IVSZ ICT market survey 2008 – a comprehensive study on the Hungarian IT and telecommunication market

IT market has increased with a moderate rate, while telecommunication sector has shrunk IDC has made a survey on the Hungarian IT market for the third time in 2008. The survey – ordered by IVSZ – analysed telecommunication market for the first time. The IKT market study of IVSZ is about the size, structure and results of Hungarian and foreign IT and telecommunication service markets comparing to the previous year (this one is about 2007).

About the study

It is extremely difficult to measure the performance of the industry due to its complexity and versatile actvities; IVSZ IKT Market Survey 2008 however, mentions certain types of markets, activities, sub-markets, analysis according to the size of companies, technological and versatile segments. 
Methods of the research are not based on general international standards, but on individual methods that were created to uniquely reflect the nature of the Hungarian market.

Using results in course of business

Research enables the strategy designer and executives of different market organizations to measure up both current position and opportunities for the future. It analyses market per different technological segments suiting current practice (8 harware, 13 software, 3 seperate consulting segments).

Survey can be a good way of measuring up competitives and power relations of the market. It may also help in creating entry plans for new market segments reducing risks and costs (for example resources to be paid on market research).
With the help of the research, benchmarking can also be done, one may form a position for their company on the basis of net profit rate of IKT industry that shows us how profitable the given sector is.

Growing IT market, decreasing telecommunication market

The overall size of Hungarian IT and Telecommunication market reached 1.476 billion HUF; the market of telecommunication services slightly fell back whereas IT market modestly grew in 2007.

Annual increase rate of both markets decreased in post 2005 years, moreover, telecommunication market started to shrink last year.

Beside Hungarian IT market there is an 845-billion-HUF IT export market. The latter’s increase rate is also lower comparing to previous years, however it still may be considered as a dynamically expanding market with its 8.4% growing rate. 

Telecommunication: constantly sharpening competition, diversified services

Thanks to end users, the Hungarian telecommunication market reached 885 billion HUF in 2007, which was a 2% fall back comparing to previous year.

The primal reason for this is the decrease of segments of voice-based services.

Competition experienced by service companies force them to diversify their range and to look for income sources, such as mobile dataservice or mobile internet.

Fall back of telecommuniction is also a consequent of economic slump that reached telecommunication faster than IT and had a greater impact on it than it had on IT.

The biggest part (47.6%) of the income of telecommunication market was made by voice-based mobile services followed by wired voice services with a 30.5% share. The rest of the incomings (21.9%) came from internet access and data transmission services.

Informatics: IT services have the advantage in numbers

IT costs of end user companies for external suppliers reflects in consolidated IT market that surpassed 590 billion HUF, its growth was 4% higher than it was in 2006.

End users mostly paid on IT services (264 billion HUF) and hadware provisions (231 billion HUF) which mean 8.1% and 0.3% growth comparing to pervious year.
The increase of the value of software provisions had a position between the two results with its 4.9%, so this sub-market made 95 billion HUF.

As for the rates, IT services had 44.7% of the whole market, whereas hardwares slaes made 39.2%, sowtware sales made 16.1%.

The difference between the size of cumulative and consolidated market reached 292.1 billion HUF. The difference consists of the volume of transactions between IT companies including sales of hardwares, softwares, transmitting IT services.

This means that every 1000 HUF end users paid resulted in a 1495 HUF turnover at IT companies.

Out of the eleven vertical market sectors determined in the study, telecommunication, IT and media industries spent the most on external IT suppliers in 2007.

Being the second biggest spender, financial sector includes banks, ensurance companies and financial service companies.

Processing industry proved to be the third most remarkable vertical segment in the previous year.

As for spending on IT, we are still file-closers.

As for the share of the numbers of clients, two-fifth of IT spending came from companies having more than 500 employees.

The segment of medium-size companies and organizations employing 100-499 people totalled up to one-forth of the market, whereas small companies and organizations employing 10-99 people had a 20% share of the whole market. 

Micro companies and households employing 0-9 people had the rest of the market. 

Hungarian IT spending was the third biggest in Central Eastern Europe following Poland and the Czech Republic.

Growth expressed in euro was 9.7%, which means Hungary was a file closer along with other countries like the Czech Republic, Croatia and Slovenia.

Romania and Bulgaria had both outstanding growth with their 26.1% and 23.8%.

Source: IVSZ

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