In 2010, the total Hungarian IT market of USD 2.84 billion increased by 7.2 percent following a drastic drop of 15 percent in 2009 due to the crisis ; the sale of hardware products is expected to have increased by 17.3 percent, that of the software products by 1 percent. In 2011, the computer hardware market is expected to grow by 8.5 percent and 4.3 percent in 2012 respectively. The sale of packaged software is estimated to grow by 5 percent in 2011, and 6.8 percent in 2012. Due to the austerity measures started in 2009, the new government continues to spend less on IT investments in 2011. In 2011, the overall IT market continues to be characterized by strong cost control due to the extra taxes levied in sectors like telecommunications, finance and retail resulting from the economic and financial crisis. Investment projects will typically cover the following areas: consolidation and virtualization, compliance and data security, Business Intelligence, e-customer service, replacement of outdated hardware. Best prospects in the field of computer hardware include: smart phones, tablet PCs, blade servers, thin clients for desktop virtualization, external DAS and NAS storage solutions, 3rd party consumables for printers, multi-function printers, and copiers. In the software segment: Application Server Middleware, Customer Relationship Management (CRM) Applications, Data Access, Analysis, and Delivery, Integration & Process Automation Middleware, Quality & Life-Cycle Tools, Security Software, Storage Software. In computer services: Infrastructure Hosting Services, Application Integration, Network and Desktop Outsourcing, Network Implementation and Integration, Application Consulting Services on Industry- Specific Application (i.e. banking, utility), Data Center Virtualization and Consolidation
Market Demand In 2011, the overall IT market continues to be characterized by strong cost control due to the crisis taxes levied in sectors like telecommunications, finance and retail resulting from the economic and financial crisis.Due to the stagnating IT budgets, projects of large scale are not planned in short term and only projects that cannot be postponed or smaller projects with possible return on investment in one year time will be implemented. Investment projects will typically cover the following areas: consolidation and virtualization, compliance and data security, Business Intelligence, e-customer service, replacement of outdated hardware. The financial sector is characterized by consolidation involving bank mergers leading to application and process integrations. In spite of the crisis tax to be paid by financial institutions, banks should meet international (Basel III., MiFIDII.) and national directives and are obliged to install new systems helping them assess their operational risks. Beyond regulatory compliance, banks' software spending is being driven by an increasingly competitive market, to which banks are responding with aggressive product and service development. In short term, banks are compelled to replace outdated hardware, to continue the virtualization of databases, to enhance IT security, to develop customer service and front-end solutions.Additionally, banks are involved in the installation of the new clearing system, InterGIRO2, making possible settlements in one day. InterGIRO2 is planned to be implemented by July 1, 2012. In long term, banks also plan the revision and consolidation of their legacy systems, the changeover to desktop virtualization and the use of private clouds. As a consequence of the crisis tax in the telecommunications sector, cable service providers slow down their investments and scale back the development of optical cable networks. Mobile phone service providers are in the process of tendering/installing LTE (4G) technology capable networks. The use of the LTE technology is subject to available frequencies (2.6 GHz and 900 MHz) to be auctioned in the third quarter of 2011 and further frequencies of 800 MHz made available with the digital broadcast switch-over postponed by the end of 2012. Telecommunications companies are expected to continue the desktop virtualization and database consolidation projects. As a result of crisis management measures in the manufacturing sector, the lifecycle of desktops, notebooks and ERP systems are extended, however IT development plans contain the replacement of desktops and the migration to Windows 7 operation system. Server consolidation and virtualization are also on the agenda together with outsourcing basic services (like mail) through the public cloud. Concerning further software demands, Business Intelligence solutions, Management Information Systems and Electronic Document Management are in the focus of development plans. Government IT spending is expected to stagnate or slightly decrease in 2011. In December, 2010 the government published its Digital