Budapest Business Journal 2921

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

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BUSINESS JOURNAL BUDAPEST

VOL. 29. NUMBER 21

NOVEMBER 19 – DECEMBER 2, 2021

SPECIAL REPORT

Business Services Sector

NEWS

Slowing Expansion Moderates Growth Forecasts The bigger-than-expected slowdown in Hungary’s economic growth in the third quarter has led analysts to lower their annual forecasts; however, the expansion is still dynamic, and the economy had already returned to its pre-crisis performance in the second quarter.  3 SPECIAL REPORT

Spreading the SSC net to Secondary Cities Shared services centers and Business Process Outsourcing have become one of the major industries in Hungary and one of the main drivers of success on both the local and regional office markets.  21 SOCIALITE

Complementary ‘K’ Grapes On a recent tour of Szekszárd, it was evident how important the black grape varieties Kadarka and Kékfrankos are to the local wine culture, Robert Smyth writes.  26

Penny Marks its Silver Jubilee

INE BUS

SS

Penny Hungary CEO Florian Naegele reflects on the German retail chain’s 25th anniversary in the country, its rebranding exercise, its expanding Hungarian range of goods and its plans for the future.  11

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Budapest Business Journal | November 19 – December 2, 2021

BBJ

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Balázs Barabás, Zsófia Czifra,

40 SLEEPS TILL CHRISTMAS

Kester Eddy, Bence Gaál, David Holzer, Levente HörömpöliTóth, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu)

I don’t want to worry you, but we passed a landmark on Monday of this week: 40 sleeps till Christmas, as my children would put it. Next week is Thanksgiving.

If you are anything like me, that may have crept up on you unawares. We are buried deep in a succession of deadlines, both for our own publications and contract printing work. Every now and then, you come up for air after a morning’s hard graft at the wordsmith forge only to find night has fallen and the day passed.

Fortunately, we can help prepare the way for you. We have a preview of expectations for Black Friday (officially November 26, but it does seem to be something of a moveable feast from store to store). The issue after this will include our Christmas Shopping Special Report. So there you are: Christmas sorted. If only it were that easy.

In the meantime, the commercial world continues apace. The Q3 GDP data, while far from bad, proved something of a disappointment after the stunning figures from Q2. Equally disappointing has been inflation, which has stubbornly refused to go away.

Indeed, at 6.6% year on year in October, it was only higher in Estonia (6.8%) and Lithuania (8.2%) in the EU, according to the statistical agency Eurostat.

That led the Monetary Council of the National Bank of Hungary, which met on Tuesday of this week, to admit: “A persistent rise in external inflationary pressures and increasing second-round inflation risks have necessitated more extensive and longer-

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lasting monetary policy tightening.” Both those as yet undetailed Q3 figures and the MNB’s 30 basis points hike to the base rate, taking it to 2.1%, are covered in our regular Macroscope feature on page three.

Our Special Report this week looks at one of the undoubted success stories of the Hungarian economy in recent years, the development of the shared services sector, or business services centers, as government agencies and the industry itself prefers to call them.

We have interviews with leading players and industry surveys to present to you, and there seems little doubt the number one concern for the market is finding (and retaining) skilled staff.

Alongside the now-familiar calls for more standardization of processes and greater digitization, there is an ever-greater emphasis on staff training.

As one center boss put it to me, employers must equip their colleagues with the skills to do jobs that did not exist a few years ago to make sure existing talents can be redeployed as the fourth industrial revolution gains pace. That, and ensuring the education sector is up to scratch and that children of all backgrounds are exposed to STEM (science, technology, engineering, and math) studies, design thinking, and problem-solving aren’t just nice things to have: They are essential.

Robin Marshall Editor-in-chief

Why Support the BBJ? • Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

• Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities.

Now, more than ever, factual business reporting is vital to good decision-making.

For more information visit budapestbusinessjournal.com

Photo by MTI / Noémi Bruzák

• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value.

Photo by Fortepan / Jenő Farkas

• Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.

THEN & NOW

In the color photo, members of the Hungarian State Folk Ensemble play at the Student Gypsy Music Qualifier event, which awards young musicians with a certificate, on November 15, 2021. In the black and white image from the Fortepan public archive, gypsy musician Jenő Farkas and his band play at the Savaria Hotel coffee shop in 1928.

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Budapest Business Journal | November 19 – December 2, 2021

News///macroscope

Slowing Expansion Moderates Growth Forecasts

ZSÓFIA CZIFRA

Hungary’s economy grew by an annual 6.1% in the third quarter of this year, slowing from a record high of 17.8% in the second quarter, the latest data published by the Central Statistical Office (KSH) shows. Adjusted for calendar-year and seasonal effects, GDP in the third quarter increased at the same rate. Quarter-on-quarter, GDP edged up 0.7%, while in the first nine months of the year, growth was an annual 7.1%.

The 0.7% month-on-month increase was below analysts’ expectations. Although it is still far from a bad performance, expectations had risen a lot after such a long series of positive surprises. On a yearly basis, the volume of GDP was up by 6.1% in Q3. This also means that Hungary is well above the pre-crisis level of real GDP: up by 1.5% compared to the third quarter of 2019, ING’s senior economist Péter Virovácz said.

Tightening Accelerates The Monetary Council of the National Bank of Hungary raised the base rate by 30 basis points to 2.1% at its latest meeting on November 16. It also raised both sides of the interest rate corridor by 30 basis points.

Following 15 basis point hikes in the previous two months, the policymakers accelerated the tightening cycle after inflation reached 6.5% in October.

Inflation in EU Member States (October 2021)

Although not much is known about the details as yet, as the second reading of the data will be released only on December 1, Virovácz said ING expects services to be the main driver, as COVID-related restrictions were entirely removed by the third quarter.

“However, it seems that value-added growth in industry and construction probably performed below expectations.

The reason behind this is obvious: equipment, material, and spare parts shortages were affecting output throughout the quarter,” he said.

“This could put a stronger-than-expected brake on export activity. Meanwhile, further improvement in domestic demand pushed import activity higher. As a net effect, Hungary’s external balances are worsening, negatively impacting GDP growth,” Virovácz explained.

Warning Note

Based on this, ING Bank has downgraded its economic outlook for this year and the “A persistent rise in external inflationary pressures and increasing second-round inflation risks have necessitated more extensive and longer-lasting monetary policy tightening,” the council said in a statement released after the meeting. The policymakers again signaled a continuation of monthly hikes while noting that the central bank’s next quarterly Inflation Report, due out in December, “will be decisive in determining the further extent of interest rate hikes.”

Lithuania

Estonia

Hungary

Romania

Poland

Latvia

Spain

Belgium

Source:

next. According to Virovácz, the quarteron-quarter performance and possible developments in Q4 are a warning to be more cautious on the GDP outlook.

“Given the shutdowns in industry and their negative impact on export activity, and considering the fourth wave of COVID-19, the fourth quarter economic performance could be somewhat weaker than we previously forecast,” he warned.

“At the same time, we also know that the government has mobilized significant fiscal resources for the last quarter of this year and the first quarter of next to boost GDP growth.

This might partially offset the negative effects, although this stimulus to aggregate demand may also have a significant impact on import growth.

In all, we are downgrading our GDP forecast to 7% year-on-year and 5% year-on-year in 2021 and 2022, respectively,” Virovácz added.

Gábor Regős of the pro-government Századvég Economic Research said the slowdown outpaced expectations, and the weakening of industry likely had a significant role to play accordingly.

“Fourth-quarter expansion could be limited by the impact of the fourth wave of the virus, a shortage of raw materials that halts industrial production, and supply difficulties,” he said in a note.

Unpleasant Surprise

Luxemburg

Bulgaria

Ireland

Czech Rep.

Germany

Slovakia

Cyprus

EU27 average

euro zone

Croatia

Austria

Netherlands

Slovenia

Sweden

Italy

France

Denmark

Finland

Greece

Portugal

12-month change in consumer prices

Malta

The bigger-thanexpected slowdown in Hungary’s economic growth in the third quarter has led analysts to lower their annual forecasts; however, the expansion is still dynamic, and the economy had already returned to its precrisis performance in the second quarter.

“A high inflation rate could also threaten growth through declining demand.

In the light of the fresh data, this year’s expansion could be lower than previously expected, at around 7%, which is still strong, exceeding expectations in the spring,” Regős added.

Numbers to Watch in the Coming Weeks The KSH will publish third-quarter investment data on November 26. October labor market figures will be out on November 29. More detailed data on the third-quarter GDP growth will be released on December 1.

The unpleasant surprise of the Q3 performance was partly due to the fact that the previous three quarters have brought much better results than experts had expected. That is why the projections for average annual GDP growth in 2021 have risen sharply so far: the median forecast was still 5% in the first half of the year, compared to 7.5% before the release of the latest GDP data.

Hungary’s economy had already equaled its pre-crisis performance in the second quarter of this year, and it continued to grow from there, even if with much smaller-than-expected momentum.

Minister of Finance Mihály Varga maintains his projection for this year’s growth. With a record growth of almost 18% in Q2, the economy has surpassed pre-pandemic levels, he said, noting that Hungary’s growth rate was above the EU average.

“All this shows that a supportive budgetary policy is now bearing fruit, and the government’s measures are contributing to the economy’s relaunch while mitigating negative external impacts,” he said. Varga added that the government was still expecting 6.8% growth for the full year.

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Budapest Business Journal | November 19 – December 2, 2021

PwC: What Employees Expect From Their Hungarian Workplace Company culture, work organization, and upskilling are the top ingredients for building futureproof organizations, according to the findings of PwC Hungary’s Employee Preference Survey 2021. Base pay remains the leading motivation for all generations, but while the young appreciate control over their time, senior colleagues find the leadership style of their direct superior exceptionally important.

LEVENTE HÖRÖMPÖLI-TÓTH

PwC Hungary conducted its annual Employee Preference Survey for the fifth time with the same purpose as always: to help organizations adjust their HR policies, processes, and practices to the new realities, and to recruit and retain talent better.

Evidence-based results of such polls can positively affect brand building as well. Data hints that a strong employer brand brings two times lower costs per hire and almost one-third less employee turnover.

Responses sometimes reveal how differently certain things are perceived at the workplace. It is very telling, for instance, that when it comes to judging whether companies successfully address employee mental health, there’s a massive gap between perceptions. Whereas 84% of CFOs believe it’s a mission completed, just 31% of employees share the same view, an alarming sign for HR departments.

PwC Hungary’s online survey shed light on many more aspects of employment. It sought to understand what motivates people, what they expect from their employers, what drives employer brands and what brand impressions exist.

PwC’s Most Attractive Employer 2021 Award industry category winners Although PwC’s survey targets all generations, the Most Attractive Employer Award is still given by the votes of respondents aged between 16-28, based on openended survey responses. PwC says the awards were based on responses received during a campaign between September 1-October 31, 2020. Over 10,000 such responses were recorded.

PwC’s Most Attractive Employer 2021 Overall Winner: OTP Bank Automotive manufacturers 1. Audi Hungaria 2. Mercedes-Benz 3. BMW

With more than 29,400 new respondents this year, 102,000 preference profiles were collected from all over Hungary from different age groups, from age 16 upwards.

As many as 55 items were measured in the survey.

Representatives of the 19-28 age group gave similar answers as in previous years regarding their top three priorities. They still value base pay, flexible work schedule, and work schedule predictability the most.

Good colleagues and challenging and interesting work made it to the top five, with leadership ranked six.

Experienced employees consider the personality of their immediate superiors even more important and ranked this factor third.

“Employees are aware that automation and the changing nature of work have brought about an environment in which developing their skills is indispensable to staying competitive.

The majority of employees are open to acquiring new competencies or even undergoing complete retraining. Therefore, the question regarding the responsibility for upskilling urgently needs to be answered.”

This shows that the pandemic substantially reshaped young people’s attitudes toward workplaces. The new situation clearly strengthened the role of

corporate culture, which is critical not only to a better employee experience but also to a successful and appealing employer branding.

The survey data indicates that upskilling is something that employers are expected to handle, including improving soft skills and business training and facilitating further academic education.

Zoltán Örkényi, manager of People & Organization at PwC Hungary’s HR consulting services, said, “Employees are aware that automation and the changing nature of work have brought about an environment in which developing their skills is indispensable to staying competitive. The majority of employees are open to acquiring new competencies or even undergoing complete retraining.

Therefore, the question regarding the responsibility for upskilling urgently needs to be answered.”

Interestingly, diversity and inclusion are at the bottom of the list, whilst the idea of a sabbatical witnessed the biggest fall of all: once among the leading factors, now it is barely given any significance by younger generations.

A thought-provoking conclusion of this part of the survey is that aspects connected with responsibility seem to be losing attractiveness. Younger colleagues are fully satisfied as long as they get their money, keep control over working hours, and are compensated for overtime. The rest bears less significance.

The option of working from home landed among the top 10 job preferences for the first time this year. People over 28 have the greatest need for this form of work. Young employees think it’s still important to spend at least some time in the office for learning and building relationships; yet, they also expect working from home to be an option.

Whereas 72% of employees would work remotely at least two days a week, 68% of employers would like to see their employees at least three times a week.

Róbert Bencze, director of People & Organization, warned that organizations must adapt to the new expectations.

Energy and public utilities 1. MOL Magyarország 2. MÁV 3. MVM Csoport FMCG 1. Coca Cola 2. Procter & Gamble 3. Hell Energy Manufacturing 1. Bosch Csoport 2. LEGO 3. National Instruments Pharma 1. Richter Gedeon 2. Egis 3. TEVA Finance 1. OTP Bank 2. Morgan Stanley 3. K&H Retail 1. Aldi Magyarország 2. IKEA 3. Lidl Magyarország SSC/BSC 1. British Petroleum (BP) 2. GE 3. Deutsche Telekom IT Solutions Technology 1. Microsoft Magyarország 2. Samsung 3. EPAM Telecommunications and media 1. Magyar Telekom 2. RTL Magyarország 3. Vodafone

“They must rethink the proportion of home days to office days, or the concept of flexibility within one working day, and they must understand that their employees require different arrangements and methods for working and relationship building,” he said.

“Expectations towards management have also grown: employees expect higher transparency, as well as open, honest, and credible communication,” he added.

