U.S.-Hungarian Economic Relations: A Never-ending Success Story
New HIPA CEO István Joó is confident U.S. investors can look forward to excellent new opportunities.
The United States is among the top three investor countries both in terms of foreign direct investment and the number of employees in Hungary. Given that this critical position has been permanent for decades, U.S.-Hungarian economic relations give the impression of a never-ending Hollywood success story.
And despite the presently rather worrying global economic landscape, based on the data and experience of the Hungarian Investment Promotion Agency, everything points in the direction that the two countries will ride off into the sunset.
If the name Kyndryl doesn’t ring a bell, it is not your fault. Formerly part of IBM, Kyndryl became an independent company a little less than a year ago. What hasn’t changed is that we are talking about one of the world’s largest IT infrastructure service providers, whose clientele includes 75% of Fortune 100 businesses.
Out of Kyndryl’s 90,000 employees worldwide, more than 3,000 work at the Hungarian subsidiary celebrating 25 years of operation in the country this year. As another sign of its long-term commitment, nearly EUR 9 million was invested in 2021 to create 300 high-value-added jobs in its Székesfehérvár office (60 km southwest of Budapest by road). The expansion was essential partly because the widespread use of cutting-edge tech solutions triggers ever more demand for quality IT support.
“We bring an unmatched intellectual heritage with more than 3,000 patents issued, and over half of these are in data and AI, cloud, networking, intelligent automation and security,” says Zoltán Zerényi, director of the Kyndryl Client Innovation Center Central Europe and MEA. “Kyndryl is partnering with the world’s biggest service companies to help customers in their mission-critical hybrid cloud, multi-cloud and edge computing data initiatives.”
Kyndryl’s bet on Hungarian talent is far from an isolated phenomenon among American firms. In fact, Hungary has been on the investment radar of U.S.-based businesses from day one since the collapse of communism.
American businesses represent the third biggest foreign investor community, which was responsible for 7.9% of total FDI stock in 2019, according to the data of the National Bank of Hungary. Furthermore, some 1,500 U.S.-owned companies employ close to 100,000 staff. Their activity is reflected in the figures of HIPA as well, according to which year after year, from 2015 to 2021, the United States brought the second-highest number of projects to the country; in 2014, it topped the charts in this respect.
This year’s announcements are, therefore, just the latest pieces of evidence of American investors’ happiness with what they find in Hungary. Leading medical technology company Becton Dickinson (BD) is to invest USD 210 mln in Hungary, amounting to nearly one-fifth of its global development budget earmarked for the upcoming years. As a result, the production of prefilled glass syringes will be doubled in its Tatabánya plant.
HTEC, meanwhile, plans to hire 610 top IT professionals in four locations in the country to take its software development operation to the next level.
These examples also represent well the sectors that attract the most American investments. According to HIPA’s statistics, from 2014-2021, the highest number of projects, 32, was taken by business services centers, followed by the ICT industry (14) and electronics (13).
Citi was among the early birds, landing in Hungary as early as 1985. Establishing its Citi Solutions Center Budapest in 2005 further increased its commitment to the country. The center is now one of Citi’s key sites in the EMEA region, supporting global operations in 20-plus highly specialized functions. Hungary is also home to a Citi technology development lab.
The Hungarian operation has been gaining in strategic importance; it is a complex site employing professionals in high value-added roles ranging from various fields in finance through IT development, information and cyber security to quantitative analysis, risk management and many more. And this evolution is very far from stalled.
“We are further looking to strengthen our presence through investments into value-added professions and digital and technology solutions,” notes Veronika Spanarova, Citi’s country head for Hungary. She adds that Citi is very much into harnessing the power of data to improve its services.
“The combination of efficient data insights with knowledge and experience in the field is key to success in our business and all other sectors,” she concludes.
Hungary’s positive appeal to American investors will remain undimmed, believes István Joó, who recently became CEO of HIPA. “The United States is one of Hungary’s key economic partners, and we have every reason to believe that interest on the part of American businesses in launching investment projects here will remain unbroken,” he says.
The figures from the recent past speak for themselves and imply long-term optimism and confidence on the part of U.S. investors who have frequently used HIPA’s consultancy services with a favorable outcome. Between 2014-2021, 99 U.S-related deals were closed by the agency, generating investments worth EUR 1.6 billion and creating more than 16,000 new jobs.
“Inflation, supply chain disruptions, raw material shortages as well as rising energy prices set a whole new backdrop to the global investment stage to which we must adapt,” Joó says. “We are facing challenging times where even more effort will be needed than before to attract FDI and lead projects to actual completion. But I am confident that, thanks to our professional team and the support of the Hungarian government, we will be able to handle every issue, and foreign businesses, including American ones, will greatly benefit and can look forward to more promising investment opportunities.”
This article was first published in the Budapest Business Journal print issue of July 1, 2022.
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