Budapest Business Journal 2612

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BUSINESS JOURNAL BUDAPEST

VOL. 26. NUMBER 12

JUNE 15 – JUNE 28, 2018

SPECIAL REPORT Shared Services Centers SPECIAL REPORT

Maturing Market Moving up from SSCs to BSCs Róbert Ésik, president of the Hungarian Investment Promotion Agency, talks exclusively to the BBJ about what HIPA is doing to promote the growth of the business services sector in the country.  10 SPECIAL REPORT

Chicken and Egg: SSCs Need Offices, Offices Need SSCs Could a functioning commercial office market develop in the likes of Debrecen, Pécs and Szeged, as has occurred in secondary cities elsewhere in CEE?  18

Rise of the Robots

SOCIALITE

Hungarian Wines Pulling in the Points Hungarian wines performed admirably at this year’s Decanter World Wine Awards, with four Magyar entries achieving the much-coveted Platinum medals, the category that sits above gold.  22

NEWS

Ericsson Research and Design HQ Opened

Ericsson has officially opened its new research and design headquarters at the Nobel Prize Winners Research & Development Park, located on the Buda side of the Rákóczi híd.  4

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LR EC I A

EPOR

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Balázs G. Nagy, president of the Hungarian Service and Outsourcing Association, talks about the challenges facing the sector, and his belief that robotization offers it great possibilities for the future.12 BUSINESS

Conservative Budget and Partnership on Offer

The Hungarian government is open to the idea of allowing foreign workers to fill employment gaps, the Minister of Finance has told members of the American Chamber of Commerce in Hungary.  6

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THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy, Bence Gaál,

David Holzer, Christian Keszthelyi, Gary J. Morrell, Rob Smyth, Zsófia Végh, Ágnes Vinkovits.

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MATURING MARKET OFFERS MORE INTERESTING CAREERS Having looked at the automotive sector two issues ago, this time we report on that other great Hungarian success story of recent years, shared services centers.

Indeed, it has been such a success that it looks like the name itself is being given an upgrade. As our interview with the president of the Hungarian Investment Promotion Agency makes clear on Page 10, that agency now talks about Business Services Centers, or BSC, rather than SSC. That puts it in line with the real estate world, which has apparently long considered shared services and business process outsourcing as subsets of the business services sector.

I am aware there is a real danger of being submerged in alphabet soup here (a cup pf BPO, anyone?) but the change in nomenclature also reflects a rapidly maturing market. When the first shared service operations began to open up in Hungary, they were little more than glorified call centers or back office operations. Back then, they came because the wage levels in Hungary meant it was much cheaper to house such operations here. That is no longer the case, but then the centers themselves have long since moved on from such mundane tasks.

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Provided you have the requisite language skills, there are genuinely interesting careers on offer in the BSCs of Budapest and, increasingly, provincial cities such as Debrecen, Szeged and Pécs. ExxonMobil’s global cybersecurity team, for example, is based in its Budapest office. These are exactly the sort of high-end jobs – value added, as the government always refers to them – that might persuade bright young graduates not to leave the country in search of a better paid career, and even tempt those that have already gone abroad to come back.

As with virtually every industry, digitalization is increasingly coming to the forefront here. The smart reception being developed in Hungary by SAP Labs (soon to be augmented by a robot, it seems) is only the most obvious example. But none of the center heads we spoke to seemed unduly concerned by what automation might mean for their headcounts. Rather, they welcomed the possibility it would take away routine tasks and enable their Gen Y and Z employees to concentrate on more fulfilling roles.

Zoltán Szabó, general manager of BT Global Services’ EMEA Regional Operations Center (to keep the alphabet soup story going, BT refers to it as the ROC) gave me an interesting metaphor for it when we met.

“It is like the invention of the washing machine,” he said.

“When the washing machine came along, the washing did not disappear, but it became much easier to deal with, allowing people to do other more interesting things and improving their quality of life.”

I am more than happy to raise a cup of BPO, or even something more cheering, to an improved quality of life.

VISIT US ONLINE: WWW.BBJ.HU

Robin Marshall Editor-in-chief

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News

///macroscope Photo by Tamás Kovács/MTI

Hungary’s Budget Targets ʼSafe Growthʼ

Hungary’s finance minister has submitted the draft budget for 2019 to Parliament. The draft assumes an ambitious 4.1% GDP growth and a 1.8% deficit.

ZSÓFIA CZIFRA

The “budget of secure growth” – as it has been dubbed by the government – was presented to Parliament for discussion on June 13. Minister of Finance Mihály Varga said that major changes cannot be expected in taxation, noting that the

15% tax

on personal income will remain in place.

The government earmarked HUF 101 billion more for healthcare than it did last year, while there will be HUF 15 bln more for education.

One of the main characteristics of the 2019 budget is that it targets a 1.8% general government deficit, way below the 3% of GDP recommended by the EU. Next year’s budget is planned with increased reserves and a smaller deficit to provide a defense for possible crises on international markets, Prime Minister Viktor Orbán said in his regular weekly interview with public radio Kossuth Rádió last Friday.

“Operationally this is a balanced budget,” Orbán explained. “Therefore if we ask how much the budget will allocate to the operation of the state and the country, then we can say that we are spending what we are producing, or earning. The deficit is all accounted for by future investments, and so investments create the deficit,” he said.

Minister of Finance Mihály Varga (left) submits the bill on the 2019 budget to László Kövér, Speaker of Parliament, on June 13.

Umbrella Reserves

As for the reserves, he said: “It’s not yet raining, so a storm has not yet arrived – much less a hurricane. But there are clouds in the sky, and if these create an adverse formation, a crisis could result.”

Continuing the metaphor, the increased budget reserves are an “umbrella”, he added.

The planned deficit is not only below the 3% cap, but well under the 2.4% target in the 2018 budget. The bill would also raise fiscal reserves

by

50%.

It also targets a reduction of the state debt ratio to 70.3%, from the 72.9% foreseen for the end of 2018. In addition, the government foresees the structural deficit at 1.7% of GDP next year, a drop from the 2.1% targeted for this year, but still over the 1.5% medium-term budgetary objective (MTO).

OECD Raises GDP Projection for 2018 “Economic growth is projected to remain strong but to slow somewhat in 2019 as capacity constraints bite,” the OECD writes in its latest economic forecast. It says that private consumption will be boosted by real wage gains and employment increases, and investment will be stimulated by private firms and the disbursement of EU structural funds. The OECD projects that inflation will exceed the central bank’s 5% mid-term target in early 2019, as wage

increases resulting from tighter labor market conditions will see CPI rise. With strong economic growth, a faster reduction of the budget deficit would allow the government to finance higher future age-related spending, the organization states.

The OECD raised its GDP growth projection for Hungary, it now calculates with an increase of 4.4% in 2018 – which exceeds even the Hungarian government’s projection – and 3.6% for 2019, which is below the government’s forecast.

The deficit goal set in the government’s draft 2019 budget bill, as well as the planned reduction of the state debt to GDP ratio, are achievable, the Fiscal Council commented in an opinion on the draft. The council warned, however, of risks to growth. The council emphasized that the budget draft is based on 4.1% economic growth in 2019, which exceeds analysts’ projections varying between 2.8% and 3.5% and can be achieved only if wages and employment grow at the projected high pace and household consumption rises as a consequence at the assumed high pace.

The draft budget targets a 3.8% rise in non-consolidated revenues of the central government subsystem next year, and a 1.8% rise in its expenditure.

The draft bill also projects an annual 8.8% rise in the gross average wage, a 1.5% rise in employment, and a 3.9% real-term increase in household consumption.

The council noted that the projected 9.5% rise in gross fixed assets accumulation or investments assumes a dynamic rise of lending and private sector investments, which are still significantly influenced

by EU and Hungarian budget-funded developments.

International Risks

The council also warns of increasing international risks, saying that steps to improve competitiveness may support the achievement of the projected growth rate, but uncertainties in the international economic environment may add to risks.

If wages and domestic consumption grow more slowly than expected, tax revenue targets can be at risk, the council said,

Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) will publish data on the April performance of the Hungarian construction industry on June 15. January-April earnings will be released on June 21, followed by the second estimate of the April performance of the retail sector on June 22.

The state of the Hungarian labor market will be in focus on June 28, and industrial producer prices will be released a day later.

specifically mentioning the VAT revenue target. The draft bill proposes a

9.5% rise

in revenues from consumption related taxes, up from the 2018 target, including a 11.6% rise in VAT revenues.

As for inflation, the budget projects an annual average consumer price inflation of 2.7%, getting closer to the central bank’s 3% mid-term target.

The council identified, in contrast, a positive risk in EU funding inflow as the draft assumes a relatively low inflow.

The council said it considers the planned size of the Country Protection Fund, set up to manage unforeseen risks, as necessary. The draft bill contains HUF 60 bln for the fund, and a further HUF 110 bln of reserves set aside for extraordinary government measures. A vote on the budget bill is scheduled for July 20.

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WELL Adapts Interior Sustainability System With WELL interior sustainable accreditation expected to become the norm in Hungary and the wider European office markets, the organization has announced changes to the system.

GARY J. MORRELL

In the new version of WELL the concepts have been reorganized into ten-plus-one concepts: Air, Water, Nourishment, Light, Movement, Thermal Comfort, Sound, Materials, Mind, Community, plus Innovations.

The most important change for the European market is seen as the new approach to performance verification.

In the first version, documentation was sent to the United States but in “WELL v2” projects are allowed to contact local providers. Thus the developers of European projects have the possibility to save time and money according to the International WELL Building Institute.

“WELL v2 operates on a points-based system, with a total of

100 points

available to each project, plus ten innovation points,” the IWBI said. “All

Budapest One by Futureal. optimizations have maximum point values. The point-value of a feature is determined by its potential for impact.

This is defined as the extent to which a feature addresses a specific health and wellness concern or opportunity for health promotion, and the potential impact of effective intervention.

Regina Kurucz, an architect and WELL building energy assessor, commented: “I think that WELL will become the norm. WELL projects may be perceived as having added value. Since the WELL Build Standard focuses on the health and wellness of the people, there may be increases in productivity and employee retention. WELL certification requires the evaluation of the triple bottom line of the product: the framework of social, financial and environmental bottom line.”

The WELL system has also been extended to other classes of buildings such as hotels. “My favorite change is that, in the new version, all buildings can apply regardless of their function. This is important, because people should have a healthy and inspiring environment wherever they are; at home, in the office,

at school as well as at a sport, cultural or recreational facility,” she added.

Pre-certification

There are as yet no actual WELL certified buildings in Hungary, although three office buildings have reached the pre-certification level and six projects are registered.