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Budapest Business Journal | November 19 – December 2, 2021

E-car Sharing Needs Extra Boost to Become a Viable Solution With the rate of urbanization growing, private vehicle ownership rising, and mobility needs and habits evolving in complexity, Budapest and its residents need a breather from traffic congestion.

Carsharing may be a viable solution. The Budapest Business Journal discusses the benefits of carsharing, which is adding electric vehicles to the mixture.

CHRISTIAN KESZTHELYI

Urban mobility is complicated and variable; so are the needs of city dwellers. On any given day, urban residents may need to jump between different transportation modes. They may arrive to work on foot in the morning, take the underground for a nearby meeting in the afternoon, and need to drive to an evening event.

Carsharing companies aim to fit into such busy schedules, eliminating the inconvenience of owning a car, finding a parking place only so it will remain stationary for 96% of its lifetime. Almost everyone needs a car at some point, but not at all times or at all costs “It is irresponsible to buy a car and maintain it if it spends most of its time unused. The occupancy of one’s own car is on average around 3-4%, while in the remaining 96%, the car is unused.

In contrast, a community car can substitute up to 5-10 privately-owned cars in traffic,” Boglárka Ádám, the Chief Executive Officer of GreenGo, tells the Budapest Business Journal.

“Not only is car sharing important in making urban transport more liveable, but also the fact that Budapest residents use the various forms of transport available flexibly from carsharing to BKK [the operator of the capital’s public transport] to cycling instead of owning a car. It is friendlier on their own wallets as well,” Ádám adds.

GreenGo, which has been in the market for five years and has 320 autos,

Automotive Matters

A monthly look at automotive issues in Hungary and the region

Boglárka Ádám is not the only carsharing service in Budapest, but it is the only one to operate an entirely electric fleet.

Wheels Spinning

Car sharing aims to alleviate the traffic burden of a big city. The same set of vehicles run the roads with different riders. Essentially, the wheels keep spinning while people mind their non-vehicle-related business. It also aims to reduce gas emissions, which is amplified in the case of electric vehicles, solving environmental and infrastructure issues simultaneously.

Nevertheless, when it comes to spreading the service, there are challenges if EVs are to take center stage.

Firstly, the charging infrastructure, and secondly, whether the chargers are publicly available or privately operated.

“In the larger cities in Hungary, especially in Budapest, there is a continuously increasing network of charging stations which enables the convenient use of electric cars across the city,” Bence Buday, CEO of Share Now Magyarország, tells the BBJ. “However, once the user wants to leave downtown and take a longer countrywide trip with an electric vehicle, extensive preliminary scheduling and redundancy planning is required as currently in Hungary, the countrywide charging station footprint still has significant blind spots, and the service availability of those also has issues from time-to-time,” he admits.

Accessibility to the charging infrastructure in Hungary is another crucial aspect for the private EV user.

While multiple providers offer charging services through their networks, the majority of charging stations are privately operated at offices, shopping malls, and industrial parks; they are not, therefore, available to the private user.

“Overall, with frequent heavy use of electric cars (i.e., carsharing), we are far from the stage when an operator

or service provider could rely on the publicly available charging networks.

This is the reason why each carsharing company in Budapest, including Share Now, has its own (privately managed) charging stations across the city,” Buday adds.

He believes that this inadequate charging infrastructure is a significant barrier to the widespread use of EVs. Hence, the company is mindful of the proportion of electric vehicles it adds to its 390-strong fleet. That said, Share Now’s charging infrastructure has recently improved considerably through adding four fast chargers and one supercharger via a cooperation with Alte-Go, the e-mobility department of alternative energy company Alteo Group.

The Mission

News | 5

GreenGo is also adopting a mindful approach in its step-by-step expansion while adding an important mission to its mix: To make electric driving and carsharing a real alternative in the minds of the capital’s commuters. In that goal, there is room for growth.

“There’s need for the regulatory environment to move from scratch and for a government decree to develop

detailed rules for community carsharing under the authority of the Passenger Transport Act and to start talking about sectoral rights such as securing the use of the bus lane for carsharing, thus for e-carsharing cars,” Ádám says. She adds that having dedicated carsharing parking spaces in the city center would help users plan better.

Share Now’s Buday agrees on this point. “The next development stage could be the development of carsharing parking and service stations across Budapest. These could be well-defined areas next to the most important transportation hubs where carsharing cars could be parked and be constantly available for users.

With such carsharing ‘islands,’ people could easily switch between transportation modes. Such ‘islands’ could also be well-equipped with the necessary charging infrastructure in the right number so that constant charging service availability would not be a problem anymore,” Buday says.

While that might be an attractive sounding tomorrow, GreenGo’s Ádám is not so optimistic today. “Unfortunately, current trends are going against this, with district parking systems just trying to crowd out carsharing companies: forcing community cars to be crowded out of parking spaces for downtown residents would not only be unfair but would also hinder environmentally friendly urban mobility,” she says.

Buday agrees that this is a longerterm project. “Looking at the current situation and the recent growth rate of the charging station footprint within Budapest and across Hungary, it will definitely take a few more years until the convenience, accessibility, and reliability of EV charging can reach similar levels as to ICE [internal combustion engine] car usage,” he admits.

Electric or not, carsharing would seem to make sense. The benefits are ample.

For micro-journeys, riding in a shared car will help drivers save on their expenses, and cut the city some environmental and traffic slack, so long it is supported by a convenient infrastructure and varied mobility options.

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Budapest Business Journal | November 19 – December 2, 2021

101 Hospitals Join Vaccination Action Week Coronavirus ///roundup The government is organizing a vaccination action plan for next week, November 22-28, according to the state’s official COVID-19 website koronavirus.gov. hu, to curb the increasing number of coronavirus infections and improve the overall vaccination rate.

NICHOLAS PONGRATZ

During this period, 101 hospitals all over the country will be equipped with extra vaccination capacity, especially those in Budapest. Those who have yet to be vaccinated are encouraged to come without an appointment between 7 a.m. and 7 p.m. to receive their first jabs.

Speaking at a weekly press briefing on

November

11,

Gergely Gulyás, the head of the Prime Minister’s Office, also urged Hungarians already vaccinated

When COVID vaccines first became available, MOL launched an information campaign with the help of pandemic experts and organized workplace inoculations, giving staff who got their jabs a day off. Stateowned railway and bus group MÁV-Volán has also offered extra leisure days to employees who receive their jabs by November 30.

As these measures hopefully boost the stagnating vaccination campaign, deliveries of COVID-19 vaccines continue to pour into the country.

The latest delivery of more than

240,000 doses

of the COVID vaccine developed by Syringes of the German-American Pfizer-BioNTech Pfizer and BioNTech on November 16 Comirnaty coronavirus vaccine prepared for put the total deliveries of the Comirnaty use at the Pál Réthy Hospital in Békéscsaba on vaccine to Hungary at more than November 16, 2021. Photo by Tibor Rosta / MTI. 10.6 million doses.

The deliveries mean Hungary has maintained enough surplus against the coronavirus to get their to continue making vaccination any more people [to get inoculated]. booster jabs following his recent bout donations to countries more in Now we need the persuasion of with the infection. need across the globe. workplace communities.”

Gulyás said the effectiveness of “We have enough vaccine for the the protection COVID vaccines offer first and second jabs and the booster Compulsory “declines radically” after six months, so shot, and we have security reserves, Vaccinations those vaccinated should take up the too, so Hungary can help those Hungarian oil and gas company booster shot during the vaccination countries that are in a difficult MOL is requiring its staff to certify action week. situation,” Minister of Foreign Affairs

by January 31 that they have Meanwhile, Prime Minister Viktor and Trade Péter Szijjártó said upon been inoculated, have coronavirus Orbán, speaking in his weekly donating 800,000 doses of COVID antibodies after recovering from interview on Kossuth Rádió on vaccine to Ghana and 300,000 to the illness, or have a doctor’s November 5, said a government Rwanda on November 8. recommendation against getting the decree allowing employers to require Szijjártó also presented 200,000 doses jab for health reasons. Although MOL workers to be vaccinated against of the Chinese Sinopharm vaccine Hungary managing director Péter the coronavirus could boost the to Turkic Council Secretary General Ratatics noted that the inoculation inoculation rate in Hungary as people Baghdad Aeyev as part of a donation rate among his employees stands listen to “down-to-earth reasoning.” by members of the Turkic Council at more than 80%, he said the aim He added, “The government to be shipped to African countries is to “significantly raise” the ratio. hasn’t and won’t be able to convince on November 11.

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Budapest Business Journal | November 19 – December 2, 2021

News | 7

Investment Volumes Down on Previous Year Colliers has traced relatively favorable CEE regional investment figures of EUR 7.3 billion for the first three quarters of the year. Poland dominated investment activity with slightly more than EUR 4 bln for the period, followed by the Czech Republic with EUR 1.2 bln and Hungary with EUR with 0.72 million.

CEE Office Yields 4.25

Poland

4.70

Hungary

5.25 Source: Colliers

“Hungary still offers comparative value compared to its peer markets, and its strong occupational fundamentals are apparently being recognized,” Cushman & Wakefield notes.

“Competing with them are some of the larger domestic funds who had been quiet for the previous two years but seem to be awakening, along with newer players who had come to dominate the market over this time.”

According to Colliers, Hungarian capital remained active with both domestic acquisitions and across the region, including Romania and Poland,

GARY J. MORRELL

Colliers treats the region as including Poland, the Czech Republic, Hungary, Romania, Slovakia, and Bulgaria. “Despite the ongoing disruption of the pandemic, investment volumes for the three quarters of 2021, totaling EUR 7.3 bln, are down just 10% year-on-year and circa 20% lower than the same period of 2019,” said the real estate professional services firm.

Cushman & Wakefield, meanwhile, puts CEE investment for the same period at EUR 6.7 bln, almost 13% lower than for the same period of 2020. Its definition of the region matches that of Colliers, except that it does not include Bulgaria.

“Transactions have taken longer to close, so we expect volumes to correct in the fourth quarter to come,” comments Jeff Alson, CEE partner at Cushman

Czech

BudaPart GATE by Property Market. & Wakefield. “The lag in volume is a reflection of slower processes and not of a shortage of capital, so we expect volumes to continue to gain ground in 2022.

Industrial transactions remain dominant with offices now recovering,” he adds.

Colliers estimates that the regional office sector

achieved

36%

of volume. Logistics and residential are continuing to record increasingly substantial volumes, held back by the lack of available products to buy.

Industrial recorded 31% of the total volume, retail 16%, and residential 11%.

Regarding country share, Poland recorded 57% of the total volume,

the Czech Republic 17%, and Hungary came third with 8%.

Record Yields

“The Hungarian market is ending the year strongly, with bids recently achieved at record yields for assets in both the office and logistics sector. Last year’s total investment volumes, which in themselves were not as constrained as on other markets, will probably be exceeded soon. Indeed, office transactions, the most active market sector, have already surpassed 2020 levels,” says Cushman & Wakefield.

Of note is the increased interest in Hungary from international institutional funds, some of whom have not been active in the market for more than a decade.

representing

7%

of the EUR 7.3 bln CEE activity.

In the latest deal in Hungary, the Austrian S-Immo has purchased the 20,000 sqm, LEED “Gold” accredited BudaPart office complex in south Buda from Market Asset Management, a subsidiary of Market Építő. The complex has an annual income of EUR 4 mln.

Colliers estimates that CEE yearend volumes will be similar to 2020 at between EUR 10 bln and EUR 11 bln.

2021 Investment Estimates Poland

EUR 6 bln

Czech

EUR 1.75 bln

Hungary

EUR 1.2 bln Source: Colliers

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Top Real Estate Executives in Hungary 2021 The Top Real Estate Executives magazine is a special annual publication of the Budapest Business Journal. The magazine presents the profiles of the most influential real estate executives in the Hungarian economy. It puts a human face on the local development market, focusing on leading personalities’ profiles and outstanding achievements.

Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at www.budapestbusinessjournal.com

• Provides an essential overview of how Hungary’s real estate system operates.

• Get an insight into the most significant developments in 2020, and a look at what is in store for 2021.

• Get to know the personalities behind the real estate business.

• Read personal accounts from the country’s top real estate executives detailing how they got into the business and some of their proudest achievements, among other things.

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Budapest Business Journal | November 19 – December 2, 2021

Do you know someone on the move? /// Send information to news@bbj.hu

Roche Szolgáltató Names P&C Business Partner Lead

customer-focused, the company told the Budapest Business Journal.

“Roche is definitely at the forefront of a comprehensive transformation of the HR function, and I am very happy to be part of this forward-looking process,” said Zács.

He added that colleagues would be given the time and resources to focus on the tasks with the most significant added value, making a real, tangible difference to their partners, and ultimately to patients.

“The challenge ahead is to continue to be a key strategic partner in Roche’s global organization,” said the new HR head, whose responsibilities include supporting the implementation of the transformation and aligning the Budapest office with the international P&C transformation strategy.

Kristóf Zács Roche Szolgáltató has appointed Kristóf Zács People & Culture (P&C) business partner lead at its Budapest service center. Zács previously led change management in establishing regional business service centers in Africa and Asia before becoming head of HR at one of the world’s leading premium beverage manufacturers wand distributors.

“Kristóf joins us at the perfect time: the comprehensive overhaul of Roche’s HR structure has seen our center take on even more complex, higher valueadded responsibilities,” said Martin Kikstein, managing director of the company’s Budapest office, referring to the 150 new complex HR positions added this year.

Kikstein added that the change was partly due to Roche’s continuing move away from the typical shared service center structure towards a global business services type of operation.

As part of the changes, the Swiss pharmaceutical group’s HR organization is being transformed into a global P&C department, making the group’s operations more agile, innovative, and

PwC Hungary Appoints HR leader Anikó Hinterstein has taken over as HR leader at PwC Hungary. She holds a degree in mathematics and business administration and is a certified expert

From left: Zsuzsanna Károlyi, head of legal; Péter Kerékgyártó, country chair, Shell Retail Ukraine; Andrea Istenesné Solti, country chair, Shell Hungary; Csaba Fekete, finance manager, mobility CEE/Russia; Sarolta Vecsey, mobility manager HU/SI; Gyula Marik, supply product manager CEE. She worked as a business partner, an employer branding consultant at Deutsche Telekom’s global HR organization, and as head of talent management, recruitment, and employer branding in the last four years.

According to a press release sent to the Budapest Business Journal, the new HR leader believes that a happier work environment is key to long-term business success, innovation, and trendsetting.

