Business Services Centres in Hungary 7

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BUSINESS SERVICES CENTRES

IN HUNGARY HUNGARY SMART. AMBITIOUS. COMPETITIVE. BUSINESS SERVICES CONTENT CENTRES IN HUNGARY

6 ABOUT HUNGARY

BUSINESS SERVICES CENTRES 14 IN HUNGARY

20 LABOUR FORCE

26 LANGUAGES

28 LOCATION

ABOUT HUNGARY MAIN FIGURES

CURRENCY FORM OF GDP (PPS) GDP GROWTH GOVERNMENT FORINT EUR 192,855 4.0% PARLIAMENTARY (HUF) MILLION (2017, HCSO) REPUBLIC (2016, HCSO)

AREA TIME ZONE 93,023 m2 GMT + 1 HOUR

INFLATION 2.4% (2017, HCSO) HUNGARY

OTHER MAJOR CITIES POPULATION

POPULATION CAPITAL Debrecen (201,981) BUDAPEST Szeged (161,137) 9,797,561 POPULATION Miskolc (157,177) (2017, HCSO) 1,752,704 Pécs (144,675) (2017, HCSO) Győr (129,301)

CLIMATE RISK OF NATURAL TEMPERATE DISASTERS (similar to the rest of VERY LOW the continental zone)

MEMBERSHIP IN INTERNATIONAL ORGANISATIONS EU, UN, OECD, WTO, NATO, IMF, EC EU member since 2004 (Source: HCSO = Hungarian Central Statistical Office) Business Services Centres in Hungary 9

ABOUT HUNGARY Melanie Seymour Managing Director and Head of BlackRock FDI IN FOCUS Budapest

"We chose Budapest to open our first global Technology and Innovation centre because of the quality of talent – the core skill sets as well as the behaviours and mindsets that support or principles. 12 months on we have hired close to 300 people across 14 different functions that are already having impact within the broader BlackRock. We have attracted a diverse workforce including attracting Hungarians living abroad to come back home."

YOU CAN COUNT ON THE GOVERNMENT’S 66%

COMMITMENT 62% TO FURTHER 51% IMPROVE THE 40% 32% Inward FDI stock BUSINESS CLIMATE amounted to 66% of the GDP (2014) the highest ungary is an open economy where particular ratio in the region. emphasis is placed on encouraging foreign direct investment (FDI). Partnership with HUNGARY CZECH SLOVAKIA POLAND SLOVENIA Source: wiiw FDI Database H REPUBLIC potential investors is a national priority; special atten- tion is paid to the needs of companies already settled in Hungary, and to the further improvement of the business climate. Business Services Centres in Hungary 11

ABOUT HUNGARY ...has modified its taxation and incentive BUSINESS ENVIRONMENT system related to R&D activities to make Hungary the innovation hub of CEE.

...offers companies a …is committed to strategic partnership, further reduce taxes and provides them on employment. with fast access to the Government.

IN ORDER TO IMPROVE ...is helping THE BUSINESS CLIMATE companies to function THE HUNGARIAN reliably by providing a clear agenda on economic GOVERNMENT... development and FDI strategy.

...further improved

INVESTMENTS IN FOCUS INVESTMENTS the practice-based dual education system built on industry needs.

...has created ...has introduced its ...has introduced a the most competitive unique economic new incentive scheme CIT in the EU development plan supporting with 9% flat rate. based on Industry 4.0 technology intensive requirements. investments. Business Services Centres in Hungary 13

HUNGARIAN EXPLORE THE COUNTRYSIDE ABOUT HUNGARY PARLIAMENT Hungary’s diverse countryside offers a wide QUALITY OF LIFE BUILDING ranked range of outdoor activities: 11,000 kilometres th of hiking routes; more than 4,000 kilometres of 10 cycle paths; 14 golf courses; 10 national parks; in world's top 10 and many protected nature reserves for those landmarks for 2018 in love with fresh air. The protected Puszta- by TripAdvisor region, the Great Plain, the romantic Danube Bend with its historic sites, and pretty baroque towns, such as Eger, attract visitors all over the year. Lake Balaton, the largest fresh water lake in Central Europe, is a perfect holiday resort.

