statistical Office (KSH), above the 4.7% pundits had estimated), Hungary boasts of a relatively attractive geographical environment and weather climate, a pool of talented resources, a well-connected airport to European capitals, and a culture similar to most European and North American countries, Gábor Tőzsér, CEO and Founder of Quickborn Consulting LLC tells the BBJ. To this mix can be added a well-established and high-level education system.
The attractiveness of Hungary for ICT operations is well reflected by international giants dominating the market.
“Low penetration of local IT business forces Hungarian companies to seek international customers and attract industries who are willing to invest and set up research and development (R&D) centers in Hungary. Being part of global companies, Hungarian R&D centers get a unique insight in the international business behavior, management practice, and trends, which make the software industry in the country stronger and more mature in contrast to if the Hungarian IT market only worked locally,” Vikingsson says.
Additionally, Hungarian IT units that are part of global corporations are in competition with the international leaders and have to benchmark their business and adopt the best practices to be competitive.
“In the long run, this will encourage driven people to start up new creative enterprises in Hungary. The question then is if the Hungarian economy has the attractive business tax climate to keep the promising entrepreneurs with outstanding ideas in the country,” Vikingsson adds.
This market dynamic has increased competition for the most valuable resource; highly-skilled and experienced talent. As the demand for more value to be delivered in less time and at less cost grows, having the right staff is crucial.
“We are training our team more often and for longer duration in more areas and ways. We are becoming a leaner, faster reacting organization to keep pace with expectations for more speed and agility,” Tőzsér, Quickborn’s CEO, says. Nevertheless, available qualified resources are hard to find, he adds.
The labor market in Hungary today seems to be characterized by Generation Y and now also Generation Z who seek quick results and are not interested in long, drawn-out processes.
“The rise of agility is a welcome development, not just as a general methodology for how companies are run, but also as an expectation from candidates. The young professionals of today want to get things done, and they have little patience for a recruitment process which is dragging on, a slow internal tool, or a sluggish IT department,” explains György Nagy, country manager at Sigma Technology Hungary.
“They also want to get and give regular feedback, and to be able to ‘peer-talk’ with everyone at the company, including the CEO. The days of an inaccessible manager working behind closed doors are long gone. Flat organizations, such as Sigma Technology, will be more and more common,” Nagy forecasts.
Additionally, it appears that employees are tired of nice sounding corporate buzzwords; they demand meaningful content. The culture, values and sustainable work of a company all seem to be determining factors in not only winning over the best candidates, but also for keeping them.
English language proficiency is also on the rise. “We work closely with Hungary’s prominent tech universities and we can see the trend that competence in the English language is growing. In 2020 the admission to computer science departments will require intermediate level of English, which will contribute to the higher English proficiency of future Hungarian engineers,” Nagy adds.
The sector faces two emerging challenges; continuous skills development, on the one hand, and widening the resource pool on the other (e.g. by working on diversity at the workplace and encouraging more women to choose IT) on the other. When choosing whom to hire, Sigma Technology says it will opt for the one out of ten candidates who is (among other things) ready to keep learning after settling into the position.
“While we enjoy the extra pressure coming with the need for continuous competence development, it also makes the workforce more expensive. That said, we very much believe that people will work at – or come back to – the workplace which has taught them the most skills, so investment in training and professional development is worth every cent,” Nagy says.
Almost half a decade ago, participants of a Morgan Stanley Hungary workshop unanimously established that the IT sector needs more women; especially in coding, as the better organizational skills on the gender results in more streamlined and clearer coding.
“There has been a lot of discussion about workplace diversity, and Sigma Technology believes that there’s still a lot of work ahead for companies in this area, especially when it comes to the (sadly very low) percentage of women in IT,” Nagy adds.
The Hungarian country manager also notes that, as a result of an aging population, especially as the workforce is becoming scarcer than ever, age diversity at the office will also be a dialogue in the upcoming years; a challenge that lurks in the pipeline for now.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.