Tímea Rákos, who has held the position of head of HR for the past two years, will transition to a support role as a consultant in organizational development and L&D projects.

Shell Hungary announces formation of leadership team Anikó Hinterstein in labor law. Before joining PwC, Hinterstein worked at Magyar Telekom, where she held various HR positions over the past 15 years.

Shell Hungary has announced the formation of a new leadership team.

The appointment of the new directors and managers is linked to a recent organizational transformation to support the company’s “Powering Progress” energy transition strategy.

Shell says that it aims to become a net-zero emissions energy company by 2050 or sooner.

“In Hungary, we have already taken several important steps towards sustainability in recent years. Last year, we opened our own branded Shell Recharge electric charging points along with high-capacity chargers in partnership with IONITY. This year we launched our carbon neutralization service that allows our customers to offset their CO2 emissions from fuel purchases at Shell sites in Hungary,” says Andrea Istenesné Solti, country chair of Shell Hungary.

“We are committed to reducing carbon emissions from our own operations; for example, our retail sites are powered by electricity from renewable sources and we’ve installed more energy-efficient equipment.

I am convinced, that our renewed organization and leadership will help us to grow as a successful company in Hungary, meeting the challenges of the energy transition and providing more and cleaner energy solutions to our customers,” she adds.

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As such, it is an essential aide to getting to know the personalities behind the business.

Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at www.budapestbusinessjournal.com

• Provides an essential overview of Hungary’s economy.

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Business

German Businesses Optimistic, Albeit With Some Concerns Members of the German-Hungarian Chamber for Industry and Commerce (DUIHK) are, by and large, over the economic shock caused by COVID-19, and their willingness to hire and invest is as high as three years ago. However, this favorable business climate is overshadowed by concerns about the labor shortage, increasing costs, and the disruption of supply chains.

affecting production plants in particular.

However, German companies are not considering relocating operations either in Hungary or globally. Nevertheless, new or additional suppliers are very much in need. Nearly half of the respondents say they intend to search for such partners; that figure was as high

as

70%

in the global survey.

In this regard, the position of the entire CEE is gaining new significance. More than one-third of businesses are looking for new suppliers in the region to secure fresh raw materials and energy sources.

Minister of Finance Mihály Varga, who also spoke at the presentation of the results, reminded his audience that the mistakes made in crisis management in the 2008 recession must not be repeated.

“Back then, fiscal rigor was restored way too fast, which held the pace of recovery back and resulted in further setbacks.

What the government is doing right now is not pre-election spending but rather injecting incentives into the economy as required to restart it properly,” he said.

Speed of Recovery

The Hungarian investment rate amounts to 27.5% of GDP and is the highest in the EU. That should help the speed of Mihály Varga. Photo by DUIHK / Pelsöczy. recovery, he added.

The overall outlook is promising, not just in Hungary but across the whole of the DUIKH, which polled 100 member German-owned undertakings present region. Growth should be 6.8% this firms locally and 3,200 globally, clearly on the Hungarian market. year, according to the latest government shows that the majority of companies, “The volume of Hungarian-German estimates, falling back to 5% in 2022 mainly in industry, have returned to foreign trade is back where it was in as the economy stabilizes. Moreover, pre-COVID levels of production. As a 2019, and so are Hungarian exports it is anticipated that most commodity result, optimism has again hit the record as a whole. In fact, Hungarian imports shortages should be gone next year. heights of three years ago. have already surpassed levels measured “Can you actually call something a As many as 43% of respondents say prior to the pandemic,” said András crisis where wages go up by they plan to hire, and 44% of them are Sávos, president of the chamber, at the ready to increase investment spending. presentation of the 2021 survey. This Industrial plants, and more specifically favorable business climate trumps the businesses with export interests, lead global average by a considerable margin. a year, and employment gets back to its previous level within a year?” the the pack in this regard. The proportion Some usual suspects might spoil the minister asked. of those who find their own business fun, though. Labor shortages stopped As far as risks are concerned, the situation positive is even bigger, with being an issue only temporarily, and government agrees with the business now it’s back with a vengeance. Nearly world that they need addressing.

40% of respondents complained about LEVENTE HÖRÖMPÖLI-TÓTH claiming “To keep energy prices under control, an intensifying labor shortage in the so. What is more, every second we’ve got long-term supply contracts past year, and just 13% experienced the The mood among German-owned company expects it to improve within in place to ensure energy provision. opposite phenomenon. businesses in Hungary is distinctly the next 12 months.

The labor shortage must be tackled in “This might become a factor that can upbeat, despite the worrying news Germany remains Hungary’s most deteriorate growth perspectives. Therefore, multiple ways: exploiting reserves in the of an intensifying fourth wave of the important trade partner and foreign system, adopting new technologies, and DUIHK will continue to play an active pandemic. The annual sentiment survey investor, with more than 3,000 intensifying vocational training are all role in further modernizing training in Hungary, most of all in vocational training, part of it. The government wishes to be a partner in solving this problem,” Varga but also in strengthening dual higher said. He added that German businesses education,” Sávos added. had validated the crisis management of Potential Bottleneck the administration.

The lack of skilled labor is one of the One other significant risk is inflation. drivers behind soaring labor costs, another As Dan Bucsa, chief CEE economist at potential growth bottleneck. On average, UniCredit Bank, said at the presentation, an annual wage increase of almost 8% is second-round effects from supply shocks expected, up from 6% in the spring. and a more protracted impact from supply It is worth noting that businesses have chain bottlenecks and food prices are been compensated by the government, likely to keep inflation at record heights. though, thanks to tax cuts under a fiveAccordingly, a 7-8% inflation rate is year wage deal struck back in 2016. projected by UniCredit for 2022 should According to Sávos, attention should energy prices and supply chains not be paid to the impact of wage costs on normalize. This is bound to force the competitiveness when working out the hand of the National Bank of Hungary next such long-term agreement. to increase the base interest rate further; The disruption of global supply chains that, in UniCredit’s estimate, could hit András Sávos. Photo by DUIHK / Pelsöczy. is also causing problems in Hungary, the 3% mark next year.

8-10%

57%

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Budapest Business Journal | November 19 – December 2, 2021

PRESENTED CONTENT

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Business | 11

25 Years of Serving the Market and Building Trust a new logo and color scheme. In our communications, we focus a lot on the local, high-quality products, wider assortment, and our offer for the healthconscious; a more extensive selection of products that are low in sugar and fat or that do not contain various allergens.

We pay attention to the vegetarian shopper as well, offering some great non-meat options.

Penny Hungary CEO Florian Naegele reflects on the German retail chain’s 25th anniversary in the country and its plans for the future.

ROBIN MARSHALL

BBJ: Penny is celebrating 25 years in Hungary. How has the business changed in that time?

Florian Naegele: The first Penny Market opened its doors 25 years ago in Szentes [156 km southeast of Budapest by road]. The chain has grown into one of Hungary’s leading retail companies in that quarter-century, with 226 stores nationwide and three logistics centers, employing nearly 4,700 people. Twentyfive years ago, the most important thing for our customers was price, not the assortment or ingredients. Today, consumers are more quality and healthconscious, besides expecting the best value for money. We have a great selection of high-quality products that can cater to those with food allergies or the health-conscious.

BBJ: How are you marking this silver jubilee?

FN: To mark the 25th anniversary, we asked our oldest members of the “Penny family” why they love working for the company. We received hundreds of very heart-warming comments. We produced posters with these and are placing them on our intranet and our Team Penny app. We are a committed partner to our employees, striving to know and understand their needs while offering them individual personal and professional development opportunities.

It is no wonder that the company has many employees who have been with Penny for more than 20 years, and some since the beginning.

Our “25 Years Together” birthday campaign ran through September for 25 days. Every day, 25 lucky winners per store received 25% of the value of their purchase back. On top of that, 25 Penny customers who presented their digital or plastic loyalty card when paying could win a gift card worth HUF 25,000. The cherries on the cake were 25 Citroën C3 cars drawn from among all the customers who shopped during those 25 special birthday days at Penny.

For our employees, we organized an online celebration, where we spoke about the past, about our commitment to the Hungarian team, our mutual achievements, and our future goals.

We had some great hosts who made the program truly enjoyable, including a performance created especially for us by the dance group Urban Verbunk.

We honored employees who have been

Florian Naegele with us for 25 years with a celebration on stage. After the show, all the teams could celebrate with a slice of cake and a glass of non-alcoholic champagne.

Every employee received a special birthday present as well. We also had some games for our employees before and after the celebration. We will continue working in this festive atmosphere till Christmas.

BBJ: Last year’s retail figures were boosted by how shoppers responded to the pandemic. Has that been maintained this year, or are things reverting to “normal?”

FN: Last year, the shopping habits changed, and these changes are still more or less valid. The average basket value has significantly increased, and the frequency of purchasing has declined.

People are more careful and buy only when they need something; price sensitivity has increased substantially.

Customers prefer private label products, and we have noticed a shift towards packaged products that are considered safer. They buy more own-brands, bulkpackaged and thus more affordable goods than before the crisis. Shoppers buy products needed for home cooking and baking more than previously. The importance of some categories related to spending time at home became much more significant.

Another change is the higher significance of the online stores. Many of those who were averse in the past tried it during the pandemic. We currently offer online shopping via Food Panda in selected locations. People are still hesitant to shop online in Hungary, especially the older generations; they prefer to come and shop in person. So, we need to make sure that we can offer them safe shopping and an enjoyable experience. Paying by bank card is favored over paying with cash.

We suspect that Christmas shopping will be somewhat different this year again. Due to the significantly higher inflation, people will not have money for expensive gifts and huge food bills. We think that they will focus on the necessities and will be looking for good value deals. Thanks to our renewed assortment, we can cater to our customers in these new, challenging circumstances as well.

BBJ: Are you using more local suppliers to shorten supply chains in the wake of the pandemic? What proportion of goods on the shelves are of Hungarian origin?

FN: We have been advocating for Hungarian producers for many years.

We have very strong cooperation with Magyar Termék Kft. (Hungarian Products Ltd.) and have applied their logo on our Hungarian products for a long time. Since the beginning of last year, we have increased the number of our Hungarian suppliers in every segment, not necessarily because of the pandemic. We are keen to offer Hungarian products due to the efficiency of the supply chain and the taste preference of our customers. In some segments, like meats or spring and summers fruits and vegetables, for example, the share of Hungarian products is more than 90%. In general, approximately two-thirds of our selection comes from Hungary. We introduced an advertising and PR campaign to inform shoppers about the direction of selection development and supply management: More local products and more efficient supply management.

BBJ: What are you doing to boost brand recognition in Hungary?

FN: We are renewing and refreshing our stores. Penny Market is becoming Penny. We have a fresher look with

BBJ: What do you think will be the greatest challenge for the company in the near- to mid-term?

FN: A great challenge for all retailers, I think, will be to work based on a fluent supply chain. We can see what is happening worldwide with the supply chain slowing down and even broken at some phases. We trust we will be able to serve our customers so that they will not see too many of these issues. We are extending our logistics center in Karcag (172 km east of Budapest); it will be ready in March 2022. This development will increase the area by 30,000 sqm and employ 40 new staff. It will supply many more stores in its vicinity, shortening the transport time of our goods from warehouse to shop.

We can react to any change in demand in a much shorter time.

BBJ: And what of the future?

FN: Important tasks for the coming years will include strengthening the brand image on the Hungarian market, building on the solid base that we have, making it more widely known and relevant, gaining new target groups to expand our customer base in an extended store network. And of course, we wish to improve our relationships with our suppliers and partners further.

We put serious efforts into maintaining our status as a reliable employer. We plan to grow our team and improve their performance through developmental programs, team coaching, offering higher educational programs, and graduate internship programs.

Regarding SCR, we will continue to support the Children with Cancer Foundation, the Hungarian Emergency Services Foundation OMSZA, and many local schools and nurseries.

We also support the Hungarian Food Bank every month and its annual Food Convoy initiative, organized with the Food and Agriculture Organization of the United Nations. This marks World Food Day and was held for the 16th time this October. People and families in Hungary are more in need of financial or material support due to the social changes following the health crisis that is now becoming economically and socially challenging.

We want to put a greater emphasis on sustainability too. We see this as an essential topic to which large corporations need to pay more attention.

We will improve our material use and systems, saving money for us and beneficial to our local environment.

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Business

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Budapest Business Journal | November 19 – December 2, 2021

LogMeIn: Developed in Hungary, Growing Globally John Ford, VP of Digital Workplace Technology and Managing Director of LogMeIn in Hungary, spoke with the Budapest Business Journal about his digital journey and the continued success of one of Hungary’s bestknown startups.

ROBIN MARSHALL

BBJ: You joined LogMeIn in January 2020. What attracted you to the company, and what is your day-to-day role today?

John Ford: Having worked in software for 30 years, half of that based here in Hungary, I was intrigued by the quasimythical reputation that LogMeIn enjoys on the local tech scene. The quality, curiosity, and openness of each person I met, from CEO Bill Wagner down, convinced me that this was a special opportunity. I have a dual role which encompasses firstly leading the local kft., a significantly-sized company in its own right, driving the incremental growth of the Hungary

The LogMeIn Backgrounder

John Ford team (+10% year on year since I’m here), ensuring our voice is heard and needs met (currently Hungary has the highest employee engagement anywhere in EMEA or North America), and communicating key global messages to the folks here.

Secondly, I ensure that our noncommercial software is developed and supported to an excellent standard so that customers, partners, and employees are best enabled to do their job. For example, our Care Support Platform, the unique landing page for any customer needing contact support, is currently more than 90% automated through the innovative deployment of AI chatbots.

decades, IPO’d, transferred its headquarters to Boston to capture the global (and especially U.S.) market, joined the NASDAQ, Founded in Budapest in 2003, and continued to grow rapidly LogMeIn is one of the most through a succession of significant successful Hungarian startups. acquisitions (most notably the The story goes that its founder “GetGo” part of Citrix in early lived on the Buda side but was 2017). Now one of the world’s working on the Pest side. Being largest SaaS companies with tens a tech genius, he developed a of millions of active users, more software tool for logging into than 3,500 global employees, his work PC remotely, therefore over USD 1.2 billion in annual avoiding the tiresome daily commute. Realizing its commercial revenue, and more than two million customers worldwide who viability, he formed a company to market this “log me in” utility, and use its software as an essential part of their daily lives, LogMeIn the rest, as they say, is history. continues to be a pioneer in both Growing quickly, a company remote work technology and the that was literally born to enable culture driving the work-fromremote-working, predating the anywhere movement.

