Networked Economy

Hungary is the 46th most networked economy ranked by the Global Information Technology Report. Their Global Competitiveness Index in 2009–2010 was 58. In 2008, Mobile phone subscriptions per 100 population was 122.1 and Internet users per 100 population was 58.7%. Hungary has had a declining GDP growth rate because of recession. Hungary recognizes ICT as a key driver to economic growth and national competitiveness.


Source - http://data.worldbank.org/data-catalog/world-development-indicators?cid=GPD_WDI

ICT Employment Opportunities (Stage 3)

In Hungary, Information and communications technology (ICT) access and use rates are lower than the European Union (EU) average, mainly among people with little or no formal education and people in rural areas. Consequently Hungary has both a shortage of ICT-skilled workers and significant unemployment. However, the government is trying to improve ICT shortfalls by offering more ICT academic related courses and with favorable policy change. ICT employment opportunities are improving in Hungary because of innovative national partnership(s) with government, academic and non-profit organizations. In doing so, they are focusing on delivering ICT skills training, and improving competitiveness and growth at all levels of the economy. The Hungarian ICT market was 6,7 billion EUR in 2008. This market has shown consistent growth as illustrated in the charts below:

One non-profit organization that was founded from these new national partnerships was the Hungarian EUGA Leadership Board (HELB) Foundation. Established in 2007 by Microsoft, Cisco, Intel, HP, Magyar Telecom and several innovative small Hungarian companies. HELB operates as a not-for-profit partnership to reduce workforce skills shortages and promote greater innovation and efficiency in the use of EU development funds for ICT skills training. HELB has helped define a new model for ICT skills training in Hungary, responding to real-life market needs and delivering results rapidly, helping to accelerate adaptation of new technologies and training of IT professionals to high standards. After HELB was launched, the Prime Minister of Hungary, Ferenc Gyurcsány, said: “We would like to attain the goal that tens or hundreds of thousands of Hungarian small to mid-sized enterprises (SME) would benefit from both high-level ICT skills and digital literacy as a natural part of their everyday lives.” One program launched in 2008 by HELB was TITAN, a three year US$ 250 million initiative that aims to train 10,000 ICT specialists, 25,000 managers at SME companies and 200,000 basic ICT users each year between 2009 and 2012. TITAN is based on an innovative philosophy: that effective training should be tailored to people’s existing skill level while taking them to the next level on the ‘knowledge pyramid’.

The innovative TITAN program has been spearheaded by the partnership between Microsoft and Hungary IT Industry. “Microsoft’s goal is to contribute to building a digital world for everyone,” says László Drajkó, General Manager of Microsoft Hungary and Chair of HELB. “Taking IT education to all levels of society requires broad, long-term collaboration and large, specific programs such as TITAN. We also believe that truly successful digital inclusion programs must include SMEs and stimulate employment.” The CEO of Microsoft, Steve Ballmer, stated: “We are glad that the industry and the government in Hungary are looking forward on this project : you can certainly count on our team here in Hungary and on the industry in this very valuable program.”

References: 5.2, 5.3

Hungary has a relatively large ICT sector, representing approximately a fifth of its exports, the third highest in the EU, and the percentage of persons employed with ICT user skills exceeds the EU average. The outsourcing market experienced growth in the ICT segment sector with a 8.7%, EUR 188 million, and the ICT markets have positive outlooks towards the future. In the 2010 ICT Development Index, how countries are making progress towards becoming information societies, Hungary ranked top in the region for ICT access, use and skills. Hungary ranks 36th in PC ownership, which should lead to a rapid take-off in both business-to-business (B2B) and business-to-consumer (B2C) e-commerce. 5.4


Business-to-Consumer (B2C) Electronic Commerce (Stage 2)

In Hungary, the Internet market was slow to take off because there are still relatively low numbers of PCs used in homes. However, this is now improving, in part because of government subsidies for family computer purchases. In 2007, 50.6% of households had a desktop computer, 11.4% had a portable computer and 38.4% had an Internet connection. While Internet auction services are already popular, wider consumer e-Commerce are held back by poor logistics infrastructure and security concerns. Improvement is happening because the wide-spread of payment cards and Internet banking, in conjunction with general infrastructure development. Hungary is expected to have rapid growth in IT services because of Western Europe outsourcing many non-core business functions.

The National Development Plan states that e-commerce is an important priority for Hungary because of its positive impact on the economy. E-commerce had a slow start in Hungary. Its slow growth is due to a lack of trust in e-commerce, especially in electronic payment by Hungarians. The most developed field is e-banking services, however 30% of the population still considers online shopping too risky. Although there are not many online shoppers in Hungary, many use the Internet as the main source of product information. Fotexnet.hu is the largest B2C e-commerce site in Hungary, which offers unique solutions to companies looking to sale of their products or services online.

In Hungary, Business-to-Consumers (B2C) e-commerce is mostly books, CDs, DVDs and computer products sales. B2C e-commerce represents less than 1% of retail trade and 80% of the sales are made by a handful of Hungarian B2C companies.

References: 5.5, 5.6, 5.7


Business-to-Business (B2B) Electronic Commerce (Stage 2/3)

Hungary’s ‘doing e-business’ ranking is 34 out of 69 countries. Electronic data interchange (EDI) is Hungary’s dominant form of e-commerce today. It first appeared in 1996, and is the most prevalent form of B2B e-commerce in Hungary. In general, the range of e-commerce offerings has widened rapidly, and most goods and services provided by international e-commerce suppliers are available under similar conditions as in other European countries. However, prices are typically higher because of the relatively small market, fewer economies of scale and weaker competition. The small Hungarian market has made it difficult for domestic B2B portals. The first B2B marketplaces began appearing around 2000. The most frequent are large B2B e-commerce marketplace portals. The largest player is, Marketline, controlled by a German company, which arranges online procurement, tender services, web-based EDI and auctions. Presently, IBM Hungary, SAP, EDS and Microsoft are key players of the Hungarian business world, selling software and hardware products, IT services from design to solution, and business consulting.

References: 5.8, 5.9, 5.10


E-Government (Stage 2)

In 2005, Hungary created an e-Government Strategy and Action Plan. The main elements of the strategy include: infrastructure development, regulation and coordination on government web pages, courses to develop skills for civil servants, creating a e-Government portal, electronic records management and integration with Europe via IDABC and TESTA. Hungary also created an e-Municipalities strategy. This plan focused on: electronic administration, CRM, online interaction of Mayor’s office and other public institutions, e-governance, e-democracy, online interaction at the local and central systems, and e-skill and awareness training.

The government prioritization of ICT ranking in Hungary is 103rd. Importance of ICT to government vision of the future ranking is 93rd. Hungary is after political and economical transformation, and investing in a networked economy. In Hungary, e-Government is being used for the modernization of public administration. Some modernizations include: transparency, accountability, increasing trust, broadening participatory democracy, innovation, flexibility, and collaboration. There are two centers in the Government experiencing modernization, at the central government in Budapest leveraging e-Government, and local government regulation and standardization via the Ministry of Informatics.

A major tool is the e-Government Knowledge Portal; an interactive knowledge base which includes systematically gathered and well structured information on both domestic and international best practice, experiences, trends and strategies. The portal development was co-financed by the European Social Fund of the European Union and by the Hungarian Government with € 540 000 (HUF 145.8 million). The computer infrastructure in public administration: central administration: 0,93 computer/employee and local administration: 0,89 computer/employee. Internet access to the central administration is 97% and at the local level it is 88%.

References: 5.11, 5.12