HUNGARY Information Technology Sector Hungarian Investment and Trade Development Agency, 2009 http://www.itdh.com/engine.aspx?page=Itdh_Befektetes Industry Overview Legal environment Strategy and Gov’t Programmes Key Enterprises Education Export potential

Introduction All stable processes we shall predict. All unstable processes we shall control. John von Neumann (1958) Located in the heart of Europe, Hungary is the perfect place for investors seeking to expand their operations in Central and Eastern Europe. In Hungary, your company will find a highly skilled, creative, motivated, flexible and hard-working workforce with one of the highest productivity rates in the region. Thanks to EU accession, investors settling in Hungary have access to a market of 493 million people. Scores of multinational companies have based their manufacturing and service operations and, in some cases, European headquarters and R&D centres in Hungary, bringing some EUR 70 billion in foreign direct investment over the years. Hungary is a land of creativity, with information and communications technology undoubtedly one of the main drivers of innovation and economic growth. Many IT companies with long track records in Hungary have also begun relocating research and development activities here, including HP-Compaq, Nokia, Siemens, Ericsson and SAP. Did you know... • ... that he Hungarian ICT market grew by 50% between 2002–2007? Did you know… …that Kürt Kft. (http://www.kurt.hu/ )a Hungarian company recovered data demaged during the terrorist attacks against the World Trade Center in September 2001? Did you know… …that a unique invention from a Hungarian company, Holografika Kft. (http://www.holografika.com/)makes it possible to see 3D images without 3D glasses?

Did you know… • …the program that enables the blind to use computers was originally developed by Recognita (now Nuance Communications Inc - http://www.nuance.com/ .) a Hungarian company? Did you know… • …that Graphisoft's (http://www.graphisoft.hu/) ArchiCAD 3D software, an early pioneer in the field of 3D visualization and modelling, has been distributed in 80 countries and 25 languages and used by more than 75,000 architecture designers? Did you know… • ...that major digital film laboratories in Hollywood use a postproduction software "Lustre" developed by Colorfront Kft (now in US ownership)? Did you know… • …that one of the first access control solutions deploying automatic number plate recognition (Carmen® Adaptive Recognition Hungary http://www.arhungary.hu/ ) by was installed at Ferihegy Airport in 1992? For inward ICT investment inquiries, business opportunities and related consulting services please contact ITD Hungary's Central Office in Budapest H-1061 Budapest, Andrássy út 12. Phone: (+36 1) 472 8100 Fax: (+36 1) 473 8201 General information: [email protected] General support for investment projects: [email protected] ICT sector specialist: Ms. Mónika Kiss, [email protected] , 472-8134 Last update: April, 2009.

Industry Overview

Global outlook and business potential "According to WITSA (World Information Technology and Services Alliance), the total value of the ICT market in Europe was EUR 785.7 billion in 2007, representing 6% of total GDP. The IT market (hardware, software and services) amounted to EUR 355.3 billion, while the telecommunications market represented a total value of EUR 435.6 billion. Hungary ranks top for per capita ICT expenditure and ICT expenditure as a percentage of GDP in the region. The Hungarian ICT market has shown strong growth in the past couple of years. Between 2003 and 2007 the average annual growth rate was 6.5%, well above the average growth rate in the EU (2.6%). Today, the Hungarian ICT market represents 12.8% of the CEE total and total sales reached EUR 5.9 billion in 2007 – 46% higher than in 2003. ICT market is expected to further grow in the coming years, at a balanced pace of cca. 4.5-5%. The IT market in Hungary grew 8.8% year-on-year in 2007 to reach a value of EUR 1,983 million. Hardware accounted for 49.7% of the total market, while software made up 20.2% share and IT services 30.1%. IDC expects IT spending in Hungary to rise at a compound annual growth rate (CAGR) of 7.4% over the five-year forecast period to total EUR 2,840 million in 2012.

World ICT market annual growth in 2005-2008 (%) Source: EITO 2007

ICT market breakdown 2005-2008 (%) Source: EITO 2007

European ICT market – Market growth 2005-2008 Source: EITO 2007

The Hungarian ICT sector The Hungarian ICT market exhibited strong growth in the past couple of years. Between 2003 and 2007 the average annual growth rate was 6.5%, well exceeding the average growth rate of the EU (2.6%). Today the Hungarian ICT market represents approx. 15% of the Central Eastern European total. Total sales are expected to reach €6.4 billion in 2007 which is 36% higher than the size of the market in 2002. The growth of the ICT market in Hungary, 2002-2007

Total IT Total telecom. Total ICT

Total sales (in billion EUR) 2002 2003 2004 2005 2006 1.5 1.6 1.8 1.9 2.1 3.2 3.5 3.7 3.9 4.1 4.7 5.2 5.5 5.8 6.1

2007 2.2 4.2 6.4

% growth 2003 2004 13.1 16.8 10.0 5.7 10.5 6.0

2005 7.4 5.0 5.8

2006 5.6 5.2 5.4

2007 7.2 3.9 5.0

Source: EITO, 2007 Hungary is a leader in terms of per capita ICT expenditure and ICT expenditure as % of GDP in the region.