COVID pandemic by nearly two

BBJ: You have worked in your native United Kingdom and Italy. What brought you to Hungary in 2006?

Was there a personal connection to the country?

JF: I met my Hungarian wife while we were living in Italy; we married within months and lived on the south coast of England for about 10 years before moving to Budapest 15 years ago. It was honestly one of the best decisions I’ve ever made, and I’m now a Hungarian citizen in my own right.

BBJ: What drew you to IT in the first place?

JF: When I was a kid in the ’80s, my history teacher advised my parents to buy me a computer, as this would be “the next big thing.”

So, I learned to code aged 10, swiftly moving to assembly language to reduce lag when creating video games. However, I specialized in foreign languages, doing Russian and German at Oxford. After uni, I moved to Italy and ran the sales and marketing for a tech startup in the recreational vehicle industry, which taught me the business processes involved and the crucial fact that technology must serve business needs to deliver true value. Coming back to the United Kingdom, I moved into SAP consultancy, where I effectively used the translation skills gained in studying languages to translate technical capabilities into business facilitation, then configured and coded the system to deliver this. It’s not the usual way people get into IT, but it’s certainly worked for me.

BBJ: LogMeIn is now a much more mature global business. Has it had to let go of its startup mentality?

JF: Yes and no. LogMeIn is now the size of a corporate enterprise; it needs a level of governance that can only be provided by processes, systems, and dedicated teams (HR, Finance, IT, Procurement, etc.) However, the startup mentality is baked into our DNA and comes out in several ways.

For example, the empowerment given to individual groups to operate as internal “startups,” such as our team in Hungary that is adaptively developing a partner portal; the proactive use of personal networks at every level of the organization; the sheer dynamism of our environment, where significant changes happen extremely frequently but are delivered with a flexible “can-do” attitude; plus the continual encouragement to “Think Big,” “Move Fast,” and “Keep Growing,” which are three of our company values. Moreover, in theory, since the company was acquired by a private equity group last August, we are once again one big startup.

BBJ: How does the company maintain its innovative mindset?

JF: We work hard at encouraging innovation, mainly through empowering self-sufficient teams, providing space for them to work on what they think needs to be done, recognizing and adopting ideas from engineering teams into the product roadmaps, as well as celebrating the internal successes and rewarding excellence in the technical domain publicly. Specifically, we run quarterly

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Budapest Business Journal | November 19 – December 2, 2021

hackathons to accelerate innovative development. These are widely attended, and I’m proud to say the last two have been won by teams from Hungary.

BBJ: You have posted on social media about how proud you are to work for a company that gives staff extra days off. Was this related to the pandemic, and what has been the reaction of the employees?

JF: Yes, we soon realized that the remote approach brought additional meetings and “screen-time,” which needed to be managed to preserve people’s mental health, so, from March 2020, the SelfCare Days have been running. People are extremely appreciative of this, and it’s become a custom to share photos via an internal Slack channel of where you’ve been to rest and recuperate.

BBJ: Given where LogMeIn started from, I guess you must always have had a fair proportion of digital natives and digital nomads. Will your work patterns change permanently as a result of COVID? JF: We’ve always had some people working remotely at any given time, and we declared early on that LogMeIn will become a “remote-centric” company even post-COVID. This means that we have actively downsized our office footprint, closing three offices in Hungary and opening a new, specially designed “collaboration hub”

for meetings, workshops, UX design, and team-building or social events, but managers can never insist that their people are physically present – this is a choice of the individual – and the expectation is that you do your actual work remotely, meaning that at any given time at least 90% of our people are remote.

BBJ: Are you worried about being able to attract colleagues with the right skill sets given Hungary’s tight labor market?

JF: Thankfully, LogMeIn has a good reputation locally, which was confirmed

by Randstad Hungary awarding us the “Most attractive employer in the IT category” in 2021, which helps.

Obviously, though, there’s competition for good talent, and some skillsets are simply non-existent here. I wouldn’t say it’s any tougher in Hungary than in other countries, but if more people were available, we would have grown more.

If we can jointly find a way to expand the talent pool, all tech companies here would benefit.

BBJ: What should we look out for next from LogMeIn? JF: We’re focusing strategically on the three critical areas of “Connecting,” “Securing,” and “Supporting” the remote workforce. We have a flagship product for each sphere, delivering strong growth, interlinked and

complementing each other. We focus on offering the simple-to-use integrated portfolio required for small-to-medium businesses (SMBs) to flourish.

“LogMeIn is now the size of a corporate enterprise; it needs a level of governance that can only be provided by processes, systems, and dedicated teams (HR, Finance, IT, Procurement, etc.) However, the startup mentality is baked into our DNA and comes out in several ways.”

Specifically, GoToConnect, LogMeIn’s unified communications as a service (UCaaS) platform, combines cloud telephony, video conferencing, messaging, events, training, contact-center capabilities, and more, is cost-effective, takes less than a day to deploy, and is tailormade to support SMBs. It includes a unified admin system and many out-of-the-box integrations, which are built by our Hungary team. In

Business | 13

the security domain, our awardwinning password management solution, LastPass, is 100% developed in Hungary and increasingly supports the requirements of service providers, enterprise customers, and our massive consumer base. Finally, for remote support, GoToAssist is benefitting from enhanced security that befits the increased threat level we are seeing nowadays, as well as bundling visual engagement (our LiveLens component lets you “show” a support agent in real-time using your mobile phone’s camera) and guided co-browsing using LiveGuide; all of these innovations stem from our engineering teams in Hungary.

And, of course, over the years, several products or business areas have been profitably divested to streamline our focus, meaning that LogMeIn is not only one of the most successful tech companies in the country but has also actively contributed to kick-starting several other entrants on the Hungarian tech scene, a fact of which we are extremely proud.

For much more on research and development and innovation in Hungary, see our special publication Invented in Hungary 2021-2022, distributed free to subscribers of the Budapest Business Journal print edition, and available to buy from our webshop budapestbusinessjournal.com.

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Budapest Business Journal | November 19 – December 2, 2021

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Retailers Optimistic for Black Friday, Despite Mixed Messages Until recently, Black Friday and the Christmas season were the most anticipated for the retail sector, as these few weeks generated most of their annual turnover.

But this year seems more unpredictable than usual, with contradictory statistics and forecasts.

BALÁZS BARABÁS

Will shipments arrive on time for Christmas? Will customers have money left for shopping? Will the microchip shortage impact the tech gadget market?

Will tax refunds encourage families to spend more? These are only some of the swirling questions, meaning it is almost impossible to make any accurate predictions for the pre-Christmas shopping spree. Or rather, what once used to be a shopping spree. This unpredictability derives from several prognoses made before November.

Prognosis No. 1

Back in October, Norbert Madar, a senior analyst at GKI Digital, estimated that customers would need to prepare for higher prices and narrower assortments in many popular product categories but that customers will spend more money overall than last year.

According to Madar, the pandemic disrupted the global logistic networks; therefore, fewer products are reaching Europe in a longer time frame. As a result of the worldwide chip shortage, manufacturers have focused on the more expensive consumer and office electronics, as these carry higher profit margins.

Thus, customers will encounter a broader offer of high-end products and less low-budget products, which will be perceived as a significant rise in prices. Meanwhile, the forint is continuously depreciating, which is adding to the higher prices.

merged in 2019 but continued operating under separate brands and held individual Black Friday events.

For the first time, Black Friday will be held jointly this year, the official communication being that the synergies have come to the point where it is reasonable to unify the promotion and to offer customers more low-priced products than ever before.

Extreme Digital and eMAG CEO Balázs Várkonyi told the Budapest Business Journal that price reductions of various levels would be applied to

500,000 products

on Black Friday. These products are already in the warehouses, and eMAG guarantees that products ordered on Black Friday will be delivered within a maximum of 14 days. Chief commercial officer Catalin Dit has no doubts that there will be growth, even compared to a strong last year.

All this means that customers who in previous years were enjoying discounts of 50-70% during Black Friday should probably expect no more than

20-30% lower

prices for smartphones and laptops this year. In addition, customers on a low budget may face low or no supplies of products in their price range.

Given all of this, retailers would probably extend the Black Friday promotions throughout the whole month of November to avoid panic shopping, Madar told daily Népszava (Voice of the People). For retailers, at least, the good news is that customers will likely spend 15% more than last year, at HUF 60,000 per capita. The pension premium and the tax refund for families, expected in February next year, will probably make customers more willing to spend.

Prognosis No. 2

Life has returned to the shopping malls, and clothing and fast-fashion retailers are happy with business figures, Katalin Neubauer, secretarygeneral of the Hungarian National Commerce Association (MNKSZ), told business daily Világgazdaság (Global Economy) recently. The bad news is the labor shortage caused by the new wave of the pandemic.

Fluctuation is high, with little time to train the new employees.

Beginning with the second quarter, each month showed growing figures, especially in the electronics and

food sector. Other retailers were less optimistic, but their problems lay not in shoppers’ purchasing power. They fear that with the new wave of the pandemic, access in shops will be restricted again, which will be a significant blow in the most important period, Neubauer said.

There is more mixed good and bad news. On the good side, the government has announced supplementary incomes, like pension premiums, salary raises, and tax refunds, which all encourage spending.

On the downside, rising inflation is curbing family budgets, so retailers will likely not have a clear picture of sales only at the end of the year.

Wearing masks in shops will probably be compulsory again, but retailers hoping that the government will not enforce other restrictions, Neubauer added.

Prognosis No. 3

Black Friday and other “shopping fests” have declined in popularity, news portal 24.hu says, citing market research by marketing specialist Rita Jagodics. According to her data, only 13% of Hungarians plan to purchase their Christmas presents on Black Friday, the reason being that many do not believe in promotions anymore, after several disappointments in previous years.

The two leading players in online retail, eMAG and Extreme Digital, announced that they will hold one single Black Friday promotion this year, on the eMAG platform, on November 19. The two companies

Black Friday and other “shopping fests” have declined in popularity, news portal 24.hu says, citing market research by marketing specialist Rita Jagodics. According to her data, only 13% of Hungarians plan to purchase their Christmas presents on Black Friday, the reason being that many do not believe in promotions anymore, after several disappointments in previous years.

“Currently, we offer around 3.5 million products through the eMAG platform.

We estimate that the online market will grow further this year, and eMAG at an even higher rate, 20-25% compared to last year,” Dit told the BBJ.

Conclusions

Retailers show few signs of worry.

Electronics retailer Media Markt has expanded warehouse capacities by 40% in preparations for the Christmas shopping period. CEO Gábor Szilágyi told news portal index. hu that the retailer offers promotions only for products in stock and only for those where they can guarantee delivery on time.

Surprisingly, not only traditional retailers have prepared Black Friday promotions this November, but also, for the first time, auction site vatera. hu. Sellers will be able to offer not only new but also second-hand products on November 26, picked by vatera.hu as its Black Friday date (and also the official date in the United States, as it is the Friday after Thanksgiving).

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Budapest Business Journal | November 19 – December 2, 2021

Is Bitcoin the new Gold?

Photo by Overearth / Shutterstock.com

The Corporate Finance Column

Much has been written about how bitcoin has taken luster and market share from gold over the past decade. But has the death of gold been much exaggerated?

Les Nemethy asks.

As Herbert Hoover, the 31st President of the United States, once famously said, “We have gold because we cannot trust governments.” Gold and bitcoin are both ways of opting out of the fiat currency system. Lebanese-American writer and mathematical statistician Nasim Taleb once called bitcoin an “insurance policy against an Orwellian future,” but it could just as easily be said about gold.

Central banks can print fiat currencies in virtually limitless quantities. The supply of gold and bitcoin are finite and elude government control. The number of bitcoins will gradually increase from the current 18-19 million to a cap of

During the latter’s short life span, there has been frightening price volatility.

Gold’s physical nature provides certain advantages: should there be a widespread power or internet failure (perhaps in the event of war or a solar flare), gold may still be traded. There is also a chance bitcoin may become more hackable with advances in quantum computing.

Several countries, including China, have recently declared bitcoin illegal, and Russia and Vietnam have banned it as a payment method. (In fairness, the U.S. Government also pronounced privately held gold unlawful

by 2040 and thereafter be fixed for eternity. Gold stock has historically grown by one or two percent a year; after 2025, gold production is forecast to go off a cliff, as few mines of scale are being discovered.

There is nothing intrinsically valuable or useful about either gold or bitcoin.

According to Warren Buffet, widely considered to be one of the most successful investors in the world, gold “gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it.”

The value of both is underpinned solely by custom and trust.

Bitcoin, being digital, has the enormous advantages over gold of requiring zero space for storage, zero expense for insurance, and is easily transferable electronically, over any distance. As we approach the metaverse, bitcoin is likely to play a role that cannot be assumed by physical gold.

Perhaps a two million percent appreciation over the past decade makes bitcoin a better investment (although bitcoin critics would argue that tulip bulbs once offered a similar performance until tulipmania ended with the first recorded asset bubble collapse in 1637).

and confiscated it.)

The regulatory regime for bitcoin is in its infancy. Is bitcoin a security, a currency, or a commodity? In the United States, the answer will impact who is the regulator and what regulations will apply. New rules may diminish attractiveness. U.S. tax authorities recently required that bitcoin transactions be disclosed on tax returns.

Because the blockchain includes a history of all past transactions, gold is perhaps a better choice for someone who wants to be totally “off-grid.”

Gold, not bitcoin, is owned by central banks. Should there be a Bretton Woods type monetary reset as happened at the end of World War II, there is the potential for an upward revaluation in the price of gold. The extensive use of gold as jewelry arguably provides a floor to its value.

21 million

Millennial Track Record

Gold has the advantage over bitcoin of having a track record over thousands of years, compared to barely a decade.

in

1934

Immortal Gold

Due to its uniqueness on the periodic table of elements, there is no element as immortal: gold does not tarnish, rot, evaporate, or decay.

It is attractive, scarce, and dense.

Contrast this with bitcoin, where more than a thousand cryptocurrencies are vying for market share. Gold has a much larger moat vis-à-vis its physical competitors than bitcoin vis-à-vis its virtual competitors.

