As organizations face an intensifying сompetition for specialized technical talent, particularly in data analytics, AI, and software engineering, Hungary's ICT sector offers a strategic solution for accessing skilled professionals. With the IT outsourcing market projected to reach $35.19B in 2025 and expanding at 11.41% CAGR to $60.4B by 2030, Hungary has positioned itself as a strategic solution provider in this growing sector.
The country specifically addresses critical business challenges that companies face today: the shortage of specialized developers, mounting development costs, and complex EU compliance requirements. Hungary's IT outsourcing services provide access to a large pool of skilled professionals, cost-effective delivery models, and seamless integration with EU business practices for companies struggling to find and retain technical talent in competitive Western markets.
Let's examine the key market characteristics, development hubs, and industry strengths that make Hungary an attractive destination for IT outsourcing partnerships.
IT outsourcing market in Hungary: Size, growth factors, and tax incentives
Hungary's IT outsourcing industry demonstrates strong growth potential, with revenue expected to reach $800M in 2025 and expand to $1.16B by 2029, driven by a strong CAGR of 9.8%.
Several key factors drive Hungary's IT outsourcing market growth. Companies increasingly turn to IT outsourcing to reduce costs and improve efficiency, attracted by Hungary's highly skilled and diverse IT talent pool. Market trends include emerging trends such as growing demand for cloud-based services and increased adoption of automation in IT processes. Hungary's competitive advantage stems from its favorable business environment, including a low corporate tax rate and well-developed infrastructure. Its European Union membership provides access to a large market. The country's growth in IT outsourcing is further supported by its stable political environment, growing economy, and highly educated workforce.
Hungary offers comprehensive R&D tax incentives through various mechanisms, including corporate income tax allowances, innovation contribution relief, a Development Tax Incentive, and full social security exemptions. Additional benefits introduced in 2019 include R&D tax credits and exemptions for small businesses under the KIVA tax system. As a result, major international companies, including Siemens, Microsoft, Deloitte, Ericsson, Nokia, and TATA, established R&D facilities in the country.
Hungary's biggest IT outsourcing hubs
IT outsourcing in Hungary primarily centers around Budapest, the dominant tech hub, but several other cities have emerged as notable outsourcing destinations. Szeged, known for its university's focus on computer science, serves as a developing outsourcing center. Gyor, a university city, has attracted software development companies due to its access to fresh tech talent and lower operational costs compared to the capital.
Budapest
Budapest continues to drive the country's development and ranks 31st in Tholons Services Globalization City Index. The capital has around 130 software development companies, with 37.5% catering to financial services companies and 36.7% specializing in projects for the IT industry. Companies serving ecommerce (25.8%), business services (25%), and healthcare (23.4%) domains form the next tier of specialization, followed by those focusing on consumer products and telecommunications at 16.4% each. The industry expertise of local tech companies spans both traditional and emerging sectors, from serving manufacturing and education clients (12.5% each) to automotive (11.7%) and government services (9.4%). These companies also maintain a presence in specialized niches such as gambling, gaming, GPS navigation, and dental software development. Budapest hosts several major tech events, including Brain Bar and Startup Safari, which create a dynamic ecosystem where innovation thrives alongside established development methodologies.
Gyor
Gyor is home to 121 software development companies with 40.5% catering to financial services businesses. Companies serving ecommerce (27.3%) and business services (26.4%) vendors follow, while those developing healthcare software account for 24.8%. Firms focused on telecommunications (17.4%) and consumer products (16.5%) industries form the next tier, followed by those serving education and manufacturing clients at 13.2% each. Companies specializing in the automotive sector, reflecting the city's industrial heritage, represent 12.4%, matching other specialized industry segments at the same percentage. Győr's proximity to automotive manufacturers has fostered specialized expertise in embedded systems and IoT solutions, with many local development teams directly supporting industrial automation and smart manufacturing initiatives.
Szeged
Clutch lists 18 software development companies in Szeged, with 44% catering to business services and information technology clients. Vendors serving financial services companies follow closely at 39%, while those specializing in healthcare for 28% of the market. The city maintains a balanced mix of mid-tier sectors, with firms focusing on software development for advertising and marketing, ecommerce, education, manufacturing, and non-profit services each representing 17% of companies. Szeged has developed a strong reputation in bioinformatics and healthcare software development, leveraging its university's research capabilities. The city is home to the ELI Attosecond Light Pulse Source facility, which specializes in ultrafast physics research using high-intensity lasers.