Per Capita ICT expenditure Source: EITO 2007

ICT expenditure as % of GDP Source: EITO 2007 Major ICT subsectors Hardware production Hungary has grown into one of the major players in hardwareproduction in Central and Eastern Europe and leads the region for computer assembly and communications equipment manufacture. In 2007, the sector accounted for 18.43% of manufacturing output, 26.5% of total manufacturing exports and 11% of industrial employment (Hungarian Central Statistics Office). The value of computer production was EUR 2.56 billion, while communications equipment manufacturing was worth EUR 11.41 billion. Sales of desktops, notebooks and accessories were estimated at around EUR 695 million in 2007 and are expected to grow at a compound annual growth rate (CAGR) of 6% to reach EUR 900 million by 2012. Laptop sales are growing rapidly, with Acer doubling its sales in Hungary to 73,000 units last year, totalling roughly 60% of the 200,000 total volume. In the same period, desktop sales fell by a further 20%. Hardware sales are expected to increase by a further 6% in 2008, boosting the growth of the IT sector as a whole. Key market drivers will include FDI in IT-related outsourcing, EU market regulations, and increased demand from SMEs stimulated by EU structural funding. PC penetration in Hungary has been continuously improving over the past years, standing at 54% of homes at the end of 2007. 1.5 million homes, i.e. about 3.8 million people are hooked up to the Internet (87% of them on broadband), and also there is a widespread Web use at educational institutions and Internet cafés.

Software production The Hungarian software market grew by almost 10%, reaching some EUR 350 million in 2007. The CAGR should be around 8.2% for 2007-2009. (EITO 2008) The software marketis the fastest growing IT segment in Hungary. According to BMI (2007), the compound annual growth rate will reach 11% between 2003-2010. Operating systems and system-level software accounted for around a fifth of the market, with their share of the total growing by 0.2 percentage points as compared with 2006. System and network management and storage software ranked second with 11.1%, followed by business applications on 9.9%. The largest annual growth rates came in business intelligence, including document and content management and workflow systems, and development and integration tools and CRM applications, achieving 11% and 18% growth respectively. For the first time in many years, license sales in 2007 fell in the dominant sectors of the software industry. These sectors were data and database management software, enterprise resource planning systems and business software (Source: IDC 2008).

IT services The Hungarian IT services market is expected to reach EUR 802 million by 2009, up from EUR 659 million in 2007, with services making up more than 40% of the total IT market, as the market matures. In 2007, the Hungarian market for hardware maintenance services recorded a 7.4% increase, reaching some - EUR 131 million. As in the previous years, sub-contracting remained a common strategy for hardware vendors, which leveraged local players’ competitive pricing. In the next few years, externalisation of support tasks, as well as decreasing prices, will affect the growth of this market – a 5.5% CAGR is estimated for this segment between 2007-2009, as against 10.3% for the total IT services market. With an estimated value of EUR 399 million in 2007, the project services segment represents the largest share of the Hungarian IT services market (at nearly 60%). For the 2007-2009 period the Hungarian project services market is expected to grow at a 10.7% CAGR, mainly driven by projects in local and central administration related to EU issues and by ERP mplementations in the SME sector. (EITO 2008)

IT Outsourcing - This sector is relatively well developed in Hungary. The outsourcing market showed robust growth of 11.4% in 2007, reaching EUR 100 million. (IDC, 2008). The end-toend IT outsourcing sector is highly concentrated with the top ten market players accounting for almost 80% of the market, although market concentration is falling largely thanks to entrants to the application hosting market. Furthermore, captive outsourcing is gaining more and more ground in Hungary, especially in the telecommunications sector. Moreover, captive outsourcing is gaining more and more ground in Hungary, especially in the telecom sector.

Telecom market End-user spending in the telecommunications market in Hungary reached EUR 3.5 billion in 2007. This is almost 2% down on the previous year, a fall largely attributable to the contraction of the voice market. While fixed-line voice communications have fallen steadily in recent years, the market for mobile voice services also fell slightly in 2007. All key indicators show a contraction of the fixedline voice market in Hungary, including market value and subscriber numbers. This is primarily due to the switch from fixed-line to mobile calls, whereby consumers are cancelling their fixed-line subscriptions in favour of mobile services. The growth of new technologies and services is also producing an increasingly competitive environment. Telecommunications providers are entering the television market, while cable operators are offering telephone services. Mobile data solutions, such as 3G coverage, also allow mobile carriers to offer television services. These new technologies are having a fundamental effect on the Hungarian telecommunications market. By December 2008, the number of clients of the three Hungarian mobile operators rose to 12,224 thousand, that is 121.8 subscriptions per hundred people. In spite of the significant market expansion, the market share of operators has hardly changed over the past years. The number of fixed broadband subscribers went up by 16 percent, reaching 1.537 million in 2007, while, according to estimates, the number of fixed-location broadband subscriptions and subscriptions to wireless internet services exceeded 2.2 million at the end of 2008.

Legal environment

The National Communication Authority http://www.nhh.hu as a government agency is responsible for the supervision of communication-related acitivites. The most important items of Hungarian legislation on the regulation of electronic communications, postal services, and the regulation of the IT and media markets (acts and decrees) include the following: (Please note that the official Hungarian text of the acts can be found in the Hungarian Official Journal “Magyar Közlöny” http://www.magyarkozlony.hu/; the English translations of these are not legally binding.) Electronic communications Act 100 of 2003 on electronic communications (Eht.) identifies the institutions responsible for state duties connected with electronic communications and their responsibilities. It creates the Hungarian national regulatory authority called National Communications Authority, Hungary which represents also a new organisational model. The new Authority is a unified body directed by a Board of seven members. Management by a body is less usual in Hungarian public administration, but is a proven practice of other European countries. As a result of implementation of the new Community regulatory framework system that entered into force on 25 July 2003 the major responsibility of the authority – in respect of shaping the market conditions – is - to analyse the national market of the sector; - to examine which are the key (relevant) markets of the sector in Hungary; - whether competition is appropriately ensured on them; - when competition is not ensured which are the players having significant market power, - on which at least one of the obligations defined in the Act that is proportionate to the market distortion and the specific position of the given market player and has the extent that is needed to ensure competition must be imposed. The Eht. gives the authority the means with which it can intervene in the behaviour of the market players when needed. Enlarging the scope of means available to the authority, creation of a more efficient system of sanctions that better promotes voluntary application of laws is justified also by the fact that great emphasis needs to be placed on post-audit of the entities performing the given activities and market surveillance because the earlier regime of permits needed for market entry is replaced by notification to start a given activity. This can be carried out successfully only when strong and efficient means are available to the authority. Act 174 of 2007 on the amendment of Act 100 of 2003 on Electronic Communications Act 154 of 2007 On the amendment of Act 74 of 2007 on the Rules of broadcasting and digital switchover and Act 1 of 1996 on Radio and television broadcasting