Advance Tower, Budapest One and Corvin 5 - Corvin Technology and Science Park by Futureal are all pre-certified. An example of a registered building is the Europa Design office and showroom.

“With achieving a WELL Certification, Europa Design wants to strengthen the company’s commitment to the work-life balance idea in our office spaces,” said the company.

“In Hungary we have a good base for WELL buildings, because with reasonable focus we can fulfill the requirements of clean air and water preconditions and optimizations,” Kurucz reckons. “The

Hungarian culture is open for changes in nourishment and movement activities.

In my view, a big challenge will be to convince offices of the need for quiet spaces for relaxation and private phone calls. Relaxing areas help to reduce stress and improve work quality.”

There are no certified buildings as yet in Germany, Czech Republic, Poland or Austria. There are currently four “Gold” certified buildings and one “Silver” in France, three “Gold” and one “Silver” in the United Kingdom, and one “Gold” in both Ireland and Spain. No “Platinum” level buildings have been achieved. Nearly 300 industry professionals in Europe have also successfully passed the WELL Accredited Professional exam, highlighting the growing pool of practitioners and industry professionals looking to develop and demonstrate their understanding of healthy building strategies.

“The new version of WELL building standard puts great emphasis on the power of communities,” concludes Kurucz. “There is even a new group of features called Community Concept. Small and large

“My favorite change is that, in the new version [of WELL], all buildings can apply regardless of their function. This is important, because people should have a healthy and inspiring environment wherever they are; at home, in the office, at school as well as at a sport, cultural or recreational facility.” communities can be a significant factor in the physical and mental wellbeing of occupants. The WELL Building Standard can help companies to attract and keep the best workforce. I think this is an invaluable accomplishment when the workforce is scarce.”

Ericsson Research and Design HQ Opened Ericsson has officially opened its new research and design headquarters at the Nobel Prize Winners Research & Development Park, located on the Buda side of the Rákóczi híd.

GARY J. MORRELL

The 24,000 sqm LEED Gold accredited complex has been designed by László Szerdahelyi and József Pesti from Wing’s in-house architects, Aspectus. The general contractor was Strabag and the project has been financed by a consortium including UniCredit Bank Hungary, UniCredit Bank Austria, and K&H Bank with an investment value of HUF 20 billion. Wing is planning to undertake development of a further 23,000 sqm phase of the project in the coming weeks.

The location of the new headquarters, in the vicinity of the Technical University of Budapest and Infopark on the Buda bank of the Danube, was regarded as central for a unified research and development and administrative center by Ericsson.

Natural Location

“This is the natural location for our new headquarters, in large part due to our cooperation with the Technical University of Budapest,” said Börje Ekholm, president and managing director of Ericsson. The new complex will include a 1,000 sqm

research and development facility as the company is working on development of the new 5G network. Wing has agreed a seven-year lease with Ericsson;

1,800 staff

will be employed at the complex, which has a capacity for as many as 2,000 people.

Wing has tended to opt for the more cautious built-to-suit office development option in recent years as the company has diversified into the retail, industrial, hotel and residential markets. In District XI, the Hungarian developer is due to deliver the 57,000 sqm, built-to-suit, Magyar Telekom headquarters in the fourth quarter. The project, designed by TIBA Építész Stúdió Kft., is the largest single block office center under construction in Budapest, according to Wing. The company has the option on an adjacent development plot in what is a developing business area; Skanska also has an office development project here.

“We are a trusted partner for multinational companies in Hungary seeking long-term property solutions, as evidenced by our HQ developments and references for such companies as EON, Telekom, Allianz and others. The new Ericsson Headquarters continues this trend,” said Noah Steinberg, chairman and CEO of WING.

Ericsson Ház by Wing.

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Business Most of our automatic associations with “disruption” are negative, such as an unwelcome event that ruins a rhythm or pattern, or something that wakes you up at night. When it comes to business and technology, however, disruption is mostly associated these days with innovation that displaces an existing market or value network.

NATHAN JOHNSON

AmCham Hungary’s fourth “HR Dream Day” event, held on May 30 at the Google Ground in Budapest, brought together leading experts and practitioners from the HR field to debate the merits and demerits of disruptive HR technologies versus their so-called classical counterparts.

The intriguing event featured two keynote speakers (Natavan Aliyeva from Lee Hecht Harrison, and Eszter Vida from SentiOne) and three panel discussions, focusing respectively on: recruitment and employer branding; development; and leadership development.

“We live during a time of unprecedented disruption,” Aliyeva addressed the participants. “What the profession needs to do is both build the new and strengthen the old. Every transformation is unique, and you can create your own successful blend. We should all be excited that we’re in one of the best professions.”

New technologies are not only changing the way companies evaluate prospective employees, but are changing the ways in which people apply for jobs. Moderator Csaba Fehér led a five-person panel discussion to evaluate the impact of these new dynamics.

“With new tools such as skills swiping, and with our ability to take advantage of

Photo by AmCham/Hajnalka Hurta

In With the new and out With Some of the Old

The recruitment and employer branding panel discussion at the fourth AmCham HR Dream Day conference. enriched data, we’re able to get a better look at candidates in much less time,” said Krisztián Zsédely from Profession.hu.

BlackRock Hungary COO László Hegedű-s noted the need for his firm’s 45-person HR staff to employ cutting-edge technology.

“We’re a niche market, so we need to show something interesting,” he said. “The most striking example, perhaps, is that we used virtual reality software to showcase our new office.”

Judit Simonyi, a partner at Simonyi and Tóth Personnel Consultancy, aims to strike a balance between older and new HR approaches.

“We can continue with some of the classical methods, while at the same time using some disruptive technologies,” Simonyi said. “Either way, we have to be prepared to listen to the message of the candidate and to forward the most suitable information to our clients.”

Tech-savvy

Other recruitment companies, such as Zyntern.com, are focusing on a more youthful and tech-savvy generation.

“Zyntern actually exists because of HR trends,” said the company’s employer branding specialist, Viktória Fulai. “We’re the most disruptive platform out there.

More and more people are now applying for jobs using smartphones, and the apps have to be fast and easy to use.”

Simonyi closed by remarking that the recruitment process is not just about finding the right candidate for the job: “You also have to sell your company to the candidate. Many candidates will work for less money if they feel they have a chance to work with an employer that offers a superior company culture.”

Leading up to the concluding panel discussions on development, Eszter Vida walked the participants through SentiOne’s “datatelling” term-search software, which is designed to help HR departments follow the latest industry trends on multiple social media platforms.

“Twitter is the absolute leader in social media for HR-related communication,” Vida revealed, “with Facebook actually quite far behind even other platforms such as Instagram.” Éva Uzsák from Aon Hungary moderated the day’s second discussion, during which the four panelists shared perspectives, both on how best to move HR departments forward and on the best means of motivating employees and evaluating performance.

“Twitter is the absolute leader in social media for HR-related communication, with Facebook actually quite far behind even other platforms such as Instagram.”

Invitel Group’s HR director Petra Jakobsen argued that disruptive technologies are needed because the “classical methods don’t work anymore,” especially as external feedback becomes the norm.

“In terms of performance management, feedback is the best management tool,” Jakobsen explained. “This sort of feedback used to come from management, but now it comes from other sources. Young people are now reacting quickly and online with short messages, and we should be paying attention to them.”

In the end, the general consensus was that there are no one-size-fits-all solutions.

Support and Enable

Judit Ábri von Bartheld, a coaching tutor from Henley Business School (U.K.) and Coaching Without Borders (CHN) Kft., invited the day’s final panelists for a thought-provoking, and

often divisive, discussion on leadership development.

Gergő Budai from Vodafone argued that technology and development is there to support and enable people, adding that the techs themselves will bring new professions to life even as others are made obsolete.

“Leaders have to be open to new techs, but also be mindful of what is already working,” said Budai. Éva Kreiter, HR director at Dreher Breweries, emphasized the importance of the human dimension in leadership development.

“We also need to be more self-critical and self-aware,” Kreiter explained. “Some tech can help, but face-to-face interactions are essential to complement them.”

Taking a much more deterministic and data-driven approach was Managementor CEO Róbert Dobay.

“If you ask me whether I’ll act on my beliefs or on the data, I’ll take the data,” Dobay exclaimed. “Having said that, can anybody here reach 80% of management with a single program or tool? I don’t think so.”

In terms of HR departments gaining a seat at the table with business decision makers, the panelists were optimistic, but stressed the importance of knowing the business itself.

“Business acumen is a must,” said Andrea Tognetti from UniCredit Bank Hungary.

“Come to the table with data that is interesting and irrefutable, and there’s nothing else you need to say,” said Kresier, who is also involved in Dreher’s strategic planning. “But be aware that it’s also HR’s job to challenge the status quo, and this always makes management uncomfortable.”

As for those HR departments that are still waiting for a seat at the table with management and board members, Dobay counseled patience.

“Don’t forget that HR is a new field,” said Dobay. “Sales and finance are professions that have existed for centuries.”

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The Hungarian government is open to the idea of allowing foreign workers to fill employment gaps, the Minister of Finance has told members of the American Chamber of Commerce in Hungary.

ROBIN MARSHALL

The minister has been a regular guest of AmCham over the years. Friday, June 7, was his first meeting with the chamber since being reappointed to head the renamed Ministry of Finance (formerly the Ministry for National Economy), and he used it to outline past successes and detail the future policy path.

Perhaps recognizing the general level of concern among chamber members at the labor crisis, Varga spent some time on employment issues. He pointed out that these are not unique to Hungary, saying peers such as Czech Republic and Poland also “suffer from a lack of sufficient skilled workers”. In part he blamed this on the educational

Photo by AmCham/László Végh

Varga: Conservative Budget and Partnership on Offer

curriculum not keeping pace with the changing needs of the younger generations.

Having successfully boosted the ratio of employed people to almost 70%, Hungary would have to find ways to mobilize reserves, Varga said “not only from the

public workers scheme but also pensioners and women. […] Where no other labor is available, we will allow job permits for foreign labor,” he told members.

But total employment remains a government goal, he said. “As long

According to figures released by the Central Statistical Office on Friday (the same day Varga spoke at AmCham), the number of vacant jobs has been rising in Hungary at an accelerated pace in the past five quarters; the year-on-year pace of increase had reached 33% by the first quarter of 2018, Hungarian news agency MTI reported. The annual rise was 13% in Q1 2015 and has been accelerating every quarter since Q1 2017. There were a little more than 79,400 vacancies overall in Q1, up by more than 6,000 from Q4 2017, and up by almost 20,000 from a year earlier, the data shows. Some 31% of all vacant jobs were in the manufacturing sector, 11% in administrative and service support jobs, 10% in human, health and social services, 8% in public administration, defense and social security, and 4% in professional, scientific and technical activities and education, MTI reported.

as there is one person looking for work, we will have work to do.”