HUNGARY ranked among the TOP 5 COUNTRIES in the BOCUSE D'OR INTERNATIONAL SCHOOLS competition Expatriates looking to stick with the curricula in 2017 of their home countries can choose from a range of private international schools for their children. There are also many English, German or French public and private pre- schools for children aged from three to six. The school year starts in September and ends in June, and school buses are usually available at private schools. There are many opportunities to study in a foreign language at universities too. GASTRO STORY The dining scene in Budapest is livelier Did you know that… than ever, practically you can find the EXPATS LIKE HUNGARY …the kindergarten and the elementary cuisines of every culture in the capital, Budapest is a city full of surprises and school division of the International School of from high-end Michelin-star restaurants wonders, with its lively centre, pretty parks, Debrecen will start to operate in September to no-frill eateries, small bistros and majestic river, tall church spires, and lavish 2019 and its upper school education starts must-try food trucks. spas. One of the most exciting cities in the running from September 2020? world, Budapest is full of secrets, hidden spots to explore, and old favourites to revisit. This is the city where being bored is not an option. Business Services Centres in Hungary 15

any companies have chosen to offshore, or BSCs IN HUNGARY rather nearshore, finance, accounting, human Mresources, customer service, and IT to Hungary because of the technological skills and business knowledge of the local workforce; the experiences of these firms are extraordinarily positive. The first regional service centres appeared in Hungary in the 1990s. To date, almost 110 companies have established BSC sites here, employing more than 46,000 people, mostly young professionals speaking multiple languages.

Bjorn Bergabo General Manager, GE Global Operations, Europe

“Europe is a strategic region for many GE businesses, including several business headquarters and when we decided to create a shared service organization for GE, we chose Hungary for establishing a multi- functional center in the region. GE’s long history of doing business in Hungary and significant industrial presence were key reasons to choose this location. The Global Operations Center, inaugurated in HUNGARIAN WINNERS February 2014, is one of the four world-class centres AT THE MOST SIGNIFICANT and the biggest in terms of number of people. REGIONAL SSC EVENT The Center in Budapest, Hungary provides multi- functional captive shared services to GE businesses Hungarian nominees have won in four categories at in over 30 countries throughout the region and also the Central Eastern European Shared Services and hosts teams with global responsibility. Outsourcing Awards gala event in Warsaw. The availability of skilled workforce, developed Avis Budget Group, British Telecom (BT ROC), infrastructure, central location and time-zone – all Harman's Székesfehérvár centre and EPAM Systems within the European Union were some of the key were awarded this year at the most important regional elements in favor of our choice.” event of the shared service sector. Business Services Centres in Hungary 17

Norbert Fogarasi BSCs IN HUNGARY General Manager Morgan Stanley Budapest lobbying activities to improve the legal and administrative environment “Morgan Stanley’s Budapest office has been an for the business services important technology, finance and business center for and outsourcing the Firm since its opening in 2006. Having opened our industries information network office in Hungary with just a few employees, today we promoting the benefits take pride in the diversity and quality of our workforce. and positive impact When Morgan Stanley moved to Hungary, above a forum for members to maintaining contacts with of outsourcing anything else the Firm was attracted by the highly skilled discuss business services foreign and international workforce and outstanding talent. The past 12 years sector and outsourcing business services have proven that we made a good decision bringing this related issues and outsourcing center to Budapest. Morgan Stanley’s Budapest office is (best practices, techniques, organizations closely linked to the company’s global network through market developments, technology and as a financial & risk analysis center etc.) collection complemented by other important business services. & distribution We are committed to building on our strong foundation of market and are proud of the important role the Budapest information office plays in Morgan Stanley’s global operations.”