Act 100 of 2003 on Electronic Communications and amendments of the Act 100 of 2003 on Electronic Communications prescribed by the Act 74 of 2007 on the rules of broadcasting and digital switchover Act 74 of 2007 on the rules of broadcasting and digital switchover Government Decree 229/2008. (IX. 12.) Korm. on the requirements related to the quality of electronic communications services in relation to the protection of consumers Government Decree No 83/2007. (IV.25.) Korm. on the amendment of Government Decree No 46/2004. (III.18.) Korm. on the rules of number portability, Government Decree No 164/2005. (VIII.16.) Korm. on the national allocation plan of electronic communications network identifiers and Government Decree No 184/2005. (IX.13.) Korm. on the management of electronic communications network identifiers Decree No 23/2007. (II. 23.) GKM of the Minister of Economy and Transport on the technical requirements for the public telephone network in order to support emergency calls to the single European emergency call number Government Decree No. 78/2006 (IV. 4.) Korm. on the rules of auction or tender for obtaining frequency usage right Decree No 62/2006. (VIII.30.) GKM of the Minister of Economy and Transport on electromagnetic compatibility Decree No. 6/2006. (V. 17.) IHM on the radio amateur service Decree No. 11/2005 (IX. 28.) IHM on the tariffs charged for reservation and use of identifiers needed for electronic communications services Government Decree 184/2005. (IX. 13.) on the order of management regarding the identifiers of communications networks Government Decree No. 164/2005 (VIII. 16.) on the National Table of Identifier Allocations for electronic communications networks Government Decree No. 134/2004. (IV. 29.) on the Detailed Rules Applicable to the Operation, Supervision, Use, Termination and Sources of the Universal Electronic Communications Subsidy Fund Government Decree 100/2004. (IV. 27.) on the system of preparing electronic communications for emergency and qualified periods, the responsibilities of state administration organs, and the provision of the conditions of their operation Decree No. 27/2004. (X. 6.) IHM on creation and operation of duty service systems in the IT and electronic communications and postal sector, their powers, and the reporting and liaison obligations of the designated operators Decree No. 7/2004. (IV. 20.) of the Ministry of Informatics and Communications on the principles of calculating the net avoidable costs of universal electronic communications service and the method of establishing such costs

Decree No. 6/2004. (IV.13.) of the Ministry of Informatics and Communications on certain administrative procedures of civil frequency management Decree No. 19/2003. (XII. 27.) IHM of the Ministry of IT and Communications on separation of the electronic communications activity and the detailed rules of keeping separate accounting records of electronic communications service providers Decree No. 18/2003 (XII. 27.) of the Ministry of Informatics and Communications on the rules of cost calculation of electronic communications services Decree No 16/2003. (XII. 27.) IHM of the Minister of Informatics and Communications On the detailed rules of electronic communications contracts with subscribers and on their conclusion Appliances With the entry into force of Act 100 of 2003 on electronic communications (Eht.) the procedures of equipment licensing were abolished. With the implementation of the R&TTE Directive equipment “only” need to fulfil certain defined basic requirements to allow placing on the market. The following provisions of law give guidance on the procedures and conditions of placing on the market and sale of radio equipment and electronic communications terminal equipment Decree No 63/2004. (VII.26.) ESzCsM of the Minister of Health, Social and Family Affairs on the threshold limit values of electric, magnetic and electromagnetic fields in the 0 Hz to 300 GHz frequency range as relating to the general public http://www.nhh.hu/dokumentum.php?cid=12023&letolt Decree No. 5/2004. (IV.13.) IHM of the Minister of Informatics and Communicationson radio equipment and telecommunications terminal equipment and the mutual recognition of their conformity http://www.nhh.hu/dokumentum.php?cid=12007&letolt E-signature, e-commerce One of the consequences of increasingly widespread use of electronic messaging is that there is a rising need for making statements with legal effect also in electronic form (e.g. contractual offer and its acceptance, performance verification). This requires that the parties making such contact can determine who has sent the given message and whether its content has changed since its sending. (The equivalent of the first function in paper-based contracts is the signature.) Documents in electronic form can also contain the name of the entity that assumes liability for the statement made therein, but naturally it does not have the probative force of a hand-written signature therefore various technologies had to be elaborated to ensure that signature in electronic form has the same authenticity as a paper-based signature. The legal effects of using such technologies, the requirements for such technologies and the organisations providing such services are regulated by Act 35 of 2001 on electronic signature. The great information technology progress seen today dramatically changes the earlier forms of social and economic contacts. One of the results of this development is the spreading use of information society related services, various business and

commercial transactions carried out through electronic data transmission (electronic commerce) and delivery of other services by electronic means. Act 108 of 2001 on certain issues of electronic commerce services and information society related services was passed to lay down the basic rules regulating the private law based legal relations created through electronic communications facilities and to create the legal conditions connected with information society related services. Implementation of the rules laid down in this Act is ensured among others by the Act on electronic signature. The following laws provide – in addition to the requirements applicable to electronic signature related services, service providers, products, certification organisations and experts – for the authority's duties, registers to be kept and the role of the Authority in the area of electronic commerce in respect of unsolicited e-mail advertisements (spam). -