Wage Momentum

He believes there is still “momentum” for wage growth in Hungary, but added the government would have to look “very carefully at the minimum wage figures for next year. I think we will have to look at competitiveness and improvements in parallel in defining the wage increase.”

Addressing recent forint volatility, Varga said he was not unduly worried, believing it was still moving within an acceptable range. Noting oil prices had normalized he said “I think FX rates will become more stable.”

He predicted FDI rates would continue to grow “driven by automotive, also pharmaceuticals and food processing”.

He described the budget as a “conservative” plan: “As long as one reason for vulnerability in the country is the high debt ratio, we have to decrease debt.” It is also framed with one eye on global uncertainties such as Iran’s nuclear program, and possible trade wars between Europe and the United States or China and the United States. One key, he said, would be to “use resources in an even more efficient way”. There should be a focus on quality, but there are also “some reserves in whitening the economy”.

He acknowledged the role organizations like AmCham have played in the past, and hoped it would continue. “I am confident we can be partners in reaching these goals,” he told members.

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Innovation at the Core of Pharma Firms

company in the field of R&D in this period of time,” the statement adds.

Fast forward a few decades, and we arrive at one of the biggest achievements of the company in the recent years. Antipsychotic drug Cariprazine was discovered by Richter researchers and developed for the treatment of bipolar mania and schizophrenia jointly with Allergan (earlier Forest/Actavis). It was approved by the FDA in 2015 and has been marketed by Allergan in the United States since 2016 under the brand name Vraylar®. In 2017, marketing authorization was granted by the European Commission for the treatment of schizophrenia in adult patients under the brand name Reagila®.

In 2018, Richter Gedeon was awarded the Innovation Grand Prize of the Hungarian Innovation Foundation for Cariprazine.

Innovation being a key to pharmaceutical success, but also considering it to be a core element of its Increasing Competition corporate strategy, Hungarian drugmaker Richter The company says that in the past decades generic pharmaceutical companies have Gedeon Nyrt. sees itself as an innovation-driven found themselves impacted by increasing peer competition and restrictive national specialty pharmaceutical company, it tells the budgetary environments.

Budapest Business Journal.

“To overcome this challenge, pharma CHRISTIAN KESZTHELYI

The research and development of original drug molecules and the development of high added value biosimilars are key elements of the company’s business strategy.

Each year, the group invests some 10% of its turnover into research and development, which reached HUF 39.9 billion (EUR 128.5 million) in 2017, Richter adds.

“Innovation and researching original drug molecules have played a key role in

the company’s strategy ever since it was founded in 1901. The company was able to continue its founder’s relentless dedication to innovation despite the historical storms of the 20th century,” the company tells the BBJ. “It managed to reorganize its research activity after the Second World War. Thanks to this, the company could introduce several proprietary products in the second half of the century, including the CNS (Central Nervous System) blockbuster Cavinton®, which was the biggest success of the

firms followed different strategies. Richter’s response was to implement a high added value driven specialty pharma business model, with a primary focus on an organic growth strategy complemented with selected acquisitions, primarily in the field of women’s healthcare (a therapeutic area chosen because of the company’s solid expertise in gynecology),” the company says.

At the same time, Richter says it has invested significant resources in building up one of the widest Women’s healthcare portfolios worldwide. As part of this

“Innovation and researching original drug molecules have played a key role in the company’s strategy ever since it was founded in 1901. The company was able to continue its founder’s relentless dedication to innovation despite the historical storms of the 20th century.” strategy, the company also preserved its original research capabilities and invested in establishing biotechnology facilities.

“In this regard, Richter’s main priorities remain unchanged as it continues to focus on said areas. We expect our first biosimilar product to enter the market next year, and intend to increase the role of biotechnology further in the future,” the company adds.

Richter notes that innovation efforts in the so-called “big pharma” chiefly focus on developing biological compounds for personalized therapies for patients, and patient safety is a top priority. Furthermore, being an integral part of the company’s strategy, innovation has been a major contribution to the company’s success and future, and knowing that increases the trust and loyalty of employees, Richter underlines.

This regular column, run in association with Audi, looks at how some of Hungary’s biggest companies involve innovation in their daily practice.

Business

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MÁV: Taxpayersʼ Dues Deflect Railroad Blues

Obituary: György Mosonyi, oil man With Soft Touch “Tenderness” is not a word typically found in books on management or associated with high-flying chief executives – certainly not those in oft-perceived “macho” industries like oil and gas.

KESTER EDDY

cozy, good life on Pasaréti út and working for Shell,” Csák recalls.

Yet for György Mosonyi, CEO of Hungary’s More Potential “He was a hero for me, and I told him there MOL between 1999-2011, who died on was more potential in the Hungarian talent.

May 29 after a long battle with illness, it He was one of the very few who didn’t call me was a vital element of his character and crazy when I told him what I wanted to do management skills. with MOL.” Persuaded, Mosonyi joined MOL So says János Csák, a former investment in 1999, sending an email throughout the banker and chairman of the Hungarian company saying: “I’ve come home.” energy company for two rapid-fire years Together with Csák, Mosonyi negotiated from 1998-2000, when he recruited Mosonyi MOL’s acquisition of Slovnaft in Bratislava and to help transform MOL into a multinational later the tie up with Croatia’s INA (although corporation.

Csák had departed by then). “[During] the acquisitions, Gyuri, as CEO, “Without him, the acquisitions wouldn’t demonstrated such knowledge, and such have worked. Gyuri’s personality, readiness a – it’s funny – such a tenderness in the to help others and…. integrity. We didn’t trick negotiating process. I remember, I was almost [the foreign partners]. I never saw him play the youngest guy, around 37, with all these games,” says Csák. seasoned oil men, they were all 50-plus.… But Mosonyi stepped down as CEO we had a balance. With Gyuri we laughed a lot. in We worked together very well. He really cared about other people,” says Csák.

Mosonyi, who was born in Budapest becoming chairman of the company’s in 1949, studied chemical engineering at supervisory board until his death.

Veszprém University before beginning his Throughout his life, Mosonyi took an active professional career with Áfor, the then statepart in numerous professional organisations, owned filling station monopoly. In 1974, he moved to Shell at a time when the Dutch-U.K. including stints as president of the Joint Venture Association (2000-06) and board energy company was one of the very first member of Amcham (2002-05). A lover international corporations making tentative steps into a Hungary that was still very much of classical music – Mosonyi was a keen supporter of the Budapest Festival Orchestra, a communist country. amongst others – he led by example, indelibly During his tenure with Shell Hungary, affecting the lives of those he worked with.

Mosonyi moved into management, becoming Gábor Hegyi, a public relations adviser with commercial director in 1986, executive MOL at the time, recounts an occasion around chairman in 1994 and chairman of Shell’s 2000 when the two were working into the Central and East European region in 1997. night: “Gyuri suddenly turned to me and said: But, wooed by Csák’s vision of a stand‘You see, we are the only two left so late in the alone, Central and Eastern European energy office. But that’s only right: because the CEO group headquartered in Budapest, it was with MOL that Mosonyi arguably made his greatest should be the first servant in the company.’”

Mosonyi is survived by his wife, Ágnes, contribution to Hungary’s corporate landscape. daughters Nikoletta and Szilvia, and son “When I became chairman [of MOL] I Dániel. wanted seasoned, internationally known György (Gyuri) Mosonyi, chemical people, because we had so much to do. Gyuri engineer, chief executive, February 15, was reluctant, he was not sure that it would 1949-May 30, 2018 . make sense. You know, a 50-year old man,

2011,

The 08:30 “Citadella” pulls out of Budapest’s Déli Train Station on time on June 12. True, it’s an eighthour haul to Ljubljana, the capital of Slovenia, and it stops at some settlements that would struggle to make “big village” status in both countries, but our air-conditioned carriage gives relief from the summer heat, and the free wi-fi should help make use of time. And at EUR 49 for a 1,000 kilometer round trip, all seems well on MÁV, the Hungarian state railway company.

KESTER EDDY

It certainly chimes with the message Ilona Dávid, the rail group’s chief executive sought to give out at the end of May, when summing up the 2017 results.

“MÁV closes a successful year”. So read the headlines in the Hungarian media after the press conference, which revealed an after-tax profit of HUF 7.8 billion on income of HUF 152 bln.

True, profit was almost 35% down on the 2016 figure, but that had been boosted by one-off land sales, so the comparison was not like for like. Income was almost unchanged on 2016.

Of course, for most of the public, MÁV means passenger trains, and MÁV-Start, the subsidiary charged with moving people, announced a HUF 3.2 bln net profit after shifting 139 million folks around in 2017.

So far, so hum drum.

But MÁV is an important company.

Perhaps the numbers need a bit more context. Even ignoring the freight traffic, MÁV transports an average

2.7

million

folk – that is about the population of the Budapest agglomeration – each and every week. It employs nearly 18,700 – and is having to raise salaries, in line with the national average of 12%, to keep the skilled employees it so desperately needs.

Indeed, it is to try “new solutions” the company said, without giving details, in order to recruit new staff.

But the picture painted by management becomes less rosy if one looks into the accounts. Yes, MÁV made a profit in 2017, but that is only after a bewildering array of state subsidies go into the coffers.

Devil in the Detail

After some searching, the accounts can be accessed on the mavcsoport.hu website, and in English, too.

Frankly, it would need a chartered accountant to nail-down the figure for the total state subsidy transferred to MÁV last year, but Page 9 of the report indicates the state provided a total of

almost

HUF 70 bln

for “operations and renovation” in 2017 – that is 46% of total revenues.

So while MÁV may make a profit, it clearly does not make it in a way similar to your normal widget manufacturer or hair dresser.

Of course, in Western Europe, almost all rail companies receive state subsidies, because all countries see rail as a necessary element of modern transport portfolios. It may even be that MÁV has lower average state subsidies per passenger-kilometer than many peer systems.

What is worrying, however, is that the public is largely unaware of this. From a perusal of the Hungarian media reports, not only did MÁV fail to mention the subsidies in its portrayal of the year, but the journalists on the job failed to question the figures.

This leaves the average Magyar punter with the belief that the company makes a profit, whereas, in fact, taxpayers contribute HUF 70 bln a year to keep services running. They may approve of that, but they should be conscious of giving their approval.

Postscript on the journey: the wi-fi barely worked and the train arrived in Ljubljana 20 minutes late, but that was all down to track work in Slovenia. The “Citadella” arrived at the Slovene border on time.