THE HUNGARIAN SERVICE AND ompanies gradually build up and expand OUTSOURCING ASSOCIATION their operations with new, high value-added (HOA) Cactivities. The workforce comprises mainly of HOA was established by leading Hungarian and fresh graduates and speakers of foreign languages, multinational companies in 2005 to promote and and the sector has created hundreds of new jobs. support activities in the business services sector. Companies establish a BSC in Hungary to serve their Based on its strategy, HOA has started in 2018 its own subsidiaries or to provide outsourced services 3 workgroups to support the represented sectors with for other companies. Most Hungary-based regional dedicated task forces delegated by our members. BSCs are involved in finance, accounting, IT, customer The main focus is on: Industry Branding (to promote service, HR and other back-office activities. and improve the awareness regarding the industry In addition to these, early positive experiences at all levels of the national economy and education); have led to the emergence of so-called centres of Education (to develop vocational training and a 3-level excellence in recent years. Beside conducting simple university curriculum specialized in business services); transactions, these centres carry out more complex RPA/Automation (to provide Hungary with a activities with higher added value. Such functions leading role in the region regarding smart process include research and development, corporate finance, automation solutions). credit management and control. Business Services Centres in Hungary 19

BSCs IN HUNGARY

FLOWSERVE LUFTHANSA TECHNIK UBIQUITY EMIRATES ALDI WHO ACELITY COMPUTACentre CELERGO ESAB GE RAIFFEISEN GRUNDFOS ECOLAB SAPA TETRAPAK MERLIN IT SERVICES UNHCR KLM MORGAN STANLEY AVIS PHOTEL EXXON MOBIL ROCHE IBM UNISYS HP/DXC SYKES Technology

1997 2003 1991 1999 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1992 1998 2004

ACCENTURE IBM TRANSCOM ARCONIC CITIGROUP BT DIAGEO CONVERGYS BUDAPEST BANK ESENSE CELANESE TATA COGNIZANT FAO LEXMARK NOKIA VODAFONE BP AGCO HELLMANN AIG MISCO EATON DEALOGIC MYLAN RANDSTAD BLACKROCK DHL UNICEF SONY FRIESLANDCAMPINA TELENOR VIESSMANN

* Source: HIPA Database, February, 2018 SSC IN HUNGARY LABOUR

Business Services Centres in Hungary 21

LABOUR FORCE YOU CAN RELY ON GLOBALLY ACKNOWLEDGED HUMAN CAPITAL AT A COMPETITIVE COST

TERTIARY EDUCATION IN HUNGARY

ACADEMIC YEAR 2016/2017

Jane Ellis Managing Director Citi Service Center Budapest Site Head NO. OF INSTITUTIONS 65 "Citi was among the first international companies to establish a Service Center in Hungary in 2005 and today ours is one of the largest Service Center employers in the country. Budapest is one of the key strategic sites for Citi to grow, where currently around total number of students 2,000 employees are providing services in various areas of Technology, Operations, Finance, and Risk 287,018 & Control for Citi-entities in 54 countries in EMEA of which 205,560 and 97 countries globally. The functions include a are fulltime number of high value added jobs that require special skillsets, such as technology engineering, quantum mathematics, physics, other IT specialties, and the availability of highly skilled multilingual talent pool, Hungarian universities appear in the QS World in addition to the well-developed infrastructure and University Rankings® 2018 (which is one of competitive cost environment were among the key the most widely read university comparisons

6 Source: HCSO, QS https://www.topuniversities.com/university-rankings/world-university-rankings/2018 factors contributing to Citi’s decision to bring these listing the world’s top 959 universities). functions to Budapest." Business Services Centres in Hungary 23

LABOUR FORCE WORKING HOURS 40 hours is the standard working week. Work on Sundays and KEY CHARACTERISTICS public holidays is allowed. OF THE HUNGARIAN LABOUR CODE

Erik Slooten Managing Director, CEO IT Services Hungary Kft.