Act LXVIII of 2008 on basic rules and restrictions of business adverisements

Act XXII of 2007 on the amendment of acts necessary for execution of the community legal acts pertaining the procedure and co-operation of the national authorities responsible for application of consumer protection statutes (Extract, relevant to Act CVIII of 2001) http://www.nhh.hu/dokumentum.php?cid=11962&letolt Act CVIII of 2001 on certain issues of electronic commerce services and information society services http://www.nhh.hu/dokumentum.php?cid=11961&letolt Act XXXV of 2001 on Electronic Signatures http://www.nhh.hu/dokumentum.php?cid=10623&letolt Decree No. 4/2006. (IV. 19.) IHM on the fees payable for the National Communications Authority's activity connected with the register of electronic signatures http://www.nhh.hu/dokumentum.php?cid=11197&letolt Decree No 9/2005. (VII. 21.) of the Minister of Information Technology and Communications on the electronic signature product certifier organisations and the rules concerning their designation http://www.nhh.hu/dokumentum.php?cid=11982&letolt Decree No. 3/2005. (III. 18.) IHM on the detailed requirements for services related to electronic signature and their providers http://www.nhh.hu/dokumentum.php?cid=10631&letolt Government Decree No. 45/2005 (III. 11.) on the responsibilities and powers of the National Communications Authority connected with electronic signature and the detailed rules of procedure http://www.nhh.hu/dokumentum.php?cid=10637&letolt Decree No. 7/2002. (IV. 26.) MeHVM on the registration of electronic signature service experts http://www.nhh.hu/dokumentum.php?cid=10625&letolt

Post Act 40 of 2001 on communications (Hkt.) regulated in a unified way the postal and communications (together “telecommunications” for the purposes of Hkt.) services and activities. However, such a gap in time arose between the development of postal and telecommunications activities which required widely differing regulations. For this purpose the postal activity was removed from the scope of Act 100 of 2003 on electronic communications (Eht.) and was regulated in the dedicated Act 101 of 2003 on the post which significantly improved transparency. To ensure continuity the new dedicated Post Act applied to the greatest possible extent the regulations of the Act on communications which had proved to be correct. The following laws provide for the licensing and notification processes connected with the market entry of postal service providers, the related registers kept by the authority, supervision of postal services and postal service providers. The authority issues and keeps a register of licenses for postal stamp experts on the basis of these laws and licenses postal equipment on the basis of examinations. Act 101 of 2003 on the Post http://www.nhh.hu/dokumentum.php?cid=10619&letolt Government Decree No. 9/2005. (I. 19.) Korm. on the detailed rules of cooperation between postal service providers, postal contributors and organisations authorised to collect confidential information and obtain confidential data http://www.nhh.hu/dokumentum.php?cid=12011&letolt Decree No. 12/2004. (IV. 22.) IHM on the obligations of postal market players to supply data to the communications authority and the rules of data management http://www.nhh.hu/dokumentum.php?cid=11955&letolt Decree No. 85/2006. (XII. 15.) of the Minister of Economy and Transport on the highest administrative prices of inland reserved postal services http://www.nhh.hu/dokumentum.php?cid=11963&letolt Government Decree No. 241/2004. (VIII. 16.) on the regime for preparation of the post for danger and qualified periods, the related tasks and operational conditions http://www.nhh.hu/dokumentum.php?cid=11081&letolt Government Decree No. 236/2004 (VIII. 13.) on the detailed rules of providing telegram service http://www.nhh.hu/dokumentum.php?cid=11147&letolt Decree No. 17/2004. (IV. 28.) IHM on accounting separation by universal and concession-holder postal service providers, and the detailed rules of costing http://www.nhh.hu/dokumentum.php?cid=11192&letolt Decree No. 14/2004. (IV. 24.) IHM on requirements for the quality of postal services connected with protection of consumers and access of handicapped persons to postal services http://www.nhh.hu/dokumentum.php?cid=11145&letolt

Decree No. 13/2004. (IV. 24.) IHM on the Communications Authority's market surveillance, quality enforcement and inspection activity connected with postal service and postal intermediary activity http://www.nhh.hu/dokumentum.php?cid=11190&letolt Government Decree No. 79/2004 (IV. 19.) on the provision of postal services and their quality requirements http://www.nhh.hu/dokumentum.php?cid=11059&letolt Government Decree No. 68/2004 (IV. 15.) Korm. on the conditions of entry to the market of postal service providers http://www.nhh.hu/dokumentum.php?cid=10864&letolt Other relevant legislation Act XLIX. of 2008 on the amendment of certain laws regarding constructions of national significance • Act XLVII. of 2008 on the prohibition of unfair trading practices • Act I of 2007 on the entry and stay rules of persons entitled for free movement and stay • Act IV. of 2006 about the economic associations • Act XLIX. of 2006 about lobbying activities • Act XC. of 2005 about the freedom of electronic information • Act CXXIX of 2003 on public procurements Act 125 of 1995 on the National Security Services http://www.nhh.hu/dokumentum.php?cid=12010&letolt Act I of 1996 on Radio and Television Broadcasting http://www.nhh.hu/dokumentum.php?cid=10622&letolt Government Decree No 247/2005. (XI. 20.) Korm.on modified and new data collection under the 2006 National Statistical Data Collection Programme http://www.nhh.hu/dokumentum.php?cid=12065&letolt Government Decree No 229/2006. (XI. 20.) Korm. on modified and new data collection under the 2007 National Statistical Data Collection Programme http://www.nhh.hu/dokumentum.php?cid=12025&letolt Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC http://www.nhh.hu/dokumentum.php?cid=12286&letolt (http://www.itdh.com/engine.aspx?page=Legal__environment )