The Bottom Line is a monthly column written

by Kester Eddy, a long-standing and well respected Budapest-based business and economic journalist, who has written for the Financial Times and many regional publications. The opinions expressed in the column are not necessarily those of the Budapest BusinessJournal. To comment on this column, or on anything else in the BBJ, email the editor at robin.marshall@bbj.hu

LIN E M O T T O B E TH

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Special Report Shared Services Centers

Maturing Market

 10

ExxonMobil Raising External Profile

 11

BSCs central to Office Market Growth

 14

Developers Targeting Shared Services Center Clients  16

What are the challenges and opportunities facing the second fastest-growing sector in Hungary?

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Budapest Business Journal | June 15 – June 28, 2018

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SAP Coming Together Under One Roof Business software company SAP is continuing to move staff into its Budapest development center. In the coming weeks all its employees will be collected together in one building, completing a process that began last year says Markus Hilken, SAP’s vice president and managing director of the center.

ROBIN MARSHALL

“SAP Labs Hungary has around 1,000 employees, who work in one of three main departments, which we call centers: development; operations; and support.”

That built up from a starting point of less than 100 when SAP opened its first development center in the region here in Hungary in 2005.

“I think this is evidence of how SAP has come to rely on the competence and ability of our Hungarian staff to deliver services around the world,” Hilken says.

Roughly 300 staff work in the operation center, he says, dealing with SAP’s cloud software for the Europe, Middle East and Africa market and beyond. One of the latest teams established here is working with dedicated machine learning (artificial intelligence) solutions.

Another

300

are employed in the support center.

“These are what we call third-level support staff, and they service mostly EMEA and the German speaking world.

So these people need not only the technical background and to be able to understand the business processes,

but they also need languages. Almost everyone here is tri-lingual in Hungarian, English and German.”

The development team, which among other things is responsible for logistical solutions and mobile app development for Apple iOS, has a global reach and is growing also steadily, Hilken says.

One Customer-Centric Team

According to the vice president, moving the staff into one location fits ideally with the “one team” philosophy, and also dovetails with SAP’s customercentric approach. The idea that the “customer is king” might seem old fashioned, but Hilken insists it is more relevant today than ever. The “design thinking” approach, putting the client as the very center, is typical of this.

By having a detailed discussion with the customer about what they need in their software, what use it will be put to, more useful, useable outcomes can be achieved, he says.

And rather than waiting for the perfect end product, development versions are shared so customers can give direct enduser feedback, and arrive at more complete solution quicker. How many iterations might a piece of software go through? “We

are not talking about one or two or three, but multiple iterations; certainly double digit,”Hilken says.

“We have a flexible desk approach, so we can move all the people needed to work on a problem, regardless of which center they belong to, alongside each other. If they are working together, they can also talk together about what is needed to solve a client’s problem, and thereby come up with better solutions.”

Moving the staff into one dedicated building also allowed SAP to think about what is required from a state-of-theart office. In addition to the flexible desk arrangements, there are concentration zones where colleagues can go if they need to work in peace.

Staff are also encouraged to “play”.

The Development Workshop (known as

the D-Shop) has been moved to a much more accessible and prominent place.

Staff are able to go in whenever they want and use the drones, 3-D printers, robots and the like stored there to foster new concepts. “Who knows what new software ideas might come from this?”

Hilken says.

As you would expect, SAP has also installed some software solutions of its own. The smart reception, for example, will notify a member of staff when a package arrives for them. That goes to a secure storage area, and the employee is able to reclaim it using their personal ID code. This is being enhanced by a robot with AI capabilities.

When a client arrives for a meeting, the staff member is again notified, but the guest can then ask the robot about the background to the meeting, SAP itself or their host.

“Once we are ready and satisfied with the way it functions, perhaps others will also want to deploy this new concept in their offices,” Hilken says.

But it is not all about technology.

The center head says one of the most important aspects of the way SAP Labs works is its embrace of diversity –because the more strands

“I think this is evidence of how SAP has come to rely on the competence and ability of our Hungarian staff to deliver services around the world.” of thought there are, the better the results. The proof of that can be seen in the results. “SAP Labs employees are responsible for 70% of the company patents” he adds.

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Citi Continues to Celebrate Diversity, Build its Service Center How long have you had an SSC in Hungary? Why was this location chosen?

Citi established its presence in Hungary 1985 as the first foreign bank and one of the earliest U.S. companies within the country. The decision to establish the Citi Service Center (CSC) in Budapest in 2005 came after careful preparation and in the end, it was the high quality of talent and language capabilities available locally that tipped the scale in favor of Hungary.

Dr. Jane Ellis Regional Head (EMEA) of Citi Shared Services, Enterprise Supply Chain and Head of Budapest Service Center

How many staff did you have at launch, and how many now?

We originally launched with about 55 people. Today, we have more than 1,700 employees in 25 different functions providing support to more than 52 countries regionally. We are particularly proud of our employee mobility, with 50% of new roles filled internally.

What tasks are undertaken at the SSC, and how has this changed over the years?

happy lies in providing the right company culture that will create an environment where people feel comfortable, safe and encouraged to bring forth their best self.

The foundation to building that culture is inclusiveness. Citi stands for diversity and as an equal opportunities employer. We celebrate the diverseness of our workforce and raise awareness through regular events organized by our affinity groups which have enabled us to win “Best Workplace for Women” and the “disABILITY Friendly Workplace” awards as well as the “Mentor Oscars”.

How easy is it to find and keep staff in Citi also believes in providing the todayʼs tightened labor market? right opportunities for our colleagues, The services center landscape is very that includes bringing together a wide different today than it was in 2005. There variety of learning opportunities such as are close to 100 SSCs in Hungary and this online courses on any device, mentoring, has created new challenges. It is not enough coaching and temporary assignments. It to attract and recruit the best talent, but also means giving our people a chance to every company has to take additional use these newly acquired skills and stretch measures to retain them as well. We themselves in challenging new roles they believe the key to keeping our employees haven’t experienced before.

As the center grew in size, so did the complexity of roles. At launch, we were mostly transaction oriented in areas such as Accounts Payable and Finance.

Throughout the years, thanks to the achievements of our local staff, we were able to grow with higher value added roles as well and today we employ highly trained professionals in areas such as technology development, cyber security, finance, human resources, markets quantitative analysis and supply chain management, just to name a few.

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Maturing Market Moving up from SSCs to BSCs universities. For example, Szeged now offers a business services centers course at the university, while Debrecen has just started a BSC roundtable as a platform to encourage discussion between the city and the companies. From the infrastructure and property side, more “A” category office developments are planned, underway or handed over, which will further enhance the opportunities offered outside of Budapest.

Last but not least, we are able to offer special incentives to facilitate new investments or reinvestments in provincial cities. Subsidies may be granted as regional aid or specific aid, such as R&D subsidies. Regional aid available for investment for a large enterprise may be up to 50% of the eligible costs of the investment, depending on the region.

In conclusion, thinking globally about the BSC sector and looking at the trends and needs, it is clear that there is a high demand on the market for locations with a significant talent pool, great accessibility, competitive operational costs and good reference points.

At our agency we experience growing interest towards all the characteristics mentioned and Budapest and Hungary’s university cities possess all these features.

Róbert Ésik, president of the Hungarian Investment Promotion Agency, talks exclusively to the Budapest Business Journal about what HIPA is doing to promote the growth of the business services sector in the country.

ROBIN MARSHALL

BBJ: What contribution to the economic development of Hungary do SSCs makes?

Róbert Ésik: Hungary has one of Central and Eastern Europe’s most mature SSC markets, not only in terms of numbers but also with regard to the industry’s history and structure. This still young sector has developed at a rapid pace in Hungary during the past few decades, based on the quality and productivity of the Hungarian workforce. Today 110 shared services centers operate in Hungary, employing more than 46,000 people. These employees are mostly young Generation Y graduates with a good command of languages. Usually service industry employees contribute to domestic economic output, in many cases by creating special intellectual added value. As with the production industry, service centers in Hungary are exportoriented, tasks come from and results go to other countries; the value chain is mostly international. Financial and IT processes dominate the Hungarian market, but HR and accounting is also considerable.

BBJ: What are the main advantages of Hungary when it comes to business services investments? How do you see the development of the industry in the country?

RÉ: One of the main advantages of our country is the strong educational background. World-class universities in the capital and in the so-called Tier-2 cities provide companies a labor supply of ambitious, fresh graduates speaking multiple languages. Above the most common European languages, Swedish, Norwegian, Finnish, Danish, Dutch, Japanese, Chinese, Hebrew and Arabic languages are also available. Beyond the strategic geographic location that allows companies to provide services to East and West simultaneously, the booming Hungarian office and property market and the world-class telecoms infrastructure and 4G coverage also support the further growth of the sector in Hungary. The sector shows a solid growth of approximately 8-10% annually.

With maturity comes more complex and high added value activities that

Róbert Ésik, president of HIPA. means the Hungarian market is stepping up from simple shared services to more complex business services. Moreover, companies are even more likely to

“As with the production industry, services centers in Hungary are exportoriented, tasks come from and results go to other countries; the value chain is mostly international. Financial and IT processes dominate the Hungarian market, but HR and accounting is also considerable. “ bring Centers of Excellence to Hungary.

Favorable costs are not the main drivers of this sector anymore; quality workforce has become the most important factor.

To this end, business services centers (BSCs) are offering appealing conditions and office environments to attract talent and continuous training opportunities to keep them. All these, combined with the global environment, the diversity and international career

opportunities are also attracting talents from abroad to work and live in Hungary.

To put more emphasis on this progress, we at HIPA now refer to the full sector as a business services sector, and to this end, the annual survey conducted in cooperation with the Hungarian Service and Outsourcing Association - HOA will also called the “BSC survey”.

BBJ: Market players are beginning to expand outside of Budapest. What benefits do countryside cities offer over the capital of Hungary?

RÉ: As already mentioned, companies planning to establish services centers in Hungary are looking for strongly driven professionals, speaking foreign languages.

Due to their educational background, university cities such as Debrecen, Pécs, Miskolc, Szeged and Székesfehérvár are the perfect spots for these companies. Fresh graduates are agile, motivated to make a difference, especially in a multinational working environment offering quick career opportunities. This trend can be seen also in our results: important BSC investment decisions from the last few years were made for countryside cities: BP has chosen Szeged for its second office in Hungary, Viessmann voted for Pécs based on the availability of technologically qualified specialists with foreign language skills.

Provincial cities are developing from year to year and are open to helping companies in order to provide permanent local work for young people leaving their

BBJ: What kind of specific services are you able to offer to help BSC investors establish or expand their presence in Hungary?

RÉ: HIPA provides management consultancy services for investors and prospective investors not only during the planning and preparations, but also in the implementation and operation phases.