NOTICE PERIODS “Building and running a successful and sustainably growing 30 days OVERTIME enterprise is facilitated by a variety of factors from a firm is the average Maximum overtime is financial and legal environment through a growth-friendly tax notice period. system till the abundant supply of skilled work force. You’ll find 250 hours/year (based on all of those factors in Hungary, but you’ll find something on top collective contract, it can of those too. Ambition. The ambition of a young generation reach max. 300 hours). from Budapest to Debrecen and from Szeged to Pécs (locations Extra premiums of ITSH service centers) to know more and achieve more in their should be paid. professional lives. Ambition can be a driver in every industry, ANNUAL LEAVE but it is like oxygen for an industry that exists in permanent 20 days is the minimum innovation: the ICT industry. Innovation is fueled by ambition. requirement per year. By the ambition of people, young and experienced professionals. The employee is entitled to This mentality is ubiquitous in the Hungarian STEM sector and additional vacation days after – along with the unique geopolitical position of the country – reaching a particular age can serve as the foundation of Hungary’s leading role in the and/or having children. economy of Central Europe.” Business Services Centres in Hungary 25

LABOUR FORCE

OTHER AGRICUL- 2.7% TURE 4.1% 17.4% 6.4% BUSINESS egarding our talent pool, altogether 287,018 SERVICES & ADMINISTRATION students were enrolled in 65 institutions of Rhigher education in the 2016/2017 academic year. Business and Administration students are the 8.4% largest single group, numbering 49,810, but Engi- ARTS & neering and IT are also popular fields of education. HUMANITIES

STUDENTS 15.0% 9.8% IN TERTIARY ENGINEERING, MATHEMATICS, COMPUTING EDUCATION MANUFACTURING & NATURAL 2016 & CONSTRUCTION SCIENCES

Zoltan Szabo 10.6% BT (British Telecommunications) HEALTH 13.7% Regional Operational & WELFARE SOCIAL SCIENCES Centre Hungary 12.0% & LAW TEACHER “In the last 10 years, BT’s establishment in Hungary TRAINING has become one of the biggest and most complex & EDUCATION service centres in the country as well as among BT’s strategic headquarters. Our centre provides services in 20 distinct languages in the fields of partner management, finance, business administration for BT’s subsidiaries and high value add technology functions such as network and service design. The benefits of the Hungarian investment environment, great location and talented Hungarian workforce enabled us to have on-board more than 2000 colleagues in our offices nowadays.” Business Services Centres in Hungary 27

igh level language skills are indispensable for According to BSC employers Hungarian graduates LANGUAGES successful BSCs and BPOs. Young Hungarians are motivated, loyal, and talented individuals with Hunderstand that in order to get ahead in today’s considerable problem solving skills. Europe, linguistic skills are essential. In the academic year 2016/2017, over 50,000 fulltime students learnt 36 different foreign languages In the school year 2015/2016, 559,272 Hungarian in universities or colleges. The most common primary school students and 495,701 secondary school languages taught at universities are English, students were learning foreign languages, mostly German, French, Spanish, and Russian, but more rare English and German. Hungary has approximately or exotic languages such as Swedish, Norwegian, 200 bilingual primary and secondary educational Finnish, Dutch, Japanese, Chinese, Portuguese and institutions, where over 40,000 young Hungarians Arabic are also taught. All tertiary education degrees study mainly in English, German, French, Italian, include at least one foreign language certificate and Spanish, Russian and Chinese. computer skills.

200 BILINGUAL PRIMARY & SECONDARY EDUCATIONAL INSTITUTIONS

PART OF ERASMUS INTERNATIONAL STUDY PROGRAM 98% Languages spoken 83% 83% in the Hungarian BSCs

Since Hungary’s entry into the EU, there has been 60% a growing number of native language speakers 58% 58% at our universities, and an increasing number of 43% Hungarians study abroad. Since 1997, Hungary has 40% 38% 36% been part of Erasmus, the EU’s largest and most 34% 32% successful mobility program. Hungary is also an active participant in the Life Long Learning program, 17% 11% which helps to provide international internships for 6% students. Services Shared Hungarian Source: and Outsourcing Insights, 2017 Other Greek Dutch Italian Polish Arabic Nordic French English Chinese Russian German Spanish Portugese languages Hungarian Business Services Centres in Hungary 29