Business | 15

Gold and cryptocurrencies are not mutually exclusive. While I favor the risk and return profile of gold (with its

6,000 years

of history, less volatility, and in my opinion, good upside potential in today’s inflationary negative real interest rate environment), I also hold a small amount of crypto.

I have two reasons for doing so: one, as a speculative asset; and two, its advantages related to easy transferability.

It is a mistake, in my opinion, to have zero exposure to bitcoin, just as with gold. In my case, I have heavy exposure to gold and light exposure to bitcoin.

This article would be incomplete without mentioning a feature of certain cryptocurrencies such as ethereum (but not bitcoin): programing of smart contractsopens a horizon as revolutionary as the internet, enabling innovations from decentralized finance to the metaverse. Long-term, this will be the real significance of crypto, blockchain applications we cannot even envision today.

Disclaimer: This article is for educational purposes only and must not be construed as investment advice. Investors should obtain their own financial advice.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix. com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www.businessexitplanningbook.com), and a previous president of the American Chamber of Commerce in Hungary.

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PRESENTED CONTENT

Third Time’s a Charm for Hungarian Stroke Researcher consequence of this is the development of brain swelling known as cerebral edema, which is often fatal.

“What we strive to figure out is how this edema develops on the level of cells. More importantly, we would like to find out whether there is any material released from brain cells into the bloodstream to predict this swelling. If so, it can be then identified in blood samples,” explains Farkas.

These so-called biomarkers are key since, if they do exist and can be detected, edema can be predicted with a high probability. Thus, treatment can start earlier. On the other hand, personalized medicine could get another boost since only those patients in whose case these specific biomarkers occur would be treated for preventing edema. This would also trigger research towards developing special medicine for this purpose.

“The main objective is to make sure that research results are translated into real-life clinical application,” Farkas says.

Sprinters don’t normally choose to pursue a researcher’s career; the nature of the activity requires more of a marathon runner’s mindset. The fact that it takes 10-15 years until laboratory results translate into hands-on therapy or ready-to-use medicine is just part of the long journey.

LEVENTE HÖRÖMPÖLI-TÓTH

Securing funds to achieve your research project adds a whole additional layer that cannot have a happy ending without grit and resilience. Dr. Eszter Farkas has demonstrated that persistence massively. Having been turned down twice by an international committee, she gave it another go just to validate the truth behind the “third time’s a charm.”

The senior researcher at the Hungarian Center of Excellence for Molecular Medicine (HCEMM) applied to that organization’s tender call three times in a row with good reason: there is a lot at stake.

“These calls offer so much more than ‘ordinary’ other calls available at the national level in Hungary,” she explains. “Take the ones by NKFIH, the National Research, Development, and Innovation Office. They provide around HUF 40 million-50 mln for four years, whereas HCEMM’s scheme gives you that much for one year. This amount of money doesn’t just help run research groups; it also paves the way for infrastructure development. This is a whole new level.”

On top of the advanced level of funding, professionals at HCEMM have the chance to become active members of the international research community.

Workshops and conferences abroad equip young talent with the global network that is necessary to deliver world-class outputs.

HCEMM also ensures that the activity of working groups gets proper publicity and gives feedback to society so that it is not only those in the ivory towers of science who are informed about the latest achievements.

Crucial Research

Farkas’ specialty area is stroke, among the top causes of death in many societies, including Hungary. “It’s not a niche problem, it concerns masses of people, and it can lead to disability

Dr. Eszter Farkas apart from death. It is, therefore, a crucial area in which to conduct research,” Farkas explains.

Whether or not strokes are a significant medical issue, it remains hard to get funding for related scientific work. As Farkas experienced herself, even though her concept concerned the same main topic every single time, it was only on her third attempt that she was successful.

“Planning experiments, assessing data, and projecting potential results is one thing. Demonstrating in a convincing and spectacular manner that the whole thing would work and be useful for medicine is another. We’re talking two different genres here,” she says.

Indeed, she endured a tough learning curve about how you actually present that what you plan to do in the lab will be worth the money and effort. This time the self-taught path turned out to pay off, although talking to colleagues about critical factors for success also helped.

Since the application procedure has two phases, it puts extra pressure on candidates. The written material is assessed by an international jury, which then invites the most promising scientists to a face-to-face interview. In other words, you need to be able to convince them in writing and in person as well.

Of course, just because you are interested in one particular area doesn’t necessarily mean you can apply for HCEMM grants. For research to be funded, it needs to match one of the pillars HCEMM deals with: immuno-inflammatory diseases, metabolic and cardiovascular diseases, genomic instability and cancer, and infectious diseases with a particular emphasis on co-morbidities. These research areas were not picked at random; they cover the leading causes of disease in old age in the Hungarian population.

Often Fatal

The topic of stroke belongs to cardiovascular diseases and, as such, is eligible for HCEMM grants, which helped the effort of Farkas. There are two types of stroke. In 20% of cases, blood vessels rupture, and the brain is subject to internal bleeding.

The remaining 80% of cases, though, concern situations where blood vessels get clogged, and as a result parts of the brain are cut off. A common

“Curiosity is self-evident if you want to do research.

What drives me, in particular, is the perspective of helping people, but gaining new knowledge and transferring that to the next generations gives me pleasure as well.

Finally, responsibility and supporting teamwork in the research group by providing the ideal circumstances in the long run, that is very motivating for me too.”

She has been in research since the 1990s, so this is not the first time she’s excited about a particular project. Since stroke remains a burning issue, her motivation is stronger than ever.

“Curiosity is self-evident if you want to do research. What drives me, in particular, is the perspective of helping people, but gaining new knowledge and transferring that to the next generations gives me pleasure as well.

Finally, responsibility and supporting teamwork in the research group by providing the ideal circumstances in the long run, that is very motivating for me too,” concludes Farkas.

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Budapest Business Journal | November 19 – December 2, 2021

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Special Report Business Services Sector

The fight to attract new talents, and just as importantly, hold on to them will be crucial for the development of the business services sector in Hungary. That, and upskilling and education.

Market Talk: Pandemic Adds Extra Heat to Services Centers Competition

18

Growing the Business Services Sector in Hungary

15

Developing the art of the Possible in Digital Transformation

20

Spreading the SSC net to Secondary Cities

18

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Special Report

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Budapest Business Journal | November 19 – December 2, 2021

Market Talk: Pandemic Adds Extra Heat to Service Centers Competition The COVID-19 pandemic may have triggered a new golden era for the services center market, be it shared services (SSC), business services (BSC), or global business services (GBS), analysts tell the Budapest Business Journal.

CHRISTIAN KESZTHELYI

Evermore companies are investing in digital transformation, especially in the process of consolidation. In this environment, Hungary remains attractive amongst Western European companies as a location for their BSC operations; indewed, the sector has become one of the leading contributors to the national economy. The country remains an attractive investment destination due to its skilled workforce, good infrastructure, and favorable tax environment, but this is a fiercely competitive field.

Southern Europe and North Africa are developing as new locations for services centers. Nevertheless, Central Europe, including Hungary, remains a preferred location for Western European countries to base such near-shore operations.

Tamás Steinfeld “Strong contenders to the established Eastern European countries are Portugal and Lithuania, but we also see smaller countries further east like Serbia and Moldova entering the market for BSCs with a young and hungry workforce,” Markus Martens, executive director of business consulting at EY Hungary, tells the Budapest Business Journal.

Services centers account for a significant share of Central Europe’s office space takeup, as headcount growth rate typically ranged between 10-15% year-on-year throughout the previous decade. The COVID-19 pandemic changed that trend, however.

“The BSC industry associations across CEE project that, year-on-year, job creation is expected to vary between 5% and 7% in 2021-2022, which is a significant decrease compared to the pre-pandemic figure (12-15%),” Tamás Steinfeld, head of research at Colliers Hungary, tells the BBJ. “Still, around 850,000 employees are working in the sector across the region, which implies that, by yearend 2022, around 100,000 additional employees will potentially require office space.

Assuming, of course, they will need to use a corporate facility, for two to three days per week at 10 sqm per person, it still means a large potential for office demand for the future,” Steinfeld adds.

Jeroen Kirschbaum Interest in Central and Eastern Europe actually grew during the pandemic. “There was increasing demand for the region due to the disruption of services for certain Asian markets which were temporarily transferred to other destinations due to the lack of working from home infrastructure. [...] As a result, this issue could mean further growth and potential possibilities for business services in CEE as companies revisit their business continuity plans,” Steinfeld explains.

Hungary has become an internationally recognized destination in the services sector over the past decade and has continued to attract new investments and create high value-added jobs through a good business environment. More than 130 companies now employ something like 60,000 people in the sector.

“In addition to the commitment and the excellent and flexible work of our employees, the favorable business environment is also a driving force for the continuous growth of the Hungarian center,” Jeroen Kirschbaum, lead country manager at ExxonMobil Hungary, says of his own BSC. “In the coming years, we will also further increase the number of our staff and the size of our headquarters, and

Kevin Turpin gradually expand the range of activities with which we contribute to the dayto-day operations of ExxonMobil,” Kirschbaum adds.

The principal driving factor for Hungary’s competitiveness remains its skilled workforce. However, a slowdown in companies selecting Hungary as their preferred location has been experienced in an increasingly tough war of talent in the markets. That is down to increasing labor costs which are only partially offset by the weakening of the Hungarian currency, the Forint, according to Martens of EY. “Amongst the Visegrád Four countries, Poland comes out as a clear leader with a continuous incoming stream of top international companies building up new BSC operations. Besides its significantly larger size, one of the success factors is the availability of a large number of Tier 2 and even Tier 3 cities that can provide the industry with an experienced workforce. In contrast, Hungary has its focus mostly set on Budapest. While we do have cities like Debrecen and Szeged that have made some ground in the past, we see huge potential in the Hungarian countryside with a large graduate and multilingual workforce,” Martens adds.

Kevin Turpin, regional director of research for CEE at Colliers, names another V4 country as his club leader, though. “The Czech Republic is a proven leader in the GBS sector in CEE with over 310 centers and rapidly approaching 130,000 people employed in the sector,” Turpin tells the BBJ. “In Hungary, the migration of services out is growing slowly by a few percent annually, representing

the fact that the Hungarian SSC industry has reached its maturity level. With 205 service centers and more than 73,800 employees, the sector has a track record of steady growth,” Turpin adds.

Nevertheless, the number of employees at centers in Poland in H1 2021 was 355,300, a 3.9% year-on-year growth rate, according to Turpin.

“However, the employment growth rate has slowed down, which is a symptom of the sector entering the mature phase. This trend is also supported by the decreasing number of new centers being established in the last three years,” Turpin says.

In Slovakia, while there are new arrivals, the majority of the expansion in the market is triggered by established centers. Here, the sector, dominated by large companies originating from the United States and Western Europe, employs more than 37,000 employees with the potential for the market to increase further.

In such a fiercely competitive market, Hungary still has some competitive advantages. “Thanks to high valueadded activities and positions and a highly skilled workforce, this competitive advantage can be maintained and strengthened in the future,” ExxonMobil’s Kirschbaum insists.

“To adapt to a rapidly changing environment, significant resources need to be allocated to training and continuous improvement, especially in the field of digitalization. We are glad that the satisfaction of our employees has remained steady and that they see perspective and vision in the work we are doing,” he concludes.

Markus Martens There is room for improvement, though.

According to Steinfeld, reaching a higher level on the EF English Proficiency Index could contribute to expanding the services center sector in the country.

Sifting Through the Service Center Alphabet Soup Shared Services Centers (SSCs) typically provide transactional activities. Due to relative task simplicity, simple activities are easily transferred to the center and allow for quick economies of scale.

Business Services Centers (BSCs) are more complex. They provide end-to-end services across various processes and functions with a

higher degree of ownership and accountability. Global Business Services (GBS) are even more complex and challenging and can be used as an engine to transform the business. It is seen as the next step of the SSC evolution. For the scope of the present article, for simplicity reasons, the BBJ uses the generic terms “services center” or “center.”

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PRESENTED CONTENT

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Special Report | 19

Photo by Gorodenkoff /Shutterstock.com

Growing the Business Services Sector in Hungary Continuous growth, resilience, and efficiency; these are the main characteristics of the business services sector in Hungary, the Hungarian Investment Promotion agency tells the Budapest Business Journal.

BBJ STAFF

In the last 20 years, there have been significant developments in the field of Business Service Centers (BSCs), and Hungary has become one of the leading international hubs for the sector in Central and Eastern Europe, HIPA says.

The importance of the industry is underlined by the fact that, currently, 156 BSCs are employing

support online business activities.

Well Prepared “Office owners are well prepared to The importance of ensured business meet space requirements of all kinds continuity has increased, and cost has become a less important factor in many and to offer office premises of a wide business decisions. variety in size, category, design, and final finishing. Feedback about working BSCs are already building digital employees from home is mostly positive from the capabilities across automation, in Hungary. Based on the latest advanced analytics, and artificial developments, the business services intelligence, and this process has sector is one of the few segments that accelerated due to the COVID-19 “Office owners are well has shown steady growth in crisis and pandemic. To remain competitive, challenging times.

BSCs need to further improve prepared to meet space The sector has shown a high level their skills, particularly in digital requirements of all kinds of maturity with resilient and flexible technologies, HIPA warns. operations in a truly global service The pandemic forced BSCs to modify and to offer office premises landscape while maintaining the their operating model and introduce of a wide variety in size, ability to engage and retain talents and new digital solutions and remote or continuously attract new investments, hybrid working models to optimize category, design, and even during COVID-19. operations. At the same time, COVID final finishing. Feedback “Despite the pandemic, the Hungarian also had a significant impact on the business services sector has achieved an ways in which companies view their about working from home outstanding result, and it has remained human capital. is mostly positive from one of the leading industries of the There is a greater focus on the employees’ side, but Hungarian economy,” HIPA tells the BBJ. coaching and training, career “The sector’s attractiveness is reflected development, supporting a better it also provides additional in the growth of the number of BSCs, the work-life balance, and providing opportunities for companies increasing headcounts, and the continuously flexibility in workspaces and working broadening scope of high-value-added hours. Training and development of to expand their activities activities,” the agency continues. employees will be the most important in Hungary and to attract The digital world and value creation in success factor, therefore investing in a virtual way became the “new normal” for new skills and competencies are of more talent, regardless the sector. This paradigm shift underlined utmost priority. of their locations.” that digital transformation is essential in Finding and retaining the right talents the journey toward next-generation BSCs are critical for long-term success. Sector as these new technologies are transforming branding and employer value proposition employees’ side, but it also provides all business functions, including finance, are also crucial in order to remain additional opportunities for companies HR, customer service, and others. competitive in the labor market.