In the framework of our policy advisory activities, we mediate between business and government and collect company feedback in order to prepare policy proposals. As one of the most important sectors in terms of FDI, a high emphasis is put on the feedback and well-being of BSC investors. The survey – to be launched in June – of the BSC industry in cooperation with HOA will be a key element for us in further improving the business environment by learning industry trends, the development plans of companies and the challenges of the sector.

The results of this year’s survey will be presented to industry representatives at a professional event followed by the BSC Gala, where the most significant market players will be recognized by HIPA and HOA. We also encourage companies’ growth by offering them support in organizing career events abroad. In February 2017, BlackRock and the Embassy of Hungary in London reached out to young Hungarian financial professionals studying or living in the United Kingdom. Following the success of the event, Morgan Stanley and Citibank joined BlackRock along with the Consulate General in Frankfurt to repeat the process in Germany. We are very proud that 20 plus Hungarian professionals working abroad have now decided to move back home with their families and to join the BlackRock Budapest team.

Did you know?

• Szeged now offers a business services centers course at its university?

• Eastern Hungary’s biggest category “A” office is being built in Debrecen with a capacity of 22,000 sqm?

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ExxonMobil Raising its External Profile Considering it is the largest publicly traded oil company in the world, and its business support center has been present in Hungary since 2004, ExxonMobil had kept a determinedly low profile until a couple of years ago. That has now changed, culminating in the signing of a strategic cooperation agreement with the government on June 1.

ROBIN MARSHALL

ExxonMobil’s relationship with Hungary actually goes back much further, as the company’s lead country manager, Dutch national Romke Noordhuis, acknowledges.

“Mobil constructed a refinery here in 1907, so we have a long relationship with the country; in 1992 a chain of Esso filling stations was established, but over time, business models changed and we have divested ourselves of those since then.”

In 2004, the company formed the ExxonMobil Business Support Center Hungary LLC., as a strategic location

Romke Noordhuis, lead country manager. for its businesses in Europe, Middle East and Africa. Initially there were some 300-400 staff; today the head count stands at

almost

1,600

and is still growing, Noordhuis says.

The company maintains two similar centers in each of its three main geographical markets (the others being the Americas and Asia). The second EMEA BSC is in Prague.

“For ExxonMobil Corporation the major driver for deciding to set up a base in Budapest was access to a well-educated workforce with good language skills,” says Noordhuis. Other boxes ticked by Budapest back in 2004 included a stable political environment, being in the right time zone to serve the EMEA market, being part of the EU, and being served by an international airport with good connections.

Community Role

The move toward a higher profile for the company started a couple of years

ago. With the coming of the new CEO, Darren Woods, ExxonMobil in Hungary decided to be more open, and concentrate more on the company’s external relations and its role within the community. That is a philosophy that works at many levels, but at its most basic it is this: when a company is more engaged with its community, the employees are more engaged with the company.

The overall effect of the past couple of years has been a coordinated corporate branding exercise. As part of this external outreach, ExxonMobil has also become a much more active member of AmCham, for example.

“AmCham is a very good interface with the government, and something of a thought leader on what makes Hungary a successful place to do business,” the lead country manager says.

The company has begun advertising on the streets and on trams for the first time “to increase visibility as an employer of choice for the brightest students”. It already has good relations with the universities, running “Ambassador Programs” at universities in Budapest and around the country.

Every couple of years the company replaces its laptops. The “old” models are cleaned up, and staff are asked to make recommendations for schools to donate them to. In the last two years, more than

1,000 laptops

have been passed on in this way. As part of the donation program, employees also provide cybersecurity trainings to students

Milestone Event

Romke Noordhuis and Minister of Foreign Affairs and Trade Péter Szijjártó sign the startegic partnership agreement.

Additionally, ExxonMobil also wanted to build its own relationship with the government. The company contacted the Hungarian Investment Promotion Agency, which Noordhuis rates very highly, and it suggested a strategic

cooperation agreement. That began a series of discussions that led to the signing on June 1.

“It is a milestone for us on the journey to become more pro-active and in being a dialogue partner with the government,” Noordhuis says. Talking about recent tax reductions as a positive example, he notes that “previously, we would have been a recipient of the decision, rather than part of the consultation process together with other leading businesses.”

Admitting that “we are here to run the business in the most efficient way possible”, he said that there were many areas where the interests of both parties coalesced.

This is perhaps most obvious in education and training the next generation of talent, but there are others, such as attracting Hungarians working abroad to come home.

Noordhuis said this is clearly a priority for the government, as it seeks ways to ease the labor shortage. Hungary needs well compensated and interesting careers to entice people back, exactly the sort of value-added jobs ExxonMobil can offer.

He says the company is actively recruiting at present, having taken on

300 people

last year and is looking to do the same again this year.

“Obviously, it is a tight market, but so far we have been successful in hiring the number and – even more important – the quality of new employees we need. But it is hard work, and certainly more work than it used to be. We have increased the size of the recruiting team, we are putting more energy into our outreach to the universities, we are putting effort and funding into our external image branding.”

Increasing its external profile and being more visible clearly helps.

ExxonMobil Fact File • ExxonMobil Business Support Center Hungary says it “aspires to be the employer of choice in the Budapest international market for professionals” across five major job families: Controllers (Finance and Accounting); IT; Fuels and Lubes (downstream customer support); Upstream Commercial Support; and Tax. • The Budapest office supports business activities in the region, but increasingly also globally in the areas of upstream commercial support, marine accounting, network engineering, cybersecurity and project management.

• Number of staff: 1,580 • Number of staff worked at BSC at least ten years: 30% • Number of staff worked at BSC at least six years: 50% • Number of Hungarian staff: More than 90% • Nationalities represented : More than 50.

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INSIDE VIEW

Automation Against the Human Labor Force?

Géza Pataki Response Director HAYS HUNGARY

NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Robotic process automation has already started to appear in Hungarian SSCs. RPA automates great volume low complexity office processes (or parts of them) such as payroll, benefits enrolment, onboarding and compliance reporting that all require a significant amount of manual, repetitive and time-consuming labor with the help of software, and can be regarded as the next step of outsourcing.

The kernel of RPA is that it is able to interact with different systems, collect and compare data, and even suggest a solution for a given problem. It actually imitates the way people work through the use of algorithms. It does not make decisions yet, but it can differentiate.

If the task is too complex, it indicates and asks for human intervention.

RPA is providing digital speed to market and cost take outs for SSCs, but the successful centers of tomorrow will be those that can embrace the next wave of robotics technology and future technology to drive business outcome.

Work Does not Disappear, it Transforms In Asia, thousands of workplaces have gone due to automation, and the majority of that work has already returned to Western countries, since a robot does not mind where it is. The above mentioned facts may seem to be worrying and may suggest that the growth of personnel in Hungarian SSCs might stop, or in extreme cases even drop, but in reality, it just means that the employees are going to do more complex duties instead of the tasks they have done thus far.

RPA has several advantages, one of which is that it can be developed quickly and its costs are coming down.

Efficiency is growing too, because robots can often do these tasks more precisely; algorithms do not include the chance of making mistakes. Moreover, robots do not need time off. An RPA bot acts like a new employee of team or a personal assistant, and with a modest

set up of the robotics software on any computer with access to the systems, the robot can start working on the identified and mapped out processes.

The other advantage is that employees can do work with more added value at the same time, so they may become more satisfied with their jobs.

Hungary’s Appeal not Cheap Labor Due to the successes in the industry and our role in the region we have come to the level where Hungary does not attract foreign investors because of its cheap labor force. Cheap labor made it possible in the past decades to attract multinational companies, which can be considered a good decision, but that work is already here, and it has to be made competitive with consistent high quality, creative thinking and we should keep it here regardless of the costs.

Trend of Growth the Same Companies operating in Hungary are growing year by year due to transferring new processes; the intensity of the investors’ interest has not changed, and more and more companies announce that they are creating their centralized service centers in Hungary. We can clearly declare that the SSC sector also suffers from a lack of workforce. The automation of some processes, such as the introduction of RPA may be able to ease pressure on companies, allowing them to stabilize or even increase their presence on the Hungarian market.

RPA is more than a trend; it is a different way to think about business processes and how they are implemented, delivered and managed, resulting in reduced costs, improved delivery and consistent quality for shared services too.

Géza Pataki joined Hays Hungary in early 2018 and became the leader of the Hungarian Response brand.

He has several years of professional experience in the recruitment field, with deep market knowledge. “In addition to high quality services, our clients expect us to provide quick results. In response to their needs, we have created the Hays Response brand, which specializes in recruiting and hiring the best candidates, ready to work as soon as possible. Depending on the client’s situation, our recruitment services include permanent and temporary employment,” says Pataki.

www.hays-response.hu

SSCs Planning for a Bright, Robotized Future In an exclusive interview, the p resident of the Hungarian Service and Outsourcing Association (HOA), Balázs G. Nagy, talks to the Budapest Business Journal about the challenges facing the sector, and his hopes for the future.

ZSÓFIA VÉGH

BBJ: How has the sector’s weight changed in the Hungarian economy in the past few years?

Balázs G. Nagy: The importance of the sector has been growing constantly.

According to the data of the Hungarian Investment Promotion Agency, it is the second fastest-growing sector in Hungary. The number of those working in SSCs is around 55,000-60,000, and those (indirectly) employed in the sector is estimated at around 165,000. Compared to other sectors, the average salary is higher and since people are employed [not freelance], the tax contribution is also high. The ratio of women, including in management positions, is around 50%.

Hungarian centers tend to deal less with customer service and more with more value-added areas such as finance and HR, or IT services.

BBJ: What has HOA done to support this growth?

BGN: Last year we submitted a statement/ resolution to the Ministry for National Economy [now renamed the Ministry of Finance] on the status of the sector. We defined three focus areas. The first is

“Hungarian experts have a very good reputation. […] Robotization can be a stepping stone as no other country from the region has ‘ jumped on’ that opportunity.” branding, so people know more about the status and potential in the sector. The second is education. In order to maintain the current growth rate of about 8-10% per year and recruit roughly 10,000 people, we need to invest in education. The needs of this sector are different from, say, those of car manufacturing. The drivers of growth here are the people. The third focus area is robotization. Centers possess an enormous amount of data – robots can help turn that into useful information.

They can also be used for dealing with repetitive tasks, requiring little input, as well as standardization and optimization processes. Turning Hungary into an SSC robotization center could be a stepping stone for the Hungarian economy. No one in the region has done that so far.

Balázs G. Nagy BBJ: A few years ago, one could hear centers constantly complaining about the limited skills, for example language command, of the Hungarian workforce.

Has the situation improved?

BGN: The situation is more nuanced. I have no knowledge of any center having brought its operation here and failed to find workforce. Finding people is never easy, mostly because of the collision of interests: companies want to find the best available workforce at the lowest possible rate. But it is more than just salary levels; what they are looking for is the best price-to value ratio. Some established firms such as BP or IT Systems can price workforce quite precisely. They also have centers in the countryside where there are a lot of potential [candidates]. This sector is still a bit spoilt, companies have had some freedom when it comes to wages, [which are still low] compared to the levels in Western Europe.