Strategy and Gov’t Programmes

Summary: A favourable policy environment for the ICT Industry • • •

The Government’s Information Society Strategy was approved in 2003; The National Development Plan II 2007-2013 earmarks 3% (approx. EUR 790 million) of EU funds for the development of the info-communication sector; A 10% tax allowance is offered on the labour costs of software developers.

Hungarian Information Society Strategy The Strategy was approved in 2003 and was further developed in 2004. The HISS systematizes the tasks by determining the fields where action needs to be taken; it designates the key areas within them, determining the tasks to be jointly performed by the various participants (government, private field, civil organizations). Key areas: -

Spreading the modern IT tools in the economy;

-

Creating a modern e-public administration;

Supporting educational activities and training with the tools of information technology at various levels of education; the creation and circulation of digital curricula; Expanding the broadband infrastructure: within the foreseeable future every person should be provided broadband access; To facilitate access to info-communication tools, some form of community access must be provided in every settlement within the shortest possible time. The PublicNet (Közháló) Programme Based on the National Broadband Strategy the Programme was launched in 2003 to develop and expand the broadband access points in the country. The programme promotes internet connection to public services (e.g. postal service) in smaller villages. The PublicNet programme also supports the eHungary points established under the eHungary programme. - € 84 million are available for the implementation of the “Közháló” project; - 7,300 access points were established in the first phase by Sept. 2005. “eHungary” Programme The programme aims to extend internet coverage across the country by ensuring free or low-cost access to internet for everyone in Hungary. “eHungary” points were opened in public offices, at municipalities, libraries and cultural centres.

“eHungary” terminals were also set up at high education institutions, railway stations and in department stores to provide information on public services. “New Hungary” National Development Plan II 2007-2013 To implement the Plan, the government has approved 15 operative programmes. A total of seven thousand billion Hungarian Forints will be invested during the next 7 years with EU co-funding. The Plan earmarks 3% (approx. EUR 790 million) of EU funds for the development of the info-communication sector. In general, it will promote the widespread use of modern info-communication technologies. Accordingly, ICT developments are supported as part of complex enterprise development projects, independent of the areas of intervention. Under the economic development operational programme, the Plan envisages the development of business infrastructure and services, including the spreading of modern info-communication technologies (ICT), the improvement of physical infrastructure, the expansion of broadband IT networks in the regions inadequately provided for by the market and increasing IT safety. Electronic Public Administration Operative Programme 2007-2008 Economic Development Operative Programme 2007-2008 HTEC (Hungarian Technology Centre) The programme assists Hungarian SMEs and the ICT industry to market their products by promoting national and international business relationships, conducting market research and providing information and office space and infrastructure free of charge in foreign countries. Employees’ PC Programme Employers may provide PCs and internet access to their employees without paying social security contributions and income tax charges on these items. Mobility and Multimedia Cluster Initiated by Magyar Telecom, thirty info-communication companies, universities and SMEs set up a Mobility and Multimedia Cluster to cooperate on R+D activities and bringing products and services to market in February, 2008. The budget of the cluster's office, which employs a staff of four, is expected to be in the tens of millions of forints range in the first year. The cluster will apply for state subsidies to cover some of its costs. In 2008, two government policies were developed regarding informatics: • •

The Comprehensive Strategy for Informatics (available only in Hungarian) E-Public Administration 2010

Key Enterprises

The ICT sector boasts a remarkable tradition in Hungary – many Hungarian scientists and engineers have left their mark on the history of information technology and computer programming. János Neumann (later known outside Hungary as John von Neumann)began his career in Budapest before working on the Neumann architecture used in virtually all computer systems. The operational principles of the IAS Computer he created in 1951 still determine the functioning of PCs today. A Hungarian-born scientist, John G. Kemeny, was behind the userfriendly BASIC programming language.The predecessor of the 3.5" floppy disk was invented and developed in the Radio Technology Factory in Budapest by Marcell Jánosi. Following the footsteps of these pioneers, Hungarian companies are successfully blazing new trails in different ICT niches. (Read more about great Hungarians in the history of communication and information technology on this page! http://www.itdh.com/resource.aspx?ResourceID=grcomm2 ) The biggest players in the Hungarian ICT sector include: •

• • • • • •

IBM (US): IBM has more than 2,500 people on its payroll in Hungary. The IBM SSC in Budapest employs more than 1,000 people, with a further 1,500 at the company's production plant in Vác, more than 500 working in IT services in Székesfehérvár, and 300 at IT giant's Budapest headquarters. In 2006, IBM won the Investor of the Year Prize for its new SSC centre, where the company created 700 new jobs and invested Ft 6.5 billion. Flextronics: Produces PCs, tape storage devices, servers and phone accessories in Zalaegerszeg and Sárvár. Samsung (Korean): Printer and monitor production in Göd and Szigetszentmiklós. Albacomp (Hungarian): Produces PCs, laptops and servers. GE (US): Healthcare, consumer and industrial equipment development and production. Nokia (Finland): Mobile device production. Others: Solectron, Sanmina, Elcoteq, Videoton, Orion, Sanyo.