Renewal Action Program focusing on four key action plans: ensuring equal opportunities to citizens, increasing the competitiveness of businesses, creating modern IT background in public administration, and developing the IT infrastructure. The key accomplishment of digital renewal will be reaching full broadband coverage which should be implemented as soon as possible to ensure internet access and create equal digital opportunities throughout the country. This will enable more than one million people previously unfamiliar with the digital world to gain access to services offered by infocommunications. The broadband development concept, which is fully in line with the Digital Renewal Action Program, envisages the support of installing new generation networks, faster fixed line and mobile internet services, and full broadband coverage in Hungary. All users in Hungary should have basic internet service by 2013, and fast or super-fast internet access by 2020 as set forth by the Digital Agenda of the European Union. The government set aside HUF 12 billion (USD 64.5 million) to support the installation of telecommunications networks in settlements of the country not covered by fast speed broadband networks where market players are not expected to build infrastructure in the near future.(Data source: IDC Hungary)
Market Data In 2010, the total Hungarian IT market of USD 2.84 billion increased by 7.2 percent following a drastic drop of 15 percent in 2009 due to the crisis; the sale of hardware products is expected to have increased by 17.3 percent, that of the software products by 1 percent. In 2011, the computer hardware market is expected to grow by 8.5 percent and 4.3 percent in 2012 respectively. The sale of packaged software is estimated to grow by 5 percent in 2011, and 6.8 percent in 2012. Due to the austerity measures started in 2009, the new government continues to spend less on IT investments in 2011. In spite of the crisis taxes recently levied by the government, the banking and telecommunications sectors however decrease their investments to a smaller extent as their storage needs and competition force them to further develop their systems. The same refers to the utilities and manufacturing sectors.(data source: IDC Hungary)
Computer Hardware In 2010, the 573,000 PCs sold consisted of 441,000 notebooks and 132,000 desktops. In 2011-2012, the number of desktops to be sold is continuously decreasing whereas the number of notebooks is expected to increase by 5.4% and 6.6 % year-on-year respectively. Demand for notebooks will likely come from first-time computer buyers who would previously have bought desktops. In 2012, IDC Hungary forecasts the sale of 621,000 PCs. IDC also predicts an 8% growth of the server market in 2011 totaling USD 86.5 million (HUF 17.5bn) while continuing with a moderate growth of 2.7 % in 2012 reaching USD 88.8 million (HUF 18bn). The server market is characterized by virtualization that continues with major companies and gain more grounds with SMEs while blade servers and cloud computing will be the other two drivers of the server market in 2011-2012. In 2011 the storage market will represent a 27 % growth with estimated sales of USD 51 million (HUF 10.31bn). The growth, both in capacity and value, will be less dynamic in 2012. Total sales are expected to reach USD 56 million (HUF 11.35bn), or 35.7 petabyte compared to 27.6 petabyte in 2011. While the printer market is expected to produce a 21.1 % growth in 2011 with sales amounting to USD 103 million(HUF 20.8bn), in 2012 the yearly growth would drop to 2.19 %. Projected sales of USD 105 million (HUF21.3bn) would include decreased number of monochrome laser printers, but growing number of color laser printers.(source: IDC Hungary)
Internet, e-Commerce Internet subscriptions increased to 3.3 million by the end of 2010, fuelled by competition within the sector and robust wireless internet growth, which rose 36% year-on-year, to 1.3 million. Cable internet is making further headway with subscriptions rising by 14%, to 753,228. Even with the rapid spread of broadband internet, Hungary's internet penetration was still at 52% in 2009. Hungary's number of internet service providers (ISPs) amounted to 393, although the market remained concentrated, with 18 ISPs accounting for 90% of users in 2010. Business-to-Consumer (B2C) e-commerce represents 1.6 percent of Hungary's retail trade compared to 1.8-2.0 percent in EU 15 countries. In June 2010, B2C e-commerce was estimated to reach USD 454 million. According to industry sources, 80 percent of Hungary's e-commerce revenue is made by the 20 major players of its roughly 2,700 B2C companies. Books, office supplies, CDs, DVDs, IT and telecommunications equipment, food and apparel generate the most business. The most developed segment of e-commerce is e-banking with 2.4 million retail and 350,000 corporate users.