BBJ: Does the country have sufficiently skilled workforce to achieve this goal of becoming a robotization center?

BGN: I am very optimistic about that.

Hungarian experts have a very good reputation. I can hardly name any sector where a Hungarian manager was appointed as the head of a foreign outlet which happened to xy. Usually it is the other way around. Robotization can be a stepping stone as no other country from the region has “jumped on” that opportunity.

To help achieve these goals, we have created working committees. The head of National Business Services (NÜSZ Zrt.), Zsuzsanna Gombkötő, leads the robotization working group, the aim of

“The government’s involvement and the level of co-operation makes me really optimistic about the future of the sector.

When commitment was there earlier in car or electronics manufacturing, the cooperation between industry players and the sector bred some real results. I am expecting the same to happen in this field in the coming years.” which is to organize conferences, run pilots, etc. Both the Ministry of Finance and HIPA have delegated members to this committee, which shows the importance of the field. Together with McKinsey, we are going to organize a workshop for managers, as there is so much interest in this area. The bottom-up approach, if met with government commitment, can help reach this goal.

Companies can run pilots here, for instance, on how to introduce automation in credit control, and can then sell it worldwide.

Automation will enhance the quality/level of human workforce as well, as it allows people to devote more time to more complex tasks and relieves them of the dull, repetitive ones.

BBJ: What are the goals of the committees?

BGN: The main aim of the branding working group is to make the sector more visible so that people know about the opportunities in working here, or the Central Statistical Office (KSH) devotes a separate section to SSCs. The group cooperates with big cities in the countryside: most recently Debrecen held a conference for companies interested in opening centers there.

The education committee tries to bring institutes and companies closer to each other. We have entered into a partnership with the Corvinus University of Budapest.

The work is led by a professor who tries to further cooperation between those intending to provide specific training to [future] SSCs employees.

The robotization group is looking at ways that would help the country become a robotization center in the region. It also studies the effects of robotization on the labor market. In this field, people are less concerned about robotization than in other sectors. The group is also working on several pilot programs and our members can volunteer to “host” such pilots. They gain access to new technologies for free and share their experience with all the other members in return.

The government’s involvement and the level of co-operation makes me really optimistic about the future of the sector.

When commitment was there earlier in car or electronics manufacturing, the cooperation between industry players and the sector bred some real results. I am expecting the same to happen in this field in the coming years.

Special Report | 13

3

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Budapest Business Journal | June 15 – June 28, 2018

Economic Impact

Those

Overall

employed in

employed in SSCs:

60,000

share of working population

5%

SSCs: Up to

Ratio of

women

(including in management):

Those

Number of

Companies: More than

100

around

indirectly employed:

50%

Around

165,000

BBJ Infographic

Source: SSC Heroes, HOA

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Business Services Central to Office Market Growth In recent years the shared services sector/business process outsourcing has generated around 15-20% of the total annual demand in Budapest, making it one of the top occupier sectors in a city with a total quality office stock of circa 3.4 million sqm and an estimated pipeline of 270,000 sqm for 2018 and 140,000 sqm for 2019, according to JLL. GARY J. MORRELL

“The CEE region is a very popular destination for shared services centers with around 400,000 people working in this area these days,” says JLL. “In Hungary, the sector is also a success story; most of the companies are continuously expanding their service portfolio, and employ more and more people. The SSC sector is especially important for Hungary: based on the data of the Hungarian Investment Promotion Agency, in 2017 the SSC sector was the second strongest in Hungary, following the automotive industry. With the growing number of employees and expanding SSCs, the sector has a boosting effect on the commercial real estate market,” JLL adds.

Hungary is proving attractive to employers based on its generally skilled workforce and recruitment pools they can tap into around the universities in the major cities. In 2017, there were approximately 110 business services centers across the country, employing some

42,000 people.

The dominant hub for the sector is Budapest (with a 70% share), complemented by the country’s second largest city, Debrecen according to David Johnston, head of advisory and transactions at CBRE Hungary.

“Most SSC/BPO driven requirements are quite large, so even a relatively small number of deals can greatly skew the demand figures. Last year, six of the top ten take-up deals were signed for such operations and over the past two years 15-20% of all take-up came from the sector,” he comments.

With regard to location and infrastructure, business services centers have a preference for metropolitan locations with an advanced public transport system to attract and reach the available workforce.

Annual Fluctuation

As JLL explains, “Public safety is another factor which can play an important role, together with a good selection

Aréna Business Campus, latest Budapest project by Atenor. of amenities (fitness, ATM, post office, etc.). As there is a large

20-25% annual

fluctuation in the workforce in the sector, there is a lot of competition among the companies regarding staff hiring. This has

“Most SSC/BPO driven requirements are quite large, so even a relatively small number of deals can greatly skew the demand figures. Last year, six of the top ten take-up deals were signed for such operations and over the past two years 15-20% of all take-up came from the sector.” resulted in a new trend in choice of location: companies prefer locations where there are no direct competitors nearby. With regard to the working environment, SSCs usually need advanced IT networks and huge server rooms, adequate power supply with 0-24 internet access. To keep their employees, the companies put an emphasis on relaxrooms, social spaces and special, employeefriendly characteristics,” JLL adds.

“Approximately 30% of the occupiers of our existing office portfolio are SSCs/BPOs,” comments Balázs Simonyi, leasing director at CPI. SSCs and BPOs are widely regarded as the dominant CEE demand sector, along with IT/telecommunications. Business Services Sector is the general term covering all these types of activities, with SSCs and BPOs seen as sub-sets, according to Colliers International. In BPO, a third party provides specific services to a company on a contract basis. SSCs are not third-party service

providers but service providers to their mother companies.

However, many BSS offices can be seen as a hybrid of both SSCs and BPOs. Multinational companies and organizations are seeking to off-shore the operational elements of companies to countries such as Hungary, Czech Republic, Poland, Romania and Slovakia that are able to provide quality office accommodation, a skilled labor force and good business infrastructure (including an IT, telecommunication and transport infrastructure) at a price significantly lower than in Western Europe.

CEE countries are successfully promoting themselves as advanced but cost-effective business destinations for the BSS sector.

From a real estate perspective, the basic requirement is that there is a stock of welllocated class “A” office space. However, other factors aside from the cost of labor are at play, such as the capacity for the growth of SSCs/BPO operators in the CEE region. “‘Quality of life’ in the cities where employees are located is becoming more important. Related infrastructure developments and government incentives and taxation initiatives remain in place.

The business environment remains generally supportive, though more can be done on the regulation side,” Colliers

International says of the CEE BPO/SSC sector in its “A Thoroughbred Racer” report.

More Than a Back Office

In Central Europe these offices have started to become more than a back-office division providing standard activities and are increasingly becoming strategic centers by extending their portfolio to more complex roles and to the core activities of the mother companies.

“In this way labor availability and the acquisition of technical knowledge through education and training looks critical to the continuation of the BPO/SSC racing in the CEE-6 countries,” Colliers adds.

As the Hungary office market matures, a growing number of companies are extending their activities to more technical roles than classic type administrative activities.

“BPO/SSC companies have played a significant role in the development of the CRE [commercial real estate] sector in Hungary, although their relative significance may be waning. While there is still a cost advantage to setting up operations in Hungary, the activities carried out by most recent market entrants have a higher value-add component than the traditional SSC, more often forming a part of the core business,” concludes CBRE’s Johnston.

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Raising Profiles and Stopping the Brain Drain the largest employee sectors after the auto industry in Hungary, with more than 100 market players generating nearly 50,000 jobs. Despite that, however, many members of the younger generation seem unaware of what exactly goes on at an SSC, much less what kind of career they might have. The top 20 or so SSC companies, all employing at least 1,000

How do you raise brand awareness amongst your future workforce when, to all intents and purposes, you have no profile in the country?

The solutions BT found to overcome that particular problem have proved so effective they have won it national and regional awards.

“I have always said if you are a rocket scientist, maybe the best place for you is across the ocean. But if you are a teacher of two languages, you do not need to be washing dishes in London just because the minimum wage is higher; an SSC can offer you opportunities both financially and in terms of an interesting job more in keeping with your intellectual abilities.”

ROBIN MARSHALL

BT is neither a newcomer to the Hungarian SSC scene nor a small employer; last year it celebrated its tenth anniversary here. And while it has seen often dramatic staff growth in that period, like everyone else it has to confront the growing labor shortage.

“It is becoming more challenging to find people, yes, and that is changing what we are doing to find people and to keep people,” says Zoltán Szabó, general manager of BT Global Services’ EMEA Regional Operations Center, a post he has held since

Zoltán Szabó, general manager of BT Global Services’ EMEA Regional Operations Center.

March

2016.

“BT was in a difficult position because it was a non-existent company brand in the country. You cannot miss BT in the United Kingdom: it is one of the oldest and best loved brands; but here in Hungary it was a different story.”

Since it has no shops and sells no products on the Hungarian high street, it had to find another way of raising awareness. The most recent example of that is BT’s award-winning #next10 employer branding campaign, launched last year to mark the tenth anniversary of the opening of the ROC, but with a determinedly forward thinking mindset.

Rising up the Rankings

“Two years ago we changed the way we handled PR, and started a very focused employer branding campaign,” Szabó explains. The fruits of that work are perhaps best shown by the way it has risen up Randstad’s European-wide brand awareness rankings.

“We are now listed in the top ten of all companies in the Hungarian market.

Since that is topped by the likes of Audi, Mercedes, Coca Cola, all companies with a huge presence here, we are extremely proud of those results. And among SSCs, we were in the top three in the past two years.

The campaign has won BT the “Best Employer Branding Strategy” prize from the Hungarian PR association in the corporate category, and in February of this year it scooped the Top Employer Branding Initiative in CEE awards in

Warsaw. Attention to detail and very systematic execution is the essential requirement, Szabó says.

“The strategy relied on the core values of BT; they are very important and very clear and well received on the local market: the values of a British company are attractive to young talents. We also research exactly what those future talents are looking for.”

Szabó says his team understands Generation Y well as the average age of employees at the ROC

is

31.

They wanted to make sure that they also know what Generation Z is looking for. For the first time BT did a complete Generation Z study last year, which is publicly available. That helped BT tailor its employer value proposition accordingly.

“These EVPs are important to us, they are important to the market and I think they differentiate us. You have to have values that are true to the inside, to those working in the company, and to the outside world. Because good employer branding not only attracts talents but also helps retain them. When company values are clear and our colleagues understand what we stand for, they stay longer.”