The largest companies in the ICT services market are: • • • • • • • • • • • •

IBM: Regional Support Centre in Budapest and IT service provision in Székesfehérvár HP: IT services Nokia: Telecommunications services and research Ericsson: Strong R&D in telecommunications software ORACLE: Database management SAP (German): Established its R&Đ Centre in Budapest in 2005 CISCO (US): Regional Technical Assistance Centre. The company is planning further expansion in the near future Siemens: Offers telecommunications systems and Next Generation Networking services Satyam (India): IT services TATA : Opened its European R&D Centre in Budapest in 2001 Synergon (Hungarian): Offers end-to-end IT services EDS (US): European Regional Centre, IT services.

• • • • • • • • • • • •

FreeSoft (Hungarian): Legacy systems, legacy transformation and modernization. Getronics (Netherlands): Global system and network integration Dataplex: The market leader in ICT outsourcing in the CEE region. BT (UK): CRM, IP services, outsourcing and security operations Sun Microsystems: Software development and consulting. Microsoft (US): Hungarian representative office of the Microsoft Corp. SaveAs Kft. (Hungarian): EagleEyeOS software to prevent data leakage Geometria Kft. (Hungarian): geographical databases Balabit Kft. (Hungarian): IT security Analogic Computers Kft. (Hungarian): high-speed intelligent cameras, InstantVision ISE XAPT Hungary Kft. (Hungarian): ERP solutions Magicom Kft. (Hungarian): outsorcing (LAN/WAN, VoIP, Network Security and DNS/DHCP)

Major companies engaged in R&D in the sector: • • • •

Siemens has nearly 600 people employed in R&D, Sysdata, owned by Siemens, is Hungary's largest software house Ericsson: employs 350 in R&D related to telephone exchanges Nokia: three R&D divisions in Hungary TATA: European R&D Centre

See detailed company listings on the web page of IVSZ (http://www.ivsz.hu/) , the Hungarian Association of Information Technology Companies. Top Hungarian performers in ….CAD/CAM design: Graphisoft is the leading developer of Virtual Building™ solutions. It is widely acknowledged as the world’s number one supplier of modelbased software and services for the construction industry. Graphisoft® is currently ranked among the world's largest Architecture/Engineering/Construction CAD software companies for PC and Macintosh. In its 24-year history, Graphisoft has revolutionized architectural design and communications with its Virtual BuildingTM concept - introducing many innovations that are now considered essential to Computer Aided Design (CAD), including objectbased three-dimensional modelling, building simulation and collaborative architecture. Graphisoft's flagship product ArchiCAD® is an object-oriented and fully integrated 2D/3D CAD solution for architects and the construction industry. Supported by current Windows and Macintosh operating systems, it is sold in 80 countries in 22 language versions through independent distributors and five whollyowned subsidiaries. Graphisoft products are used by over 100,000 design professionals and builders worldwide, and have played a key role in the construction of over a million buildings. The company also launched the world’s first 5D virtual construction solution for the multi-billion dollar construction industry. … Character Recognition: established in 1989, SZKI Recognita Rt. developed OCR applications to recognise special characters, such as accents specific to different languages, and became a worldwide market leaders with Recognita Plus, its flagship optical character recognition (OCR) software. In March 2000, the firm was acquired by ScanSoft, Inc. (now Nuance Communications, Inc.), which located the

development of OmniPage, a fast and precise sofware to convert high volumes of paper, PDF and forms into editable and searchable files to Hungary utilising the vast experience Hungarian programmers acquired in OCR decelopments. …Language Technology: MorphoLogic was founded in 1991 by a number of committed researchers. The company's first significant success was the creation of the Hungarian spell-checking module. The theory applied to this module enabled the company to create further linguistic tools and MorphoLogic soon found itself at the heart of the Central European language technology industry. The company gained a strong foothold as a vendor for a number of multinational companies, such as Microsoft, IBM/Lotus, Xerox, Franklin and Adobe/WinSoft. Today, MorphoLogic's product range includes proofing tools, search and recognition support tools as well as electronic dictionaries, machine translation programs and a wide range of linguistic analysis tools. Various international players in electronic and dictionary publishing use MorphoLogic XML and localization services. MorphoLogic's highly successful pop-up dictionary won the IST Prize in 1999. …IT security, data protection: KÜRT Zrt. has achieved considerable international success with its unique, top-level security technology and is recognized widely for its data recovery and restoration solutions. Kürt can recover information from heavily damaged magnetic disks, even those burnt or partially incinerated. The firm was involved in the recovery of information from digital media that was virtually destroyed in the 9/11 attack on the World Trade Center. .. Anti-virus protection: VirusBuster's mission is to provide customized, multi-level virus protection solutions tailored to individual customer needs and backed by highquality technical support. VirusBuster has been developing and distributing anti-virus and other IT security solutions for more than 15 years - including workstation, server and mail server protection, as well as anti-virus management systems for the most commonly used platforms. Many firms use its internationally recognised virusdetection engine in their security technologies. VirusBuster products have won the Virus Bulletin 100% Award and the Checkmark Anti-Virus Level One certification several times, as well as the ICSA Desktop/Server Anti-Virus Detection certification all clear indications of their quality and effectiveness. VirusBuster products are available in Hungary and through its partners in Europe, South and North America and other countries around the world. .. Software development for mobile communications Founded in 2001 as a spin-off from Westel Rt., the first Hungarian mobile telecom operator, ITware has gained extensive experience and expertise developing and operating Westel’s IT infrastructure. Its main products include SMSware, an original SMS application platform providing flexible bulk SMS or premium SMS services via a fully functional Web interface and another ASP-enabled solution, FLEETware, a fleet management system which gives logistics and transportation companies full control over their vehicles on the road. …Embedded mobile applications: Cellum Zrt.(formerly Enigma) is a pioneering Hungarian technology company and a leading developer of intelligent systems for secure mobile commerce. Its unique, cutting-edge architecture enables secure transactions to be made over the GSM network. Cellum offers a variety of services including support for mobile banking, mobile signature/authentication and payment of tolls, parking and utility bills.