AN EXCELLENT LOCATION LOCATION FOR YOUR BUSINESS Direct flights SERVICES CENTRE from Budapest to the USA (New York, Chicago, ca. Philadelphia) YOU CAN 120 min MAKE THE MOST OF THE COUNTRY’S STRATEGIC LOCATION: EASY ACCESS TO BOTH WESTERN AND ca. EASTERN EUROPEAN 60 min COUNTRIES FROM THE HEART OF THE CONTINENT

Csaba Szende ungary is within two hours by air from Eaton EMEA BSC most major European capitals, and Managing Director Hprovides a key link between Europe and the rapidly expanding markets of the East. The 6 hour time difference from New York and “Since the opening of Eaton’s Business Service the 7 hour time difference from Tokyo enable Centre (BSC) in Budapest in 2015, the team BSCs to provide services to the East and West has grown to over 500 employees. This team simultaneously. now covers more than 20 different value add services such as customer technical support, HR and Finance, for the Europe, Middle East and Africa region. I believe that Hungary and in particular Budapest, has proved that it has the right talent and location for us to develop the scale needed for our business. I’m really proud of all of my entrepreneurial and diverse colleagues -6 HOURS +7 HOURS as together we are able to focus on making what matters work for all our internal and external customers and are building a BSC and function that is a best practice in our industry.” NEW YORK BUDAPEST TOKYO LOCATION LOCATION SSC IN HUNGARY I with BSCs. with popular are particularly locations close-to-city and lay-outs well effective as as properties, built newly in –currently solutions space Cost-conscious available. –7.3% 250,460sqm with (2018 Q1) total office of the Potential tenants have considerable opportunities, and US standards. accepted German towere internationally constructed buildings most Western as from its peers European greatly differ not does terms of quality, Budapest is relatively stock new. In office capital’s the cities, toConsequently, Western many compared European by 2019. Budapest in is anticipated supply of new sqm 560,000 further while years, four last the in built was space office sqm 295,334 sites; some tion Until very recently, the city was dotted with construc recently, very with Until dotted was city the CEE. in making Budapest the second largest office market capital, Hungarian the in space office of modern there is over 3.41 sqm million n terms of offices, FOR COMPETITIVE RENTAL COMPETITIVE FOR PRICE TOTAL SPACE OFFICE AVAILABLE (CA.) 250,460 250,460 sqm -

IN PRIME LOCATION PRIME IN FOR CATEGORY FOR „A" OFFICE BUILDING RENTAL PRICE (EUR / sqm /month) /sqm (EUR

60 40 50 20 30 10 0 Category A. (EUR 16/sqm/month) A. Category in lowest rental of the prices one has Hungary According to Cushman&Wakefield's database, 16.0 Business Services Centres in Hungary in Centres Services Business BUDAPEST

BUCHAREST

PRAGUE

WARSAW in the region. the in

FRANKFURT 31

LONDON

Source: Cushman&Wakefield Business Services Centres in Hungary 33

EXPLORE THE UNIVERSITY CITIES LOCATION YOU CAN COUNT ON THE s for the emerging Tier-2 cities, after two decades of experience, Hungary is QUALITY LABOUR Aconsidered a mature and effective location for BSCs. Whilst the majority are located in Budapest, FORCE ACROSS more and more companies are looking to larger towns with universities. Outside the capital, the most popular locations are: Debrecen, Miskolc, HUNGARY Nyíregyháza, Pécs, Szeged, Székesfehérvár.