Office culture is changing fast with the to expand their activities in Hungary Critical Elements and to attract more talent, regardless of introduction of the hybrid operational Telecommunication networks and their locations,” HIPA says. model, which combines the physical connectivity are critical elements The investment promotion agency space of a central office with working of a country’s ICT infrastructure to from home or remotely, HIPA points out. provides management consultancy

70,446

services for existing and prospective investors from planning right through to implementation and operational phases.

In the case of an investment resulting in the creation or expansion of a business service center, creating at least

50

new jobs

in the countryside, a VIP non-refundable cash incentive may be provided by HIPA. The eligible costs are 24 months of personnel-related expenses of the newly hired employees within three years.

New and more favorable regional aid rules will be applicable as of January 1, 2022. Based on these, a VIP cash subsidy can be provided to establish and expand business services centers in Pest county up to 50% of the eligible costs.

There are different tools and mechanisms to support innovation and R&D activity in Hungary as well.

HIPA can provide VIP non-refundable cash incentives for R&D projects in Budapest and the countryside. The objective is to enhance the R&D activity of large enterprises and the creation or expansion of R&D competence centers in the country.

The Hungarian Government also offers a VIP subsidy for the training of employees. The subsidy is available to investors creating at least 25 new jobs in business service activities.

The funding is provided for internal and external training covering 50% of the eligible training costs. The total amount of the subsidy may not exceed EUR 5,000 per training participant and EUR 2 million per training session, regardless of the project’s location.

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Budapest Business Journal | November 19 – December 2, 2021

Developing the art of the Possible in Digital Transformation There is an area of Danube-Ipoly National Park, north of Budapest, now known as “Tata Forest.” The 200 oak saplings were planted

by TCS volunteers to help promote the country’s biodiversity and raise environmental awareness. The woodland is also a long-term reminder of the 20th anniversary of the opening on Tata Consultancy Services in Hungary, celebrated this year.

ROBIN MARSHALL

“We believe in a better future; therefore, we wanted to help the local communities and support sustainability: that is the reason we have been working with the national park for the last 10 years,” says Prabal Datta, who has been CEO of TCS Hungary for six years and with the company’s Indian parent organization for 31.

“This plantation will last for a long time for future generations. Twenty years down the line, people will be able to enjoy Tata Forest, experience its green impact and biodiversity. A visit to Tata Forest would be a memory to mark our 20th anniversary landmark and what we built ages ago. It also lessens our ecological impact and is in line with our priorities in off-setting our carbon footprint,” Datta notes.

TCS Hungary has undoubtedly developed enormously since its office opened 20 years ago as the Indian giant’s first European Delivery Center.

“Now, TCS Hungary is the hub of our European delivery network; we have come so far since 2001, when we had 14 or 15 engineers working with one customer, developing IT solutions,” Datta says of those early days. The total headcount now numbers 2,700, spread across three buildings in the same office development close to the Danube.

“Today, we offer more than 40 digital transformation services: we are not a backoffice for TCS. We are one of its

Prabal Datta global digital delivery centers. We have 80 customers worldwide, the majority are from Europe, and provide services in 30 different languages.” The workforce itself is drawn from over 99 different nationalities, Datta explains.

Put simply, TCS has become a highend IT services company, using artificial intelligence, machine learning, and the cloud to deliver digital transformation that enhances customer experiences and prepares firms for a better future.

Today’s roster of services includes digital technology solutions, cognitive financial, data analytics, pharma, and clinical research services. The latter explains an interesting quirk.

“We have 40 doctors on our payroll, which is a little unusual as we are not a healthcare provider,” Datta says with a laugh. The doctors provide medical knowledge and input into the design of services for customers in the pharma sector. The aim is to streamline and standardize patient safety and so-called “adverse event” reporting to regulatory agencies like the U.S. Food and Drug Administration, the European Medicines Agency and others across the globe. It is an example of TCS using its contextual knowledge and digital skills to help save lives.

Future Talent?

Given the rapid growth across all measures – customers served, services offered, and staff employed – is Datta concerned about securing talent for the future in a country at close to full employment?

“Yes,” is the short answer, though it is more nuanced than that in full.

“The talent is the single most important factor in our continued

success and growth, but skills are also key factors; we give the possibility to our employees to grow and realize their potential,” says Datta. That second part is significant. The CEO makes the point that he already has a treasure trove of 2,700 talents; he says it is the duty of the company to provide existing staff with the skills and training to do jobs that did not exist a few years ago, or to change career path, should they want to.

This becomes a virtuous circle: staff with new skills are more valuable and capable of taking on more challenging, exciting roles. That makes it easier both to retain associates and to attract new talents.

“There is a lot of focus on digital technology, but you don’t have to be a computer science graduate to get that knowledge; we can provide it through training too. I am not a programmer, but I have been working in this field for many years; it is something you can learn,” Datta insists.

Training for the future is not restricted to current employees. TCS has developed a flagship digital education program called GoIT. “The idea is to make sure kids have creative thinking, problem-solving minds in future.”

It is a holistic approach that embraces everything from extra-curricular competitions to ensuring high school educators, who may have trained before the fourth industrial revolution got going, have the knowledge, skills, and confidence to teach what is needed.

Around 30 TCS volunteers have also become ambassadors to help pass the knowledge along, and TCS is also working with NGOs to amplify the reach of GoIT.

“Design thinking is a way of how to present, how to build solution.

We want it to spread like the coronavirus, but in a positive way!”

Hybrid Working

And talking of COVID, TCS has evolved into a hybrid working model, although Datta stresses that the offices remained open throughout the pandemic for those who wanted to come into work, observing all the health protocols, of course.

“The pandemic was very hectic, particularly at the start. We had to create what we call a Secure Borderless Work Spaces (SBWS) for those working from home to ensure the safety of our employees and the services we provide our customers were not compromised.

We also had to make sure our clients were comfortable with the new situation, and it sat well with their protocols.”

The learnings from the pandemic show the way forward, Datta says, with the hybrid model TCS now operates clearly the future trend. “Some jobs need social interaction; some people want to come into the office, others work effectively remote, so we understand the needs and handle this in a flexible way: we are using a mix of operating models.”

One important consideration has been the need to look after the mental health and level of company engagement of those working predominately from home. While they might be spared the daily commute, the “boundaries between work and home can become blurred,” as Datta puts it.

“We care about our people, so we have developed a 24/7 health hotline for our employees offering counseling, and we use the technology to keep in touch with them. Connection points have increased across the board. The technology has been there to do this for a while; the pandemic taught us the art of the possible.”

“We have a 24/7 health hotline for our remote working associates offering counseling, and we use the technology to keep in touch. Connection points have increased across the board. The technology has been there to do this for a while; the pandemic taught us the art of the possible.”

Datta was a short-listed runner-up in the BBJ Expat CEO of the Year Awards for the second time running on September 24 this year. Does he think it might be a case of third time’s a charm in 2022?

“I feel very fortunate to have been nominated twice. I am an outsider, a real expat; I’m not even from this continent!

If I am nominated again, it would be an honor.” He sees his nomination as a recognition of the work of the TCS Hungary team. “As leaders, we can only be as successful as our team, and we win and lose together,” he concludes.

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Special Report | 21

Spreading the SSC net to Secondary Cities and accessible green areas nearby.

Concerning transportation links, the most favorable is a metro within 400 meters.

Shared services centers (SSCs) and Business Process Outsourcing (BPOs) have become one of the major industries in Hungary and one of the main drivers of success on both the local and regional office markets.

Brownfield Site

Futureal is developing the phased, 65,000 sqm, BREEAM and WELL accredited Budapest One Business Park located on a brownfield site at a transport hub at Etele tér adjacent to the Kelenföld railway station and the Metro 4 station. It will house both Vodafone’s new headquarters and BT’s regional service center.

“Once completed, Budapest One office park will expand the capital’s office market with a total of more

than

65,000 sqm

GARY J. MORRELL

The Hungarian Investment Promotion Agency has successfully promoted and attracted companies to Hungary as a quality but cost-effective SSC destination. More than 120 SSCs are operating in Hungary, making it the second-largest industry in Hungary, according to KPMG. SSCs are undertaking increasingly complex functions such as R&D, well beyond a purely administrative role, and, therefore, SSC and BPO tenants have evermore sophisticated specifications with higher sustainability accreditations.

All of this means companies are looking to base SSCs in offices at the very top end of the office market.

In the first half of 2021, IBM agreed to a

14,500 sqm deal

with Futureal to establish a new Budapest headquarters at the BREEAM- and WELL-accredited Corvin Innovation Park.

From a real estate perspective, the essential requirement has been that there is a stock of well-located, developer-led class “A” office space with a premium on direct public transport links

Budapest ONE business park by Futureal. to more than 120 Roche subsidiaries in finance, procurement, human resources, and IT processes.

The building is among the first to receive WELL certification in Hungary. “This milestone is another proof that Nordic Light Trio is one of the most sustainable, healthy, and inclusive office buildings in the country,” says András Ábrahám, project director of Skanska’s commercial development business unit in Hungary.

“WELL-certified buildings have a positive impact on employees’ performance and therefore on the overall performance of their employers as well, retaining their value for an extended period and being truly futureproofed investments,” he explains.

“The pandemic reaffirmed the need for healthy workplaces built with great care.

Skanska created bright, comfortable, Global Support and flexible working areas that benefit The international pharmaceutical the health of office users. The carefully company Roche Services (Europe) has designed building makes it easy to established its headquarters at the implement health and safety measures 14,000 sqm Nordic Light, designed by that affect how employees feel when Paulinyi & Partners on Váci út. The office coming back to their workplaces,” has more than 1,000 employees and Ábrahám says. provides global support and consultancy “The building has highly effective ventilation and air filtration system with microbe and mold control; water quality is also constantly controlled and monitored. Excellent lighting conditions have been created in the workplaces thanks to the electric light glare control.

The offices are designed to provide a pleasant temperature all year round and create a calm, noise-free environment for work,” he adds.

According to Atenor, which aims to attract SSCs to its projects, business complexes are expected to integrate into their surroundings by offering services, public squares, and green areas that provide a mutual benefit to the development and the surrounding areas.

The most crucial factors for an SSC office are the proximity and variety of public transport, various amenities within walking distance, Nordic Light Trio interior. the business nature of the district, and quality interiors that facilitate the wellbeing of staff and high productivity.

There is now a further emphasis on anti-virus provisions and internal organization that facilitates this.

Companies increasingly need to consider issues relating to hybrid models of office and home working and the property and facility management considerations necessitated by the post-pandemic working environment.

The Váci Corridor is regarded as an excellent SSC location that has transformed District XIII into a significant business sub-market with its direct metro links, accessible residential area, and easy access to the urban infrastructure. The South Buda area is also attracting several SSCs, although it has no direct metro links.

of leasable area,” says Tibor Tatár, CEO of Futureal.

“Due to the coronavirus epidemic, employees’ expectations have changed; therefore, companies must focus on spaces that encourage creativity, collaboration and provide a comfortable, healthy, and safe environment. There is still a strong market demand for office buildings that provide high-quality and human-centered solutions,” Tatár adds.

“Due to the coronavirus epidemic, employees’ expectations have changed; therefore, companies must focus on spaces that encourage creativity, collaboration and provide a comfortable, healthy, and safe environment.

There is still a strong market demand for office buildings that provide high-quality and humancentered solutions.”

HIPA is promoting second-tier cities such as Debrecen, Pécs, and Szeged as suitable for establishing SSCs following the success of secondary centers in Poland and the Czech Republic in doing just that.

In addition to developer-led class “A” office accommodation, cities require a strong university background, an available qualified workforce, and a modern business infrastructure. This, in turn, attracts office developers to the cities, creating a speculative office development market outside of the capitals.

This also facilitates young people being able to achieve a high standard of living without the necessity of relocating to the bright lights of the capital.

Debrecen is seen as being particularly successful in this sense, not least because the municipal government is aware of the enormous potential of SSCs and has worked to promote the city.

22 | 3

Special Report

www.bbj.hu

Budapest Business Journal | November 19 – December 2, 2021

PwC: Hungary SSCs Battle Labor Shortage, High Turnover The most significant challenges faced by shared services centers in Hungary relate to a labor shortage, a high rate of staff turnover, and growing employee expectations, according to a survey of the sector conducted by Big4 consultancy PwC.

talent pools, thereby developing GBS [global business services],” they add in the introduction to “Shared Services in Hungary: Towards New Directions.”

It is well-known that SSCs play a significant role in the Hungarian economy, although the preferred term for the government (and much of the industry) now is BSCs, or business services centers, as it implies higher value-added jobs.

The authors say that, in 2020, the sector employed more than 64,000 people in Hungary in

131

companies.

“Most Hungarian SSCs operate in the manufacturing industry, with business and financial industries also BBJ STAFF representing a large segment.”

Accounting and tax services are The big takeaway from the survey, responsible for most tasks performed here, published in mid-October, is that the focus although HR, sales, and legal services on staff satisfaction is probably crucial to are also relatively common, albeit at a lower overcoming the majority of challenges. share than for SSCs globally, PwC suggests.

The survey highlights “how the The highest percentage of outsourced pandemic has affected Hungary-based services are in the HR and accounting SSCs, with a focus on their digital and fields, where Hungarian centers carry out HR agenda,” the Budapest-based authors, around 60% of parent company activities.

Péter Selmeci and Flóra Bagyinka say.

The report points out that the Hungarian “Our results show that the pandemic put journey from relatively low-skilled the emphasis on employee expectations workbench SSCs to more complex BSCs, in order to decrease turnover and extend able to perform global services and take on

end-to-end processes, is largely dependent on having sufficient numbers of skilled staff.

Talent Pools

“The so-called talent pools are the main reason behind the development of Global Business Services: over half of the CEOs interviewed in Hungary believed that lack of employee skills drives up costs, hampers quality, impacts their ability to innovate, and affects customer experience,” the authors say.

What is sometimes called the “battle for talents” has meant services centers increasingly have to develop their employer branding in an attempt to make themselves stand out. “In fact, employers need to spend more to acquire talented staff,” the survey finds.