…E-identification and secure collaboration platforms: One of the key Hungarian players in this area is E-GROUP, with a product portfolio that includes eidentification and authentication (mobile as well as non-mobile), strong e-identities (PKI- and non-PKI-based, wireless-PKI and digital signatures), NFC (Near Field Communication), RFiD, smartcards, industry-specific transaction and document workflow/DRM solutions, including payment systems. http://www.egroup.hu/ …Digital filmmaking and colouring: Colorfront’ssoftware specialists began writing code for computer games two decades ago. They have become renowned for developing animation programmes, including the animation software for worldfamous movies like Harry Potter, Spirder Man and The Lord of the Rings. Colorfront is now part of US-based Autodesk Inc. …Mobile navigation systems: Nav N Go was incorporated in 2004 and currently supply over 50 global consumer electronic companies worldwide. NavNGo develops innovative software for connected devices offering the latest solutions for navigation, location-based services and content provided for a variety of platforms. In March 2007, Nav N Go released the first ‘true’ 3D map software in Europe and later introduced maps of the USA, Canada and Europe on a 2GB SD card.

Education

The primary strength of the country is still the highly qualified and creative human capital, thanks to its world-standard education system. • •

Hungary’s active labor force of about 4.1 million is highly educated and skilled All diplomas with at least one language examination and computer skills. 90% of the students speak English, second most popular is German, followed by French

Hungarian employees are seen as flexible, service oriented, highly motivated and very efficient; they are open-minded and keen to learn. The largest IT faculties in Hungary Budapest •

Budapest University of Technology and Economics, Faculty of Electrical Engineering and Informatics Number of students enrolled at the IT Faculty: 8,000

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Eötvös Lóránd University, Budapest:, Faculty of informatics Number of students enrolled at the IT Faculty:3,000

Szeged •

University of Szeged, Faculty of Informatics Number of students enrolled at the IT Faculty:2,000

Debrecen •

University of Debrecen, Faculty of informatics Number of students enrolled at the IT Faculty:2,000

Pécs •

University of Pécs, Institute of Mathematics anc Information Technolog Number of IT students:1,800

Miskolc •

University of Miskolc, Institute of informatics Number of IT students:1,300

Veszprém •

Pannon University, Faculty of information technology Number of students enrolled at the IT Faculty: 1,300

Co-operation between Industry and academia Successful co-operation between multinational firms and universities •

Infopark, Budapest

Budapest University of Technology and Economics, ELTE University of Natural Sciences, IBM, Hewlett Packard, Panasonic •

Innovation and Knowledge Centre, Budapest

Budapest University of Technology and Economics, and 9 important IT companies •

Digital Community Centre, Miskolc Miskolc University, Hewlett Packard

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Research and Training Program, Szeged Szeged University, Tata Consultancy

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eScience Knowledge Centre, Budapest

ELTE University of Natural Sciences, Delta Eletronik, Econet, ESRI, MiltuRáció •

Oracle Competency Center, Budapest Budapest Technical College

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CISCO Networking Academy Programme, Budapest Budapest Technical College, University of Szeged, Pécs, Veszprém

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SAP Competency Centre Budapest Technical College

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SUN Java and Solaris Certification

Major companies involved in R&D in the sector: • Siemens - Siemens's Sysdata is Hungary's largest software house. • Ericsson: R&D related to telephone exchanges. • Nokia: Three R&D divisions in Hungary. • Tata: European R&D centre. • SAP: established its R&D Centre in Budapest in 2005.

Export potential

IT Export Export revenue of IT companies reached EUR 9.05 billion in 2007, 6% higher than in 2006. Around 37.3% or EUR 3.38 billion originated from IT activity, translating into 8.4% growth. The remaining 62.7% arose from other activities, such as manufacture of consumer electronics, electronic components, mobile phones, telecommunications equipment and offshore/nearshore processing outsourcing (IDC 2008). Hungarianbased companies manufacturing for global or European markets drive Hungarian IT exports. Hardware products produced and exported by multinational companies make up as much as 89.6% of Hungarian IT exports. Exports of IT services account for 8.1% of total IT exports. (Source: IVSZ IT market study 2008) Small and mediumsized IT companies producing exports focus primarily on IT services and developing propriety software, rather than reselling activities. Fewer companies build their exports on the latter. (Source: ITD IDC IT export study) Current export offers from the Hungarian ICT sector: Onlinet Kft.www.onlinet.hu developes customer queue management systems and information terminals, digital posters and manages UPS devices. Contact at [email protected] , or via fax: +36-1-888-0354. LogSystems Kft.www.logsystems.hu offers RFID (Radio Frequency Identification) based solutions and services. Contact Mr. Viktor Papp Technical Director at [email protected] , fax +361 240 9472. IT Ware Kft. www.itware.hu offers high-profile IT services, solutions and applications including “FLEETware” vehicle fleet management system, DVB-T based messagewall combining digital TV technologies and SMS/MMS interactivity, mobile phone based payment solution, 3G mobile communications platform. Contact Ms. Katalin Szili [email protected] , fax +361 4630621. SPB Kft. http://www.q-net.com/ offers queue management systems, information kiosks, meeting room management, banking equipment. Contact: [email protected] )Zahorecz Tibor sales manager, fax +36 1 227-0387. One of Hungary’s leading IT companies, Kürt Kft. www.kurt.hu offers cutting edge solutions for the creation of high security IT systems and the prevention of IT catastrophes. Kürt’s special services include data recovery from damaged storage device. Contact: Mr. Gabor Fabianyi Marketing Manager [email protected] fax +36 1 228 5414. Allround Informatika www.allround.eu offers IT solutions for roaming, billing, operations and development and revenue management. The company’s flagship products include CeDaR for CDR handling, incorporating CeDaR for Telecom Operators, a comprehensive solution for CDR/TAP browsing, test data generation and mediation; CeDaR Utilities, a stand alone, customer-specific, ready-to-run solution that solve CDR handling problems; TAP Converter a billing system independent, ready-to-run application for TAP file conversion tasks; TAP Solution which helps manage everyday roaming functions in a cost-effective way; AllRoamer, a comprehensive solution to manage all international roaming related tasks such as conversion between different TAP versions, validation of files, re-rating of CDRs,