Key advantages of IT outsourcing in Hungary
When considering IT outsourcing to Hungary, understanding the country's specific strengths allows you to make informed decisions that align with your strategic objectives and technical requirements. This knowledge enables you to identify optimal partners with the right expertise, anticipate communication patterns, and leverage specialized skills that could provide competitive advantages while mitigating potential risks in your outsourcing relationships.
Growing talent pool of skilled experts
Hungary's educational infrastructure ensures a steady influx of IT talent with strong technical skills required for outsourcing operations. The country's ICT education system has demonstrated significant growth, with total ICT students reaching 24,237 in 2021 and ICT graduates increasing to 4,034 that same year-a 135% increase from 2015. The country's STEM programs at universities and technical schools consistently produce qualified IT professionals in key technical fields, with 90% of ICT students pursuing bachelor's degrees and 10% enrolled in master's and doctoral programs, according to the Future of IT 2023 report. Upskilling initiatives help these professionals stay current on emerging technologies, ensuring Hungary maintains a competitive IT workforce. The high international student enrollment (13.2% tertiary inbound mobility rate, 16th globally) contributes to a multilingual talent pool-a significant advantage for IT outsourcing operations serving diverse global markets. These educational strengths ensure a steady influx of ICT experts for Hungary's expanding IT sector.
High English proficiency
Hungarian tech professionals demonstrate strong English language skills, ranking 17th globally in the EF English Proficiency Index. This high level of English proficiency allows smooth communication in international projects and cross-cultural team environments.
Cultural compatibility
According to Hofstede's cultural dimensions analysis, Hungarian developers' cultural alignment with Western business practices is reflected in several key characteristics. Their high achievement motivation score (88) demonstrates a strong focus on performance and results, while their individualistic tendency (71) supports merit-based recognition and personal responsibility. A high uncertainty avoidance score (82) indicates their preference for structured work approaches and careful planning, though this may occasionally impact innovation speed. Notably, their low power distance score (46) facilitates direct communication and active participation in decision-making, creating an environment where technical feedback flows freely, and team members contribute openly to project discussions.
The structure of the IT outsourcing market in Hungary
Most of Hungary's IT outsourcing sector is dominated by smaller firms with up to 250 experts on board, with companies having fewer than 50 employees representing 74% of the market. Mid-sized companies with 50-249 employees account for 20% of the sector, representing a significant portion, while large and enterprise-level organizations comprise a smaller but influential market segment. The IT outsourcing sector in Hungary serves diverse client industries, with companies primarily specializing in information technology and financial services. Software development for business services, ecommerce, and healthcare domains also takes up a significant market share. The ecosystem is further enriched by companies delivering projects to clients from consumer products and services, telecommunications, education, manufacturing, and other industries.
Read more: Top Destinations for Software Development: Ukraine vs Hungary
IT outsourcing in Hungary vs. other CEE countries
When choosing a vendor for outsourcing software development to Hungary, base your decision on your specific business requirements and strategic objectives. Before initiating any partnerships, create a detailed checklist of technical specifications and evaluate potential vendors across different Hungarian tech hubs according to your priority criteria.
Carefully consider the vendors' industry expertise and technical specializations. Working with development teams with experience in your or similar business domain can significantly streamline project implementation and enhance overall results.
Hungary's position in the regional IT outsourcing market offers a balanced option with 180K technology professionals-significantly more than Croatia (67K) or Moldova (33.5K), but more modest than Poland (525K) and Ukraine (340K). The country produces 4,034 ICT graduates annually, outpacing Slovakia (1,600) and Croatia (1,700), but falling short of Ukraine's 16,000 and Poland's 13,400 graduates. With 157 companies listed on Clutch, Hungary offers more options than Slovakia (70+) and Moldova (60+), but significantly fewer than Poland (1,300+) and Ukraine (1,000+). Hungary is a mid-sized but growing player in the CEE IT outsourcing market.
Wrap-up
Hungary's IT outsourcing sector shows sustained market growth, supported by its technical education system, high English proficiency, and investment incentives. The market encompasses multiple development hubs beyond Budapest, with Hungarian technical professionals demonstrating strong alignment with Western business practices.
N-iX offers strategic advantages for IT outsourcing in Hungary through its established regional expertise, comprehensive security compliance frameworks, and proven track record of partnerships with Fortune 500 enterprises and industry leaders. With 2,200 tech experts across more than 25 locations in Europe and the Americas, N-iX leverages its strong employer brand and sourcing expertise to attract and engage top talent. Our hiring capabilities and deep local market understanding make it an optimal partner for organizations seeking to access Hungary's technology talent pool.
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