Average recruitment time increases with seniority, with the shortest hiring process taking up to

7-8 weeks

on average. The PwC survey suggests these figures are roughly in line with global trends, but recruitment in Hungary generally takes one or two weeks longer across almost all seniority levels.

If hiring is time-consuming, retaining staff can also be problematic. Often, the quickest way to get a promotion or a pay rise might be to join a rival SSC.

To counter that, PwC says Hungarian centers are trying to make the most of their global business services (offering more interesting, international roles) and increase employee satisfaction.

“Over half of the respondents considered talent management and employee engagement a strategic goal for the upcoming years,” the survey authors say.

More than half of the companies involved in the survey experienced 5-20% staff turnover throughout the past three years.

Looking at the averages, Hungarian SSCs faced a more significant turnover in 2020 than in 2016 (when PwC conducted the last such survey) and the global average in 2020.

Standardization and digitization processes are being deployed to reduce the human input needed and place the “focus on more exciting tasks for employees, possibly resulting in higher retention levels.” Although these trends were already indicative of the direction of travel, they have also been amplified by COVID. The study is based on a survey conducted from November 2020 to January 2021, with more than 300 participating companies from all over the world. The full report on the Hungarian market can be found on the PwC Hungary website.

PROMOTION

The Thermo Fisher Scientific Budapest Growth Story Thermo Fisher Scientific Inc. is the world leader in serving science, whose Mission is to enable their customers to make the world healthier, cleaner, and safer. The Budapest site, home to Thermo Fisher’s Global Business Services, has grown significantly over the last year with the opening of a new IT Center of Excellence and hiring more than 200 talented multilinguals. Thermo Fisher’s global shared services Vice President Dénes Láng talks to the Budapest Business Journal about this impressive growth and how putting people first during COVID-19 drove measurable business results and improved employer branding.

BBJ: How did the Budapest Global Business Services’s story start, and how far have you come?

Dénes Láng: My driver has always been to build something new and special. To open the Hungarian multi-functional center under my leadership in 2018 was a great challenge especially because the company started our shared services journey quite late. We are working to close a gap of 10-plus years within half that time. Since then, we have gone from zero employees to 500 in three years. Because of our people-focused culture, the company’s growth goes hand-in-hand with personal development. In our first two years, 30% of our colleagues were promoted; I, for example, have come to now lead a global organization responsible for shared services.

BBJ: How did the pandemic affect the company?

DL: As a world leader serving science, the company played a crucial role in the fight against the pandemic. In the past year, Thermo Fisher has contributed to countless COVID19-related projects, played a central role in

vaccine development and commercialization, and accelerated investments to support the pandemic response. Fighting COVID has led to many new business opportunities and increased customer expectations; therefore, there was an immense need for growth.

Due to growing demand, the Budapest site faced new HR challenges. Initially, we focused on business services center positions; However, later in 2020, operations were expanded with a new IT Center of Excellence targeting IT professionals. The business strategy for 2020 included the construction of an entirely new IT function. In the middle of the global pandemic, we needed something new - a robust approach to our recruitment processes to achieve our strategic goals. So, we decided to put employer branding at the center of our strategy.

BBJ: What were your aims when building this strategy?

DL: When we built the strategy, we recognized the integral role that employer branding had in supporting the broader business strategy. Our program, which

Dénes Láng was awarded this year by the Hungarian Public Relations Association, Hungarian Outsourcing Association, and HRKOMM [a competition for the HR and communications professions], provided an integrated approach to candidate experience, employee engagement, social media online recruitment, and university presence. Our goals were to raise brand awareness, have an impact on employee retention, hire at least 60 IT professionals, and involve around 10% of our colleagues in our initiatives BBJ: What were the key components of the program?

DL: Initially, the program focused on the establishment of the IT Center of Excellence. Later, the employer brand

initiative was extended to the entire organization: Customer Care, HR, and Finance, as well as IT. Forty-six colleagues applied to participate in the program. The most significant innovation was the podcast ‘Career Stories Behind the Science’. This unique format had not previously been used in employer branding in the SSC sector in Hungary. It can be integrated into all points of the employee experience lifecycle while supporting the business strategy.

The program’s impact was clear: we retained our all-time low turnover during the pandemic, we succeeded in involving 56 brand ambassadors in the program, implemented innovative employer branding solutions like the podcast, and built relevant campus relationships reaching more than 18,000 students. Finally, we managed to hire more than 60 IT professionals. We are proud that our case study was published in the Employer Branding Excellence Study Book as the only Hungarian example in 2021.

BBJ: What are Thermo Fisher Budapest operation’s future plans?

DL: The goal of Thermo Fisher shared services model is to be the backbone of the company and our Budapest operations plays a critical regional role in achieving that. We are currently working on personnel growth, continuing our employer branding activities and further developing functional skills of the team.

We are planning to expand the services in scope and scale to improve customer experience and stakeholder satisfaction.

3

www.bbj.hu

Budapest Business Journal | November 19 – December 2, 2021

Special Report | 23

Shared Service Center Operating Companies

1

deutsCHe telekom it solutions1 www.deutschetelekomitsolutions.hu

3

bp business seRviCe CentRe kft. www.bp.com/hungary

4

bt RoC kft. www.facebook.com/BTCareersHungary

5

Citibank euRope plC. magyaRoRszági fióktelepe Citi solutions CenteR budapest http://www.citibank.com/ emeaservicecenter/hungary/ csc-hungary.htm

6

7

exxonmobil Üzletsegítő központ magyaRoRszág kft. www.exxonmobil.hu

ibm HungaRy inteRnational sHaRed seRviCe CentRe kft. www.ibm.com

68,568

–

–

–

–

–

✓

–

–

✓

2,700

27,000

✓

✓

✓

✓

✓

–

✓

–

–

60 12

✓

✓

✓

2,700 (approx.)

35,366

✓

✓

✓

–

✓

✓

–

✓

–

A A

✓

✓

✓

✓

50 5

–

A A

A

A

A

✓

✓

✓

2,402

2,400

29,416

–

✓

✓

✓

✓

✓

✓

✓

–

–

✓

✓

✓

–

–

–

✓

1,928

45,619

✓

✓

–

–

✓

✓

–

✓

–

A A

1,700 (approx.)

22,637

✓

✓

✓

–

✓

–

–

–

✓

A A

vssb vodafone szolgáltató központ budapest zRt. www.vodafone.hu

1,700 (approx.)

9

genpaCt seRviCes HungaRy kft. www.genpact.com

1,000 (approx.)

10,588/

✓

✓

✓

✓

–

✓

–

950 (approx.)

38,470

✓

✓

✓

–

–

–

A

18,412

✓

✓

✓

✓

✓

–

A

A

A

A

✓

✓

✓

✓

✓

✓

A

A A

✓

–

A A

✓

✓

✓

A

A

A A

✓

✓

✓

A

✓

✓

✓

yeaR establisHed planned neW WoRk foRCe HiRed in H1, 2021

WoRk fRom Home

paRt-time WoRk

flexible WoRk HouRs

4,919

7

nokia solutions and 10 netWoRks kft. www.nokia.com

available WoRk Condition CHoiCes

A A

tata ConsultanCy seRviCes ltd. magyaRoRszági fióktelepe www.tcs.com 2

aveRage WoRk entRy peRiod (days) aveRage no. of eduCational days peR yeaR

botH

inteRnal

otHeR

CustomeR seRviCe

sales

pRoCuRement

HR

exteRnal

Client division (%)

seRviCe aReas

finanCe

total net Revenue in 2020 (Huf mln)

Company Website

no. of employees WioRking foR ssCs on august 1, 2021

Rank

Ranked by no. of employees working for SSCs

2006 A

2001 250

2009 A

2007 250

1985 A

2004 A

2004 A

2007 A

2018 A

2007 A

oWneRsHip (%) HungaRian nonHungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

– Deutsche Telekom Group (100)

erik slooten Zsolt Őrffy –

1097 Budapest, Tóth Kálmán utca 2/B (1) 456-5400 fmb-ts-itsh-info@t-systems. com

– Tata Consultancy Services Ltd. (100)

prabal datta Sachin Makwana Edit Bencsik

1117 Budapest, Alíz utca 4.

(1) 886-8000 hungary.marketing@tcs.com

– BP Global Investments Ltd. (100)

Jamie anderson – –

1133 Budapest, Árbóc utca 1–3.

(1) 866-6300 hungary@bp.com

– BT (Netherlands) Holdings B.V. (100)

péter győri Attila Szűcs Máté Fazekas

1117 Budapest, Budafoki út 91–93.

(1) 777-0850 bt.roc.communications@ bt.com

-– Citibank Holdings Ireland ltd. (100)

veronika spanarova, károly kodaj Márk Szentpáli Beáta Smid

1133 Budapest, Váci út 80.

(1) 374-5000 citibankmagyarorszag@ citi.com

– ExxonMobil Petroleum & Chemical B.V. (100)

Jeroen kirschbaum – Ágnes Zoller

1139 Budapest, Váci út 81–85.

(1) 344-3400 BudapestGBCCommunication@ exxonmobil.com

– IBM International Group B.V. (100)

edina drabik Andrea Szőke –

1138 Budapest, Népfürdő utca 22.

(1) 777-1055 info@hu.ibm.com

– Vodafone International Holding B.V. (100)

dóra debreczeni, adrienne benedek, yapici Cevdet Yapici Cevdet –

1087 Budapest, Hungária körút 40–44.

(70) 460-8000 –

– Genpact Luxemburg S.A.R.L. (100)

Jymmy-alin soare, soringabriel popescu – –

1036 Budapest, Bécsi út 52.

– communication.europe@ genpact.com

– Nokia Solutions and Networks Oy (100)

béla zagyva Erzsébet Tóth –

1083 Budapest, Bókay János utca 36–42.

(20) 977-7797 –

eaton enteRpRises 12 (HungaRy) kft. www.eaton.com

Cpl Jobs kft.

13 (Covalen solutions HungaRy) https://covalensolutions.com

14

Celanese magyaRoRszág kft. www.celanese.com

770

605

10,231

89,669

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

–

–

–

oWneRsHip (%) HungaRian nonHungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

✓

A A

– UNISYS Interntaional Services B.V. (100)

norbert makk – –

1062 Budapest, Váci út 1–3.

(1) 298-9000 ugshadmin@unisys.com

✓

2000 40

– Cooper Industries Trading Unlimited (100)

istván lenk, istván mátéka – –

1123 Budapest, Nagyenyed utca 8–14.

(1) 499-9100 bscofficemanagement@ eaton.com

2009 50

– Outsoucing Inc. (100)

simone olivo Ildikó Homoki Gergely Pusztai

1062 Budapest , Teréz körút 55/A (1) 501-5460 info.cee@ covalensolutions.com

– Celanese Holdings UK 1 Limited LLC (100)

istván katona – –

1134 Budapest, Váci út 80–84.

(1) 672-7400 –

– Thermo Fisher Scientific (100)

miklós koczor – Réka Juhász

1134 Budapest, Váci út 41–43.

(1) 686-1000 facility.budapest@ thermofisher.com

– Lexmark International Technology Sárl (100)

péter Csucska Levente Barát Alexandre Cole

1095 Budapest, Lechner Ödön fasor 8.

(1) 501-7200 karrier@lexmark.com

– KCI Europe Holding B.V. (100)

alain noel simonnet – –

1117 Budapest, Neumann János utca 1/E (1) 880-2501 –

Randstad Hungary Kft. (100) –

Rachid schmitz, lívia tóth – –

1138 Budapest, Dunavriág utca 2–6.

(30) 836-5364 info@randstadsourceright.eu

– AGCO International Holdings B.V. (100)

emese szakács – –

1117 Budapest, Alíz utca 4.

(1) 882-8300 Lilian.Seres@agcocorp.com

– Arconic Nederland Holding B.V. (100)

balázs gábor, zsuzsanna ilona varga – –

8000 Székesfehérvár, Verseci utca 1–15.

(22) 531-200 erika.sas@arconic.com

– DXC Hague B.V. (A), DXC Hague II B.V. (A)

zoltán Czibók, krisztián kovács – –

1114 Budapest, Bartók Béla út 43–47.

(1) 279-8000 cegugyek@hp.com

– IBM Global Financing Investments B.V. (100)

giorgi Chikhladze, maria Chumachenko – –

1138 Budapest, Népfürdő utca 22.

(1) 777-2111 info@hu.ibm.com

WoRk fRom Home

paRt-time WoRk

available WoRk Condition CHoiCes flexible WoRk HouRs

aveRage WoRk entRy peRiod (days) aveRage no. of eduCational days peR yeaR

botH

inteRnal

otHeR

CustomeR seRviCe

sales

pRoCuRement

HR ✓

exteRnal

Client division (%)

seRviCe aReas

yeaR establisHed planned neW WoRk foRCe HiRed in H1, 2021

unisys magyaRoRszág kft.

11 www.unisys.com

www.bbj.hu

Budapest Business Journal | November 19 – December 2, 2021

finanCe

Company Website

total net Revenue in 2020 (Huf mln)

Special Report no. of employees WioRking foR ssCs on august 1, 2021

Rank

24 | 3

✓

A A

✓

30 14

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

500

3,500

–

–

–

–

✓

–

✓

–

–

A A

450 (approx.)

5,362

✓

✓

✓

✓

✓

–

–

–

✓

A A

–

A A

✓

✓

✓

2007 A

tHeRmo seRviCes kft. www.corporate.thermofisher.com 450

15

lexmaRk inteRnational 16 teCHnology HungaRia kft. www.lexmark.hu

5,910

✓

–

–

✓

✓

✓

–

✓

393

4,097

✓

✓

✓

–

✓

✓

–

–

✓

A A

–

–

✓

17

kCi HungaRy kft. www.acelity.com

300 (approx.)

283

✓

✓

✓

–

–

–

–

–

✓

A A

✓

–

–

18

Randstad souRCeRigHt kft. www.randstadsourceright.com

200 (approx.)

2,296

–

✓

–

–

–

✓

–

–

✓

A A

✓

–

✓

–

A A

–

✓

✓

A

A

A

agCo HungaRy kft.