A Tale of Two Cities

Somewhat unusually in Hungary, the BT ROC operates in two distinct cities. It makes sense from a business

contingency planning perspective, and also in terms of labor supply. Debrecen has a good university but is in a part of the country with lower employment rates.

Staff there tend to be more loyal. The so-called “churn factor”, the rate of staff turnover, is below the industry standard for Hungary. But Szabó says BT has also worked hard at its relationship with the city.

“We became the first and only major company to have signed a comprehensive cooperation agreement with Debrecen in 2016 that involves the city, the secondary schools, the university and BT.” The company donates equipment, supports university sports, is involved in curriculum development, promotes business language-learning and teaches technical and soft skills. The program won the “Best University-Business Cooperation in CEE” title in 2017.

Indeed, cooperation is another hallmark of BT. SSCs represent one of

BT Fact Box BT opened a branch office in Budapest in 1999, in support of MNCs operating in the country. In 2007, the Regional Operations Center was opened, also in Budapest, with a second location in Debrecen following

staff, have therefore come together to improve the sector’s reputation, with the support of the Hungarian government and the American Chamber of Commerce in Hungary, among others. It is aimed clearly at stopping the brain drain of the country’s brightest and youngest talents, by offering homegrown career alternatives.

“I have always said if you are a rocket scientist, maybe the best place for you is across the ocean. But if you are a teacher of two languages, you do not need to be washing dishes in London just because the minimum wage is higher; an SSC can offer you opportunities both financially and in terms of an interesting job more in keeping with your intellectual abilities.”

And those abilities are only likely to get more interesting. Digitalization is increasingly removing the more routine work and bringing ever more complex value added jobs. “The traditional, lower value stuff people did ten years ago now makes up less than 10% of what we are doing today. Many of those we are only doing because we have the language skills here. But we offer more complex work for more money, which is good for the company, the people, and last but not least it helps Hungary to further increase the salary level in the sector while maintaining its competitiveness.”

within a year. By the time Zoltán Szabó joined the company in 2014, the headcount stood at around 1,000. Today it is 2,500 (about 700 of which are in Debrecen), providing 22 different functions and working in 18 languages. Some 15% of staff are non-Hungarian.

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Developers Targeting Shared Services Center Clients Developers are increasingly designing a project with a view to securing SSC/BPO tenants with more than 100 currently operating in Hungary according to the website SSC Heroes.

GARY J. MORRELL

The success of Hungary and Central Europe in attracting such centers has been due to the provision of quality, well located office space alongside an educated work force at significantly lower cost that Western Europe. However the market situation is changing as companies take on increasingly complex operations and tenants and staff require higher quality space and specifications.

The automotive company, Ford has chosen Váci Green Building D for its European Business Services Center, with Ford CEE Sales

leasing

4,000 sqm

at the complex.

“When seeking its new office, we were focusing on the location, the top quality of technical specification, the flexibility of the building as well as in-house services.

During the process Váci Greens Building D proved to be the best choice,” Viktor Molnár, regional director of Ford CEE, comments on the choice of location.

Easily Accessible

Most international SSCs target semicentral locations that are easily accessible from the city center and main

Agora Tower communication routes such as the airport and railway stations. Good visibility is preferred, although this tends to come hand-in-hand with the accessibility requirement. Virtually all new entrants seek modern “A” category buildings with high, internationally certified sustainability standards; the internal working environment is increasingly approached as an HR and branding investment rather than just an expense.

A growing number of developers are increasingly designing projects with a view to securing SSC tenants with a dense person per sqm ratio and the need for amenities such as changing room facilities for cyclists, cafe bar and restaurant facilities and green areas that also act as informal meeting areas. The concept is that staff will be happy to spend time at the complex, often working irregular hours and taking the opportunity to utilize the leisure facilities.

“Our main targets are the shared services centers for our Arena Business Center as well as Váci Greens: As of today, four buildings within the Váci Greens office complex were handed over which is

approximately

80,000 sqm,

and out of this 90% is leased by the SSC/ BPO sector,” says Nikolett Püschl, leasing manager of Atenor Hungary.

“We definitely believe that our buildings are ideal for tenants in the SSC/BPO sector, therefore they are our main targets. In Hungary, SSC/BPO companies are significant players.

These companies prefer Hungary because of the excellent quality of education and good price to value ratio as Hungarian salaries are still far below Western Europe levels. Comparing Hungary to other Central and Easter Europe countries it has many advantages like good country incentives, taxes, promotions, etc.,” Püschl ads.

Targeting the Sector

Balance Hall by CPI.

Balázs Simonyi, leasing director at CPI, is equally open. “Regarding our latest development, Balance Hall, we are specifically targeting the sector, as we consider all fundamentals in place to successfully attract them. Having one of the largest stakes in take-up, the sector and its actual tendencies are highly influential on the office sector,” he comments.

“Location is absolutely key, as availability of mass transportation is a must. Give the current status of the HR market amenities, together with the rest of high quality working environment fundamentals, have also became ‘hard criteria’,” Simonyi adds.

Püschl agrees that the most important factors are location (safety, easy accessibility by public transportation,

“Our main targets are the shared services centers for our Arena Business Center as well as Váci Greens: As of today, four buildings within the Váci Greens office complex were handed over which is approximately 80,000 sqm, and out of this 90% is leased by the SSC/ BPO sector.” services inhouse and in the nearby vicinity), cost efficiency – which is in direct connection with space efficiency, technical specification, green and sustainable features – and quality.

There is a big question mark in the recent labor market, she says, reflecting that SSCs must battle to retain staff. That is one of the reasons why the importance of the quality of the property, its interior design and the functionality of the office space, as well as other services, is growing continuously.

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SSCs Continue to Evolve as Work Practices Change core part of their overall business strategy.

According to the “Hungarian Shared Services and Outsourcing Insights”, the majority of SSC employees range between 25-35 years, therefore many SSCs aim to accommodate this generation’s demands beyond the flexible working hours, diverse community and cool offices in order to achieve sustainability. For example, they create a family friendly culture as a recent value add, that not only provides the flexibility that enables young parents to accomplish their parental activities, but they also receive complex packages and program plans that support them during this period of their lives. The SSCs have realized that they need to adapt to the ongoing industry changes, the increasing demands while remaining sustainable as an organization.

The Budapest Business Journal spoke with Kata Mazsaroff, director of occupier services at Colliers International Hungary, about the role the SSC sector plays in the firm’s business.

BBJ

BBJ: How much of your business is taken up by SSCs? Is this growing?

Kata Mazsaroff: After the automotive industry, the SSC sector is the second largest growth area in terms of employees in Hungary. The SSC sector remains the main driver of the Hungarian office market, along with the IT sector. Nearly 30% on average of the yearly office take up in Budapest derives from the SSC sector. We continue to experience growth, from operations already present or when Hungary is identified as the chosen market for new entries. There are roughly 2,500 new positions created per year in this sector. Hungary is a favorable market due to its central location in Europe and excellent infrastructure. People are welleducated, speak multiple EMEA languages beyond English. Wages are increasing, but nevertheless are still competitive. However, collaboration between local governments, state government and educational institutions with SSCs is key to enable future growth.

BBJ: What percentage of those SSCs are in Budapest, and what percentage in the countryside?

KM: Roughly 85% of SSC companies are located in Budapest and 15% amongst the secondary cities: Debrecen, Szeged, Pécs, Miskolc and Székesfehérvár. Some examples of companies present in these markets are IT Services Hungary, British Telecom, National Instruments, EPAM, British Petrol, IBM and Vodafone.

BBJ: Do you see any signs that secondary markets are beginning to develop, at least in the university cities?

Kata Mazsaroff, director of occupier services at Colliers International Hungary.

KM: In the CEE region we have experienced in the past years that beyond the new office developments in the capital cities, the secondary city office market has been dynamically growing as well. There is a correlation between the entrance and expansion of already present SSC companies and new office developments.

This phenomenon is also reflected in Hungary, but it is not as dynamic as in cities like Brno or Wroclaw. The available skilled workforce continues to remain a challenge in Budapest, especially for new entries; therefore, these organizations seriously consider secondary cities where there are also well educated, young agile people who can be offered career opportunities with a stable, predictable future by the SSC

sector. Mainly Szeged, Pécs and Debrecen have been identified as university cities with potential labor supply. However, the lack of speculative office developments is an issue; real estate developers perceive developing on a speculative basis in secondary cities as a risk from an investment perspective.

This is a barrier as these new entry SSCs require the space “immediately”, therefore leaving no construction lead time for a traditional build-to-suit development. The city of Debrecen recognized this when it decided to develop Forest Offices, meeting Budapest and international “A” category office standards with the aim of attract new entries, to create new jobs in Debrecen, providing room for roughly 2,000 people to be accommodated in the office building.

Promenade Gardens

BBJ: How are SSC trends changing, from your perspective?

KM: While companies continue to centralize more of their operational activities, SSCs have been moving away from basic roles towards enhanced services and high value activities including technological innovation. Automation is changing the nature of workforce as many processes shift from human-powered to computerized. Several SSC companies develop their own robotic software that creates value and enhances efficiency.

However, the value of human connection is also critical to the companies’ ability to compete. The employees require an environment that fosters innovation, connectivity and creativity. The SSCs continue to develop and besides automation being in the forefront they establish talent retention strategies with a focus on making employee experience a

BBJ: Can you give an example of a project you are proud of?

A recent successful example of a new office building where Colliers had represented all the SSC occupiers entering the building is Promenade Gardens, developed by Horizon Development, located on the Váci Corridor, in the submarket most popular amongst SSC occupiers. This office building carries all the traits the SSC end users require, including large floorplates in four towers which provide the flexibility for the companies to implement their work concept considering the ideal distances that support their workflow and daily activities, either vertically or horizontally. The large surface glass facade together with the depth of the floorplates provide natural light in all areas, adding to the employees’ comfort level. In addition, the effectiveness of these floorplates allow cost reductions over the operating expenses.

Furthermore, the unique internal clear height enhances the ergonomical feel for the people and the ceiling’s specification has noise absorbing effect as well. An important focus for occupiers is improving the employee experience at their workplace by reducing friction. Distractions that slow an employee down from getting a task done can wear on the employee’s morale and motivation. In an open plan environment, the noise level causes distraction, therefore a smart design that enables alternative ways of working together with the technical specification focusing on sound isolation, as in Promenade Gardens, is key when considering improving the employee experience.

BBJ: How worried are you that the labor crisis could hold back further SSC development?

KM: At some point it will reach its peak, however, it is difficult to predict as to when because the SSC ways of working have been changing and will continue to change with the presence of AI and with automation affecting headcount demand. In some cases, automation can replace a full-time position.

