Growing the Business Services Sector in Hungary

Government

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Continuous growth, resilience, and efficiency; these are the main characteristics of the business services sector in Hungary, the Hungarian Investment Promotion agency tells the Budapest Business Journal.

In the last 20 years, there have been significant developments in the field of Business Service Centers (BSCs), and Hungary has become one of the leading international hubs for the sector in Central and Eastern Europe, HIPA says.

The importance of the industry is underlined by the fact that, currently, 156 BSCs are employing 70,446 employees in Hungary. Based on the latest developments, the business services sector is one of the few segments that has shown steady growth in crisis and challenging times.

The sector has shown a high level of maturity with resilient and flexible operations in a truly global service landscape while maintaining the ability to engage and retain talents and continuously attract new investments, even during COVID-19.

“Despite the pandemic, the Hungarian business services sector has achieved an outstanding result, and it has remained one of the leading industries of the Hungarian economy,” HIPA tells the BBJ.

“The sector’s attractiveness is reflected in the growth of the number of BSCs, the increasing headcounts, and the continuously broadening scope of high-value-added activities,” the agency continues.

The digital world and value creation in a virtual way became the “new normal” for the sector. This paradigm shift underlined that digital transformation is essential in the journey toward next-generation BSCs as these new technologies are transforming all business functions, including finance, HR, customer service, and others.

Critical Elements

Telecommunication networks and connectivity are critical elements of a country’s ICT infrastructure to support online business activities. The importance of ensured business continuity has increased, and cost has become a less important factor in many business decisions.

BSCs are already building digital capabilities across automation, advanced analytics, and artificial intelligence, and this process has accelerated due to the COVID-19 pandemic. To remain competitive, BSCs need to further improve their skills, particularly in digital technologies, HIPA warns.

The pandemic forced BSCs to modify their operating model and introduce new digital solutions and remote or hybrid working models to optimize operations. At the same time, COVID also had a significant impact on the ways in which companies view their human capital.

There is a greater focus on coaching and training, career development, supporting a better work-life balance, and providing flexibility in workspaces and working hours. Training and development of employees will be the most important success factor, therefore investing in new skills and competencies are of utmost priority.

Finding and retaining the right talents are critical for long-term success. Sector branding and employer value proposition are also crucial in order to remain competitive in the labor market.

Office culture is changing fast with the introduction of the hybrid operational model, which combines the physical space of a central office with working from home or remotely, HIPA points out.

Well Prepared

“Office owners are well prepared to meet space requirements of all kinds and to offer office premises of a wide variety in size, category, design, and final finishing. Feedback about working from home is mostly positive from the employees’ side, but it also provides additional opportunities for companies to expand their activities in Hungary and to attract more talent, regardless of their locations,” HIPA says.

The investment promotion agency provides management consultancy services for existing and prospective investors from planning right through to implementation and operational phases.

In the case of an investment resulting in the creation or expansion of a business service center, creating at least 50 new jobs in the countryside, a VIP non-refundable cash incentive may be provided by HIPA. The eligible costs are 24 months of personnel-related expenses of the newly hired employees within three years.

New and more favorable regional aid rules will be applicable as of January 1, 2022. Based on these, a VIP cash subsidy can be provided to establish and expand business services centers in Pest county up to 50% of the eligible costs.

There are different tools and mechanisms to support innovation and R&D activity in Hungary as well. HIPA can provide VIP non-refundable cash incentives for R&D projects in Budapest and the countryside. The objective is to enhance the R&D activity of large enterprises and the creation or expansion of R&D competence centers in the country.

The Hungarian Government also offers a VIP subsidy for the training of employees. The subsidy is available to investors creating at least 25 new jobs in business service activities. The funding is provided for internal and external training covering 50% of the eligible training costs. The total amount of the subsidy may not exceed EUR 5,000 per training participant and EUR 2 million per training session, regardless of the project’s location.

This article was first published in the Budapest Business Journal print issue of November 19, 2021.

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