NR www.agcocorp.com

A

6,776

✓

✓

✓

✓

–

✓

–

✓

aRConiC-köfém mill pRoduCts NR HungaRy kft. www.arconic.com

A

149,594

✓

✓

✓

–

✓

✓

–

✓

–

A A

dxC teCHnology NR magyaRoRszág kft. www.hp.hu

A

24,699

A

A

A

A

A

A

A

A

A

A A

✓

A A

NR

ibm Capital HungaRy kft. www.ibm.hu

A

11,074

✓

–

–

–

–

–

–

–

✓

A

✓

A

✓

A

2018 A

2008 40

2010 A

2016 A

2011 A

1941 A

1991 A

2016 A

(1) Aggregate data of Deutsche Telekom IT & Telecommunications Hungary Kft. and Deutsche Telekom Systems Solutions Hungary Kft.

A = would not disclose,

NR = not ranked, NA = not appliacable

This list was compiled from responses to questionnaires received by November 17, 2021, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies’ voluntary data submissions. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14, or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

4

www.bbj.hu

Budapest Business Journal | November 19 – December 2, 2021

Socialite ‘Cloaca, Canals, and Closets’ at the Kiscelli Museum I recently discovered that the “Cloaca, Canals, and Closets” exhibition at the Kiscelli Museum had been extended until the beginning of January 2022. It takes a particularly intriguing show to make me want to venture out on a chilly November day. But this one is sure to be worth it, not least because it involves a trip out to the Buda Hills.

DAVID HOLZER

For me, the Kiscelli is the most fascinating museum in Budapest. I was first taken to the somewhat battered but still grand baroque monastery housing the various collections that make up the museum by a friend who grew up near the Buda Hills. He spent his childhood roaming the paths and trails that crisscross the Hills and, on summer nights, barbequing in a leafy glade a short walk from the Kiscelli.

“Cloaca, Canals and Closets” examines the place of what my Dad used to call

Pioneering?

“the throne” and what we do on it in culture throughout history. My father also preferred the word “lavatory” over “toilet.” He insisted that the former was polite and the latter was vulgar.

While he may have been right in terms of etiquette, technically toilet is correct; it describes the thing itself, the porcelain chariot. Lavatory comes from the Greek word “lavatorium,” which means a communal washroom.

According to dear old Google, the Americans first popularized the term lavatory and relegated toilet to the status of an unmentionable. I believe, or at least I would like to, that it was the Americans who also came up with “bathroom stationery” as a euphemism for toilet paper.

The Fountain

Alongside artifacts from throughout the history of sanitation, the exhibition references Marcel Duchamp’s 1917 “Fountain” artwork, a urinal signed “R. Mutt.”

Born in 1887, Duchamp was a French painter, sculptor, writer, and legendary chess player associated with the most revolutionary art movements of the early 20th century, including Dadaism, Cubism, and conceptual art.

Put simply, Duchamp, who died in 1968, helped shape modern art.

Andy Warhol was a fan, and it’s Duchamp’s most famous work, not difficult to see how “Fountain” Fountain, at the Tate Museum, influenced the American pop artist.

London, on March 7, 2016. Photo by Warhol’s elevation of everyday robson.miguel / Shutterstock.com household items such as Campbell’s

Now, if one were being charitable, it would be possible to argue that Duchamp was merely pioneering the art of appropriation that is today highly fashionable. The approach uses existing objects and images in art without changing them significantly. Think of Warhol’s Brillo boxes or some of the work of his descendent Jeff Koons.

The art of appropriation has a lot to do with questioning the notion of originality in art. But if Duchamp did steal – and not appropriate – “Fountain” from the Baroness, he was doing something rather less laudable.

Despite such convincing evidence that “Fountain” wasn’t Duchamp’s idea, museums such as the Kiscelli continue to attribute the object to him.

“Cloaca, Canals and Closets” also references the infamously disgusting toilet scene in the 1996 movie “Trainspotting,” a genuinely black comedy that follows the misadventures Kiscelli museum in Budapest. Photo by of a group of Scottish heroin addicts. The Geza Kurka Photos / Shutterstock.com toilet scene comes about when the junkie Renton, played by Ewan McGregor, accidentally drops his heroin into the Soup cans and Brillo boxes to icon “Worst Toilet in Scotland.” status clearly owes a debt to Duchamp.

In case you were wondering, the As far as I know, however, toilets and cloaca used in the scene was cocoa or accessories like bathroom stationery chocolate. When Renton disappears into don’t appear in the work of the the toilet, he’s sliding into half a loo with notoriously prudish Warhol. a concealed ramp. So now you know.

When Duchamp first presented Contrary to popular belief, the flush “Fountain” to the American Society of toilet wasn’t invented by Victorian Independent Artists in 1917, it was bathroom technologist Thomas Crapper. rejected. As The Guardian newspaper Credit should more properly go to Sir explains, “Duchamp, a member of John Harrington, the godson of the the board, resigned. Alfred Stieglitz English Queen Elizabeth I. In 1592, photographed it. The thing vanished, Harrington invented a water closet with but conceptual art was born. In 2004 it a raised cistern and a downpipe. Water was voted the most influential modern ran through the downpipe and flushed artwork of all time.” away the waste.

This is hardly new to anyone It was István Széchenyi, of Budapest interested in contemporary art. What bridge fame, who introduced the flush you might not know is that “Fountain” toilet to Hungary when he installed may not have been Duchamp’s work. one at Széchenyi Palace in Nagycenk, The same article in The Guardian in the Sopron region. alleges that the German-born poet and artist Baroness Elsa von FreytagLoringhoven was the actual originator Go to www.kiscellimuzeum.hu to find of the masterpiece. It was her who out more about exhibitions at the “found the object [and] inscribed it with museum. You might want to contact the name R. Mutt.” the museum first to make sure There’s substantial evidence that the show continues. I couldn’t find what seems like a preposterous any reference to it on the website, allegation might, in fact, be true. so I’m going out there on trust.

Apparently, in a 1917 letter to his sister Susanne, Duchamp mentions To read more about the Duchamp being sent a porcelain urinal as a “Fountain” controversy, search for sculpture by one of his female friends. the article “A Woman in the Men’s It was the tyrannic Surrealist leader Room: When Will the art World André Breton who attributed the Recognise the Real Artist Behind urinal to Duchamp in 1935. Duchamp Duchamp’s Fountain?” began taking credit for “Fountain” and on the Guardian website. authorizing replicas only in 1950.

26 | 4

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Budapest Business Journal | November 19 – December 2, 2021

The Complementary ‘K’ Grapes Photo by kviktor / Shutterstock.com

On a recent tour of Szekszárd, it was evident how important the black grape varieties Kadarka and Kékfrankos are to the local wine culture, both as single varietals and as critical components of the Bikavér (Bull’s Blood) blends.

Kékfrankos makes fruity and flavorsome wine that is sometimes floral but also vibrant with zesty acidity.

It is nicely structured and easy to drink with its medium-bodied rather than full-bodied character. It also develops beautifully with age.

ROBERT SMYTH

While there is plenty of fervor for the frisky yet fragile former, with winemakers barely able to make enough of it to quench consumer thirst, the latter continues to be a hard sell, despite some gorgeous wines being produced. Winemaker after winemaker in Szekszárd described the antipathy of domestic consumers to this lateripening variety.

Many wine lovers undoubtedly still conjure up in their minds the caustic, thin, and sometimes vinegary Kékfrankos wines of the past. This is a pity as not only is this pan-Central European grape Hungary’s most planted variety, it is highly reliable in the vineyard and nowhere near as tricky to grow as the sensitive, uneven-ripening, and disease-prone Kadarka. Kékfrankos delivers good to very good wine vintage after vintage, to boot.

It is capable of really high quality, as the Austrians have shown with worldclass wines made from the same grape over the border in Burgenland, where it is known as Blaufränkisch. Some equally impressive offerings are currently being made around Hungary, now that winemakers have come to appreciate how good it can be and have also put more focus on indigenous varietals.

When yields are sufficiently low, Kékfrankos makes fruity and flavorsome wine that is sometimes floral but also vibrant with zesty acidity. It is nicely structured and easy to drink with its medium-bodied rather than full-bodied character. It also develops beautifully with age as the tannins become delightfully fine-grained.

Even in Hungary, but more especially internationally, tastes are starting to

Fragile Glory

This latter grape is going from strength to strength, especially now that winemakers are starting to allow it to express itself in all its fragile glory, rather than hiding its true character behind a cloak of oak. Instead, large used barrels have become the norm, or even Flexcubes with a few oak staves inserted to give just a hint of wood.

Szekszárd, where the grape was not completely downtrodden during communism, is considered a stronghold of Kadarka, with fabulously featherlight, pale ruby wines being made from the widespread P9 clone, as well as more complex offerings from clones from older vines, or a mix.

Tasted from the barrel in October, János Németh’s Kadarka 2021 had a delicious peppery character. This wine includes the P9 but also other clones. Németh says the P9 makes spicy wines, but its compact grape bunches can be too tight and make it highly susceptible to disease, meaning that good wine can only be produced in excellent, disease-free vintages.

The other clones have looser bunches.

favor elegance over intensity, which suits this grape’s natural characteristics. (Try to dress it up in oak to add body and weight, and it tends to fall flat trying to become something that it is not.)

Good Articulator

Kékfrankos is also starting to prove itself as a good articulator of terroir, something that comes across very nicely in a trio of single-vineyard wines from Heimann Családi Birtok, as part of the 2019 vintage from the Heimann & Fiai (Sons) range.

While being harvested on different days, the vinification is essentially the same for all three wines of the 2019 vintage: All were spontaneously fermented in whole bunches. Zoltán Heimann Jr., who studied winemaking in Geisenheim, Germany, and worked at various wineries abroad, says this can add more layers and length to the wine, though less color.

They were then aged in large barrels to preserve the fruitiness, with little sulfur added at bottling. The first wine comes from the protected Bati

Kereszt vineyard, where the grapes ripen late and exude a floral character.

Alongside this is the offering from the sunny, southeast-facing, and open Baranya-völgy vineyard, which absorbs the heat from the Great Plain and forms a rich, robust wine.

Finally, there is Szívem, which is a plot of old-vine Kékfrankos planted in the Baranya-völgy in 1969 that yields a very concentrated yet pleasantly airy, vibrant, and elegant wine with seductive aromas. The first two cost HUF 5,650 and the third HUF 9,800 from Bortársaság.

Heimann Jr. sees the Heimann & Fiai range as an opportunity to develop stylistically with the Kadarka and Kékfrankos grape varieties. He is just as obsessed with the former, and his Facebook handle is, in fact, Kadarka Man. The two grapes complement each other so well, with Kékfrankos offering bags of fruit and spiciness, though with more body attached, while Kadarka is lighter and more playful with tongue-tingling acids.

Outstanding Kadarkas are now being produced in other regions too.

From Eger, Orsolya Pince’s Kadarka 2018 comes from 11 clones in two vineyards in the village of Ostoros and is zesty yet balanced, with notes of hibiscus, cloves, pomegranate, and anise.

The Orsolya cellar believes the use of different clones is the secret to a good Kadarka. These were selected from vines belonging to József Szentesi in the Etyek Buda region (with the cooperation of the Pécs Research Institute), as well as the Ménes clone, which is behind the immensely popular and quite different Kadarka of Géza Balla, whose winery is just across the Romanian border and close to Arad.

Szentesi (sometimes known as “The Mad Professor”) also makes fine Kadarka and works with a pile of ancient Hungarian varieties that hail from the pre-phylloxera era.

From Hajósipincefalu (considered to be the world’s biggest cellar village) in the Hajos-Baja wine region, the bijou Sziegl Pince, which follows a natural approach, has two exceptional singlevineyard bottlings of Kadarka that serve up different aspects of the grape variety and are well worth searching out.

4

www.bbj.hu

Budapest Business Journal | November 19 – December 2, 2021

News///in brief Cultural

Pandemic Hits Household Spending on Culture It probably comes as little surprise that the pandemic hit our spending on culture and recreation, according to data from 2020 compiled by the Central Statistical Office (KSH) and released this month. In total, household spending on culture and recreation dropped 8.9% to HUF 88,900, and expenditures on catering and accommodation fell 17.6% to HUF 52,400. Spending on clothing and footwear also slipped by 7.2% to

Socialite | 27

PARTNER CONTENT

French-Hungarian Chamber Marks 30 Years

HUF 51,800. We did spend more in some areas, however. Consumption expenditures on food and non-alcoholic beverages rose 9.9% to HUF 357,500, according to the data. Per capita spending on furnishing, household equipment, and routine maintenance increased 10.4% to HUF 63,700. Health expenditures climbed 9.9% to HUF 74,200. Expenditures on communication rose 8.4% to HUF 101,200. Headline consumption expenditures per capita of households increased 2.8% to HUF 1.369 million in 2020.

Hungarian World Expo Pavilion Attracts 100,000, Including Crown Prince The Hungarian Pavilion at the 2020 World Exposition in Dubai has attracted 100,000 visitors since the fair opened in October, the Hungarian

Tourism Agency (MTÜ) told state news agency MTI. Among the visitors was Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai. The prince arrived with a 40-member delegation, including the CEO of Emirates Group Ahmed bin Saeed Al Maktoum. The Hungarian Pavilion was designed by Lőrinc Csernyus and is the largest wooden structure in the Persian Gulf region. Called Aqua Roots of Hungary, the pavilion showcases water, a resource in which Hungary is rich. Expo 2020 Dubai will run until the end of March 2022. The expo was postponed for a year because of the pandemic.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai, in the Hungarian Pavilion. Photo by MTÜ

This year, the French-Hungarian Chamber of Commerce and Industry has been celebrating its 30th anniversary.

To mark the occasion, it launched a podcast series at the beginning of the year, in which member company executives tell stories about the past decades and their current news.

More recently, on September 25, the chamber held a prestigious gala evening, entitled Jardin des Lumières (“Garden of Lights”), hosted by the beautiful garden of Klebelsberg Kastély (Klebelsberg Castle), in Budapest’s District II.

The 30th anniversary celebration year will be closed with a booklet called Réussites (Sikertörténetek or “Success Stories”), which will be presented at the chamber’s annual Christmas party.

More information on the chamber, including its 30th anniversary celebrations, can be found on its website: www.ccifrance-hongrie.org/hu

Vilmos Huszár: Baccara Game, ca. 1928–1929 © Museo Nacional Thyssen-Bornemisza, Madrid

Paul Cezanne: The Card Players, ca. 1893–1896 © Musée d’Orsay, Paris

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