contract management and interconnect billing, etc. Contact: Ms Lilla Csókási, Marketing & Sales Support, [email protected] , fax +361 2061638. A group of marketing and business communication companies, MarkCon Kft., www.markcon.hu specialises in online content and service development. Main projects include: WEBsys Content Management System, an on-line photo agency (www.picturesofhungary.hu) and an online website building system. Contact: Ms. Violetta Vaszari [email protected] +36 72 510 678. MagiCom Group (www.magicom.com) has long-term experience in ICT consulting and services as design, build and run LAN/WAN, VoIP, Network Security and DNS/DHCP. Due to her best practices and highly qualified CISCO, AVAYA, CISSP and ITIL experts MagiCom Group is a preferred outsourcing service provider for multinational partners and customers in several countries in the world. Contact in Budapest HQ: Mr. Dénes CSUKA [email protected] and/or Mr. Zsolt CSEH [email protected] – In UK Office: Mr. Balazs NAGY [email protected] AAM Technologies Kft. www.aamtech.hu offers application integration services and software products including AAMT EOXMON process monitoring, „AAMT EWI” Electronic Workflow Integrator, „AAMT QMON” Queue Monitoring, „AAMT SAMU” System Architecture Management & Utility. Contact lakhegyi.peter@aamtech hu, fax +36 1 4652078. IPR Insights Consulting & Research www.ipr-insights.hu offers IT solutions including software assets management systems and advice on financial and legal issues of software management. Contact: Ms. Orsolya Bock Bureau Chief [email protected] fax +36 1 2047731. Loxon Solutions Kft. www.loxon.hu a software developer company specialized on developing front-end software solutions of loan approval, collateral management, scoring, rating, collection and basel2 business fields. Contact: Ms. Krisztina Kapás Operation Manager [email protected] . Aquis Informatics Zrt. http://www.aquis.hu/ offers complex IT solutions including system integration, standard IT services (workstation operation support, server hosting and operation, remote operation, IT auditing), business solutions (Q-Control client management systems, information terminals), tender handling, etc. Contact Mr. Tibor Kovács Marketing Director [email protected] , fax +361-4363100. Dream Interactive Kft. www.dream.hu, an internet consultancy offering allinclusive web development services including copywriting, online publication, regular updates, graphic design, SiteMotive content management system and hosting services. Contact [email protected] Fax: +36-1398-0467. DSR Kft. http://www.dsr.hu offers digital voice documentation solutions. Contact: Mr. Istvan Varga Executive [email protected] . Adaptive Recognition Hungary Kft. (www.rhungary.hu) develops, manufactures and sells intelligent software and devices that process images within the context of security and traffic control including license plate and container code recognition products, document reader and biometric products. Contact: Tamas Lazar sales director [email protected] .

AITIA International, Zrt.www.aitia.hu offers software and telecommunication services through telecommunication systems, portal technology, speech recognition, simulation systems and virtual interfaces. Contact: Mr. Peter Tatai, CEO, [email protected] fax +36 1 453 8081. TC&CKft. http://www.tcandc.com offers innovative IP telephony and Contact Centre solutions including CARIN call recording, analysis and archive system suitable for both video and voice over IP processing; CISconn solution delivering real-time connectivity between Cisco Unified Contact Center Express and mySAP™ CRM using a pre-packaged, server-based Computer Telephony Integration (CTI) approach; CASpro (Call Accounting System professional) product family provides call accounting and billing functions for IP based and legacy PBX systems as well as for VoIP gateways. Contact: Mr. Csaba Juhász CEO, Owner [email protected] .

Links

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National Communication Authority – www.nhh.hu Hungarian Association of IT Companies – www.ivsz.hu John von Neumann Computer Society - www.njszt.hu National Office for Research and Technology – www.nkth.gov.hu Hungarian Official Gazette Publisher www.mhk.hu/mhknew/intro.htm National Development Agency www.nfu.hu Ministry of Transport , Telecommunication and Energy http://www.khem.gov.hu/en Telecoms Industry Information System. Registration required. – www.estat.hu/en_ihm_h-pir/ Digital media news for Hungary www.dmeurope.com/default.asp?CountryID=17 International Telecommunication Union, ICT - Free Statistics Home Page www.itu.int/ITU-D/ict/statistics/ E-Government Office http://www.meh.hu/szervezet/hivatalok/ekk (only in Hungarian) National Telecommunication Authority http://www.hif.hu UNESCO Information Society and Trend Research Institute, Hungary www.ittk.hu/english/