Computer Software Based on estimated figures for 2010, IDC Hungary forecasts a moderate increase of 4.1 % in sales made by software manufacturers totaling USD 501 million (HUF 101.4bn) in 2011. Within the market of infrastructure software amounting to USD 148 million (HUF 30,9bn) the storage software and IT security software segments will reach a yearly growth rate of 11.5% and 9.5% respectively compared to 2010. Business Intelligence software and the middleware market will well perform with a growth rate of 8.0% and 12.7 % respectively in the overall application development tool segment with total estimated USD 101 million (HUF 21.1bn) sales in 2011. As a result of the crisis, companies focus more on acquiring and retaining customers thus spending more on Customer Relations Management (CRM) tools. Analysts expect a yearly 6.5 % growth in this segment together with content management (+4%) based on major projects and upgrades within the government and utilities. The mature ERP market amounted to USD 68 million in 2009, and stagnated in 2010 as there was a saturation in all segments. There will be however EU funds available for SMEs in the New Szechenyi Plan to install new or upgrade existing systems. A yearly 5.2 % increase can be expected until 2014 generated mostly by government procurement. The manufacturing sector will take the lead with 24 % in software spending, followed by telecommunications, transport and utilities (23 %). The financial sector ranks third (17 %) as it is hit by the extra taxes but have to meet the new international and domestic directives. Cloud computing business models (where applications are hosted on a centralized server and accessed remotely) currently comprise mostly of consumer applications such as webmail, social networking, and e-commerce applications.(source: IDC Hungary) According to an annual global software piracy study of the Business Software Alliance (BSA) conducted in partnership with IDC, PC software piracy rates in Hungary fell by 1% to 41% from 2008 to 2009. The commercial value of this illegal software amounted to USD 113 million.
Computer Services In 2010, cost saving measures resulting from the economic crisis felt their effects in the computer services market. While the market in the second half of 2009 still grew, in 2010 it amounted to USD 867 million (HUF 181 billion) representing a 1.9% decline. IDC Hungary cautiously estimates a 0.9% growth for 2011 where outsourcing would be the only segment of producing a 4.3% growth in the USD 899 million (HUF 182 billion) market. The public sector is still the largest user of IT services (with 21.9% market share), followed by telecommunications (18.4%) and finances (17.2%).(source: IDC Hungary) Hungary is among the top ten global offshore locations for IT and business services, due to developed infrastructure, low-cost, skilled labor, and proximity to Western Europe. IBM, HP and Tata are among the many IT-related companies that have service centers in Hungary, which provide a source of demand for IT hardware, software and services.(source: IDC Hungary)
Best Prospects Hardware: - Smart phones - Tablet PCs - Blade servers fueled further by server virtualization - Thin clients for desktop virtualization - External DAS and NAS storage solutions - 3rd party consumables for printers, MFPs, copiers Software: - Application Server Middleware - Customer Relationship Management (CRM) Applications - Data Access, Analysis, and Delivery - Integration & Process Automation Middleware - Quality & Life-Cycle Tools - Security software - Storage Software Services: - Infrastructure Hosting Services - Application Integration - Network and Desktop Outsourcing - Network Implementation and Integration - Application Consulting Services on Industry-Specific Application (i.e. banking, utility) - Data Center Virtualization and Consolidation(source: IDC Hungary)
Market Entry All major U.S. IT companies have a Hungarian subsidiary, but all of them sell their products through distributors and business partners of different categories (VAR, Certified Partner, Gold Partner, etc.).New entrants to the market are recommended to find a Hungarian partner.
Market Issues & Obstacles No tariffs are applied on U.S. exports of hardware, software and services. Computers, computer units and parts were included in the U.S.-Hungarian trade agreement signed on January 30, 2002, which reduced or suspended Hungarian tariffs of U.S. agricultural and industrial exports starting April 1, 2002. Duties applied against computers and parts, as well as office machine parts fell, from 5-8.9% to zero. In case of software, duties are to be paid only on the carrying medium. All equipment should carry the CE marking, attesting the electrical safety, electromagnetic compatibility and machine's safety, a requirement of the E.U. The Hungarian Institution for Electro Technical Inspection is engaged in testing and certification activities.
Health Information Technology (HIT) is defined as information and communication technologies allowing healthcare providers to collect, store, retrieve and transfer information electronically. The European Commission’s 2007 e-Health Task Force Report estimates the worldwide sales potential for E-Health solutions between EUR 60-70 billion yearly. In 2006, the European E-Health market was estimated at EUR 21 billion. Hungary spends 5.5 percent of its GDP on public healthcare representing about USD 8.4 billion. As far as E-Health is concerned, Hungary as an EU member state is working on introducing interoperable solutions already in use or to be implemented in other member states. Considerable European Union funds are available to develop the IT infrastructure in hospitals, outpatient clinics, emergency care to facilitate the introduction of e-Health solutions. Best prospects include The E-Health Card” project that will require the supply of about 40,000 card readers, card management system, card application and authentication solutions etc. and the “Electronic authentication database and healthcare portal” project requiring security and authentication SW solutions, secure and scalable database, portal solutions (SW).