MISKOLC Vodafone United Call Centres

Jamie CA Anderson NYÍREGYHÁZA Lego, Raiffeisen Head of Centre BP GBS Europe DEBRECEN British Telecom, IT Services, “BP has been present in Hungary for over 15 SZÉKESFEHÉRVÁR National Instruments, years and we opened our shared service centre IBM, Arconic, Harman, Sapa Flowserve, Transcosmos in Budapest in 2009. Since then, our centre has grown from strength to strength. It is a core part of BP’s business and employs more than 2,100 SZEGED PÉCS people now. Last year we expanded our operations IT Services, BP, ALDI, Convergys, to a second location – Szeged, where we are Provident Hellmann, IT Services, already employing around 300 people. Our people Unisys, Viessmann are key to our success – we aim to deliver service excellence and create value for BP’s entities in Europe and across the globe. Our global business service centres carry out a variety of business activities for BP, including: financial reporting and accounting, procurement, tax, human resources, customer services and supporting commodity trading. With the expansion Apart from abundant and skilled labour force, to Szeged, our operations in Hungary will become choosing a Tier-2 city could potentially mean more our largest service delivery location within BP." government incentives as well. Business Services Centres in Hungary 35

HIPA OUR SERVICES

HOW DO WE SUPPORT YOUR BSC PROJECT?

BEFORE AFTER YOU MAKE A DECISION YOU HAVE CHOSEN WE OFFER YOU…. HUNGARY

….one-stop-shop ….tailor-made incentive …. location search We are open to your We support your management offers and information & evaluation feedback and offer mediation further expansion consultancy services packages on the + between government and plans. to address your business environment, site visits. and business based business needs. labour market, tax on your inputs. regulations, etc.

PLEASE CONTACT US ….meetings with ….reference visits ….assistance with Address: 1055 Budapest, Honvéd utca 20. HR & real estate agencies, at companies that are your incentive Customer service: [email protected] law firms and already established application. Telephone: +36 1 872 6520 other consultants in Hungary. Web: www.hipa.hu based on your needs. Business Services Centres in Hungary 37

HIPA Regional grants are the most typical forms of incentives for greenfield / brownfield investments INCENTIVES OVERVIEW or reinvestments. The maximum amount of regional incentive is shown on the regional aid intensity map. The map above illustrates that regional aid GOVERNMENT INCENTIVES available for investment for a large enterprise may be up to 50% of the eligible costs of the investment, s a member of the European Union, Hungary’s depending on the region. For investments not regulations on incentive opportunities exceeding EUR 50 million, the maximum intensity Aare in accordance with the EU rules. One ratio can be increased by 10 percent for medium- of Hungary’s competitive advantages over other sized and by 20 percent for small enterprises. countries in the region is the Government’s strong commitment to increase the competitiveness of SMEs and large enterprises in Hungary. Alongside the regulatory tools that contribute CENTRAL HUNGARY, Budapest to the competitive business environment of 0 / 20 / 35% local companies, Hungary offers wide-ranging Miskolc incentives to facilitate foreign direct investments and reinvestments by local enterprises. Subsidies NORTHERN 35 % HUNGARY may be granted as regional aid or specific aid, such as R&D subsidies. 25 % Győr Debrecen CENTRAL NORTHERN TRANSDANUBIA GREAT PLAIN Székesfehérvár 50 % WESTERN TRANS- DANUBIA SOUTHERN THESE INCENTIVES INCLUDE, BUT ARE NOT LIMITED TO SOUTHERN GREAT PLAIN TRANSDANUBIA Szeged

Pécs

CASH SUBSIDIES TAX INCENTIVES LOW-INTEREST for investments, reduction of LOANS training, corporate tax, job creation social tax, or for The maximum available aid intensity decreases if and R&D encouraging R&D the investment is a large investment (exceeding activities... EUR 50 million): 50% of the maximum aid intensity determined in the regional aid map is available for investment between EUR 50 and EUR 100 million, with 34% of the maximum aid intensity for investment over EUR 100 million. VIP CASH GRANT MAY BE AVAILABLE For information on up-to-date and individual 50 IN CASE OF CREATING 50 NEW JOBS incentive packages please contact HIPA directly.