In Hungary the majority (66%) of public hospitals and clinics are owned by local governments, 9% are state and university institutions, and 16% are foundations or church-owned healthcare institutions. The rate of private institutions is 7%, though this covers only 0.2% of the total number of beds. The recurrent and operational costs of public hospitals are financed by the Health Insurance Fund through contracts with the National Health Insurance Fund Administration (OEP). Capital expenditures are funded by the maintaining entities. The majority of local government and state hospitals function as budgetary institutions. Their financial management is limited by a fixed budget and they may not take loans or draw external capital. (Source: National Institute for Strategic Health Research)
As a result of the existing financing scheme, so far limited funds have been available for IT developments. In the framework of the National Development Plan, however, European Funds are allocated to various healthcare expenditures including specific IT related projects. Within the Social Infrastructure Operative Program (TIOP) the “Electronic authentication database and healthcare portal” project (TIOP 2.3.2 funded 100 % by the EU) HUF 1.6 billion (USD 8.2 million) is allocated to develop and connect databases necessary for the operation of the e-Health Card. Tenders for the supply of hardware and software are expected to be issued in the second half of 2010 by OEP. Another program (TIOP 2.3.3, 90 % EU funding) allocates HUF 3 billion (USD 15.5 million) to install inter-institutional healthcare IT infrastructure to facilitate the access of electronic patient records. The project is under preparation, a consortium of hospitals may apply for funds at the National Development Agency from the end of 2010 onward.
Some other programs allocating funds for the development of 8 regional hospitals and outpatients clinics are allowed to spend funds not only for construction works and the procurement of medical equipment but also on Integrated Healthcare IT Systems, ERP systems, and telemedicine.
In Hungary, the first generation Health Insurance Cards (TAJ card) were distributed during 1990-1992. Currently all of the about 10 million Hungarian citizens have a paper based Health Insurance Card issued by the National Health Insurance Fund Administration (OEP).
The government has been working on the concept of the e-Health Card for many years and in 2008 a government decree (1079/2008) was issued for the introduction of an electronic health card. Total project costs (without operational costs) were estimated to reach HUF 17.5 billion (about USD 97 million). A pilot project was planned for the introduction of the card in Budapest and Pest counties in 2010, but the project was cancelled. In 2006 the National Health Insurance Fund carried out a test program in three counties involving 9 General Practitioners, 16,000 patients, pharmacies, outpatient clinics and hospitals, but the successful program was not continued. As the current project will be financed from different sources, mainly from European Union funds managed by the National Development Agency, coordination of securing funds and data protection issues cause delays in the project.
According to the plans, one side of the e-Health Card would be similar to that of the one used in the European Union and could serve as a European Health Insurance Card. It would contain the name of the cardholder, his/her National Social Insurance Identification Number (TAJ), his/her Health Insurance Fund ID, Identification Number of the Health Fund, and expiry date. On the other side of the card a chip would contain the coded TAJ number, electronic signature, card number and expiry. The E-Health Card would be handled by a terminal. A Health Professional Card (HPC) will be used to authenticate read/write access.
Later on further data could be added to the card at the request of the card holder:
In an e-Prescription system, prescriptions of the patient
Emergency data (blood type, allergies, blood pressure etc)
Electronic medical records.
Electronic Health Records (EHR)
There are isolated solutions in hospitals and outpatient clinics. A pilot project was completed during 2006-2007 from European funds in three regions: South Transdanubia, North-Great Plain and North-Hungary involving 38 hospitals and outpatient clinics as well as General Practitioners. The project connects the existing Hospital Information Systems (HIS) via a secure intranet solution . TIOP 2.3.3 program (see above) would facilitate the enlargement of the existing IKIR system. Mobility of patients and health professionals requires the definition of interoperability standards for EHRs. Hungary is coordinating with the EU concerning the preferred usage of the following options:
EHR based on a personal data storage medium
Patient-life route archived paradigm
Divided system paradigm
The National Technology Program funded the EHealth8 Project started by a consortium in 2008. The 3-year program aims at developing the prototype of a telemedicine service system establishing at the same time a system platform of telemedicine standards, instruments and processes. The system could be used as a regional unit of the Inter-institutional Information System (IKIR) developed in 38 healthcare institutions (see paragraph on Electronic Health Records)
The Hungarian health administration would welcome private investments in telediagnosis (especially in radiology and pathology, where there is already a shortage of doctors) and also in telemonitoring. There are some examples for tele-cardiology and home care. For example, International Medical Services provides a transtelephonic ECG system in 5 locations.
Hospital Information Systems (HIS)
The HIS market is dominated by six Hungarian companies. So far international HIS providers were not successful in selling to Hungarian hospitals.
The “E-Health Card” project will require the supply of about 40,000 card readers, a card management system, card application and authentication solutions, and other related equipment.
The “electronic authentication database and healthcare portal” project will require security and authentication SW solutions, secure and scalable database, portal solutions (SW).
The E-Health Card will connect 10 million people with ~6,800 General Practitioners, 3,200 pharmacies, 160 hospitals and 450 outpatient clinics. This will be a good opportunity to establish patient related services such as disease management, disease surveillance, etc.
U.S . suppliers of E-Health products that are interested in entering the Hungarian market are expected to make sure that their products are localized i.e. software, manuals, training materials, etc. must be in Hungarian. Installation, operation and maintenance as well as after sales service require a local presence or well-established distribution partner.
Computer Software (CSF)
Total Market Size (in USD millions)
Source: European Information Technology Observatory (figures were converted from €
at €1 = 1.246 USD in 2005, €1 = 1.26 USD in 2006, EUR 1=1.37 USD in 2007
According to a survey conducted by IDC Hungary, the size of the Hungarian IT market
was HUF 590 billion (USD 3.2 billion) in 2007, representing a 4.4% yearly growth rate.
The HUF 264 billion (USD 1.4 billion) spent on IT services represents an 8.1% yearly
growth rate, with a 44.7% share in total IT spending. Sales of hardware amounted to
HUF 231 billion (USD 1.3 billion) showing a decreasing share of 39.29% with only a
0.3% yearly growth rate. End users spent HUF 95 billion (USD 518 million) on software:
an increase of 4.9% from 2006 in software sales.
IDC estimates 2008 growth was 2% for the total IT market, with hardware sales
decreasing, but services and software sales growing by 3-4%. In 2009, the overall
market is likely to stagnate or even drop as a result of the economic crisis affecting key
segments (e.g., public sector, financial, telecom and processing industry) that typically
drive demand for IT developments. But in relative terms, IT should perform well.
Forecasters anticipate 5-6% annual growth in the Hungarian Customer Relations
Management (CRM) market. Banks, telecommunications companies, large companies
and utilities are the primary CRM consumers. But SMEs are also a quickly growing
segment as they are able to access special EU funds for IT upgrades. Major suppliers
include SAS, Oracle-Siebel, Amdocs, Microsoft, SAP and some domestic companies like
R&R Software. Hungary’s service and support center sector is a growing consumer of
CRM applications. There is also increasing demand for industry specific, vertical CRM
According to IDC, the size of the Enterprise Resource Planning (ERP) market was about
HUF 13 billion (USD 71 million) in 2007. The SME sector was and continues to be the
main driving force of the market. The potential here is large, as only a fraction of the
thousands of SMEs have installed an ERP solution. Moreover, SME spending on ERP
will increase substantially, again thanks to EU funding.
The automotive sector maintains a major share (25%) in ERP spending. Other leading
sectors are commerce and utilities, each claiming a share of over 10%. The market of
ERP solutions for large companies has been saturated for years. However,
opportunities to provide vertical solutions for special industry sector processes exist
Major suppliers include: SAP, Microsoft, Libra (Hungary), Oracle and R&R Software
(Hungary). Yearly growth rate for the next five years is projected by IDC at 8-9%. The
largest growth is expected in the telecom, media and public sectors.
While the market for IT security software had about 15% growth in 2007, and was
estimated to grow by as much as 20% per annum in the subsequent years, current
macroeconomic trends may ease growth rates in the short term. Still, the long-term
outlook for security software is positive. Currently, over half of IT security spending
goes for basic content security solutions like antivirus, spam, spyware, and web filtering
software. Identity and access control management software has been the most dynamic
segment in recent years - a trend that is likely to continue. Intrusion detection and
vulnerability management software are growing more slowly. Major suppliers include
Symantec, McAfee, and CA.
The EU supports development of Hungary’s IT infrastructure through the second
National Development Program. EU development funds totaling USD 4.6 billion for
2007-2013 will allow Hungary to increase IT spending by 25% over projected levels for
the period including Customer Relations Management (CRM) and Enterprise Resource
Planning (ERP) software. EU funds require a 30-50% matching contribution and are
available for micro, small or medium size companies and private entrepreneurs. U.S.
firms are eligible via partnership with a EU entity.