Often, however, it frees up an employee’s capacity to manage more complex expectations and allows them to focus time on value-add activities. We will experience how this leverages in the coming years.

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Chicken and Egg: SSCs Need Offices, Offices Need SSCs Could a functioning commercial office market develop in reaction to SSC/BPO demand in the likes of Debrecen, Pécs and Szeged, as has occurred in secondary cities across Czech Republic, Poland, and Romania?

GARY J. MORRELL

Experts agree the development of a functioning commercial office market could attract SSCs/BPOs, while demand for space could bring about development of an office market. These cities provide the infrastructure for a quality lifestyle for a workforce that does not need to migrate to the capital or Western Europe.

David Johnston, head of advisory and transactions at CBRE Hungary, comments that Debrecen already has a handful of established SSCs (for example British Telecom, Flowserve, IT Services Hungary, Merlin and National Instruments) that are committed to the city and looking to expand.

Modern office buildings are also emerging in Szeged (BP has an operation here), which seems to be next in line for further operations. Pécs is lagging in comparison.

However, he further argues that it will take years until these cities build the critical mass of real estate needed for a properly functioning secondary market, as today their respective office stock can be counted in the tens of sqms only, versus the millions of sqms in Budapest.

There is progress, though. Nikolett Püschl, leasing manager of Atenor Hungary says: “Debrecen is a good example where more, new Category “A” office buildings were developed for such companies in the last few years, but Szeged and Pécs could also be similarly developed in the near future because these are big cities in the countryside and university cities, where a young, well-educated person’s salary is even lower than in the capital.”

Green2Day office building in Wrocław.

The number of new SSC offices in the countryside is certainly growing, making Hungary less capital-centric. “Currently Debrecen hosts the second largest number of SSCs in Hungary; as a result there are an

estimated

3,000

employees in the sector in the city. In the countryside, salaries are appealing, but still somewhat behind the wages in Budapest,” comments JLL.

Supportive Environment

At the recent MIPIM 2018, it was not only major projects in Budapest that were presented, but also investment and development opportunities in four university cities (Debrecen, Miskolc, Pécs and Szeged). City authority representatives from these Tier-2 cities emphasized the supportive environment, local job opportunities, highly qualified work force and the quality of life for employees.

Within the CEE region, cities where there are large graduate populations have been particularly successful at attracting SCC/BPOs and in this way commercial office markets have also been established by international developers who have been able to sell assets on to international

investors. The northern European investor Niam, for example, has purchased the 18,000 sqm, LEED “Gold” accredited Green2Day office center in Wracław from Skanska for a reported EUR 51 million. A rare regional office investment deal for Hungary was the purchase by OTP RE Fund of the

6,800 sqm EPAM

building in Szeged from Futureal.

But while Hungarian provincial city authorities in secondary cities with large university populations are adopting proactive promotions, what has held them back to date is the lack of a supply of modern offices, with developers currently unwilling to build on a speculative basis as has occurred elsewhere in CEE. Interest in the Polish regional city of Łódź, from foreign corporations over the last four years has caused quality office stock there to rise to close to 440,000 sqm, compared to an estimated 55,000 sqm in Debrecen. Secondary Polish cities such as Wrocław and Kraków are fertile recruiting grounds for BPO/SSC players.

“The BPO/SSC industry can be treated as a significant recruiter where it is taking on more than 5% of the graduate population and that is the case in every city in the CEE region we surveyed except for Budapest and Bratislava,” said Mark Robinson, CEE research specialist at Colliers International.

“The total number of employees engaged with BPO/SSC companies in Kraków, for example, is equivalent to 7.3% of the city’s entire population. This compares to 1.3% for Debrecen and 2.3% for Budapest. The region’s climb up the tech ‘complexity’ scale is seen as an important driver.”

Strong Demand

Lion offices in Debrecen.

There is also a strong demand for office space in secondary Romanian cities such as Cluj Napoca and Iasi where BPOs have chosen to locate outside of Bucharest. Commentators see the possible development of South East Europe markets by attracting outsourcing companies.

“Belgrade, without question, could become a dominant business center. Its position

is not so dissimilar to where the likes of Budapest and Prague found themselves in the early 2000s,” comments Uros Grujic, head of investment properties SEE, CBRE. The skilled labor force shortage is a general issue in Hungary and the region; however, there are good examples in Hungary of universities trying to serve the needs of the sector by launching courses and intern-programs with SSCs in both Budapest and in the countryside.

“There is no doubt that the current labor shortage is felt across Hungary – most

“Debrecen is a good example where more, new Category “A” office buildings were developed for such companies in the last few years, but Szeged and Pécs could also be similarly developed in the near future because these are big cities in the countryside and university cities, where a young, well-educated person’s salary is even lower than in the capital.” businesses rank this as their top challenge in further expansion. The SSCs are seeking proximity to higher educational institutions in order to secure running access to fresh candidates – hence the focus on Budapest, Debrecen and Szeged,” notes CBRE’s Johnston.

“Talent base is a primary consideration for employers at the moment, therefore all secondary cities with universities and colleges are already targeted by occupiers and developers. New developments are already under completion and more expected to come in the next couple of years,” concludes Balázs Simonyi, leasing director at CPI.

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service center Shared services centeroperating operating companies companies

IT SERVICES HUNGARY SZOLGÁLTATÓ KFT. www.it-services.hu

4,736

–

–

–

–

–

✓

–

–

✓

Ÿ Ÿ

Ÿ

Ÿ

Ÿ

PLANNED NEW WORK FORCE HIRED IN H2, 2018

WORK FROM HOME

PART-TIME WORK

AVAILABLE WORK CONDITION CHOICES FLEXIBLE WORK HOURS

AVERAGE WORK ENTRY PERIOD (DAYS) AVERAGE NO. OF EDUCATION DAYS PER YEAR

BOTH

INTERNAL

EXTERNAL

OTHER

CLIENT MANAGEMENT

SALES

PROCUREMENT

HR

FINANCE

TOTAL NET REVENUE IN 2017 (HUF MLN) 57,998

CLIENT DIVISION (%)

SERVICE AREAS

Ÿ

YEAR ESTABLISHED

1

COMPANY WEBSITE

NO. OF EMPLOYEES WORKING FOR SSCs ON MAY 1, 2018

RANK

Ranked by no. of employees working for SSCs on May 1, 2018

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

2006

– T-Systems International (100)

Erik Slooten Katalin Riedl Ollárné –

1097 Budapest, Tóth Kálmán utca 2/B (1) 456-5400 (1) 456-5499 fmb-ts-itsh-info@ t-systems.com

2007

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

Zoltán Szabó Attila Szűcs Máté Fazekas

1117 Budapest, Budafoki út 91-93.

(1) 777-0000 (1) 777-0001 bt.roc.communications@ bt.com

2001

– Tata Consultancy Services Ltd. (100)

Prabal Datta – Edit Bencsik

1117 Budapest, Irinyi József utca 4-20.

(1) 886-8000 (1) 886-8001 hungary.info@tcs.com

Edina Drabik Andrea Szőke –

1092 Budapest, Köztelek utca 6.

(1) 777-1055 (1) 777-1111 info@hu.ibm.com

BT ROC KFT. 2

3

http://sscheroes.com/ company/bt-hungary

TATA CONSULTANCY SERVICES LTD. MAGYARORSZÁGI FIÓKTELEPE

2,400

2,100

21,265

Ÿ

✓

✓

✓

✓

✓

✓

✓

–

✓

✓

✓

✓

–

✓

–

–

✓

42 10

–

50 12

Ÿ

Ÿ

Ÿ

Ÿ

2004

– IBM Europe B.V. (100)

✓

✓

✓

✓

✓

–

500

300

www.tcs.com

4

IBM HUNGARY 2,000 INTERNATIONAL SHARED (approx.)

SERVICE CENTRE KFT.

22,556

✓

✓

✓

–

✓

–

–

–

✓

Ÿ Ÿ

2,000

36,376 (2016)

✓

✓

✓

✓

–

✓

–

✓

–

Ÿ Ÿ

✓

✓

✓

450

2009

GE Infrastructure Central & Eastern Europe Holding Kft. (100) –

Bjorn Bergabo – Csilla Kövesdi

1138 Budapest, Váci út 117–119.

(1) 237-6800 – reception@ge.com

1,950

Ÿ

✓

✓

✓

–

–

✓

–

–

✓

Ÿ Ÿ

✓

✓

✓

Ÿ

1985/ 2005

– Citibank Holdings Ireland Ltd. (100)

Kevin A. Murray, Jane Ellis Péter Kővári Smid Beáta

1051 Budapest, Szabadság tér 7.

(1) 374-5000 (1) 374-5100 –

1,757

22,904

✓

✓

✓

✓

✓

–

Ÿ

Ÿ Ÿ

✓

✓

✓

Ÿ

2007

– Vodafone International Holding B.V. (100)

Gergely Szappanos Tamás Pók Réka Juhász

1087 Budapest, Hungária körút 40–44.

(70) 460-8000 – –

2006

– Morgan Stanley International Holdings Inc. (100)

Norbert Fogarasi Beáta Juvancz –

1095 Budapest, Lechner Ödön fasor 8.

(1) 881-4000 (1) 889-2700 millennium-reception@ morganstanley.com

www.ibm.com

4

6

7

GE INFRASTRUCTURE HUNGARY KFT. www.ge.com

CITIBANK EUROPE PLC. MAGYARORSZÁGI FIÓKTELEPE citibank.com/ emeaservicecenter/ hungary/csc-hungary.htm, https://jobs.citi.com

VSSB VODAFONE SZOLGÁLTATÓ KÖZPONT BUDAPEST ZRT.

Ÿ

Ÿ

www.vodafone.hu

8

MORGAN STANLEY MAGYARORSZÁG ELEMZŐ KFT.

1,479

40,222

✓

–

–

–

–

✓

–

–

www.morganstanley.com

our people are our greatest innovation.

✓

66 4–5

✓

✓

✓

263

10

BP BSC KFT.

www.bp.com/en/global/ bp-careers/professionals/ locations/hungary.html

NOKIA SOLUTIONS AND NETWORKS KFT. www.nokia.com

1,400 (approx.)

24,461

✓

✓

–

✓

✓

–

✓

PLANNED NEW WORK FORCE HIRED IN H2, 2018

WORK FROM HOME

PART-TIME WORK

AVAILABLE WORK CONDITION CHOICES FLEXIBLE WORK HOURS

AVERAGE WORK ENTRY PERIOD (DAYS) AVERAGE NO. OF EDUCATION DAYS PER YEAR

BOTH

INTERNAL

OTHER

CLIENT MANAGEMENT

SALES

PROCUREMENT

HR ✓

EXTERNAL

CLIENT DIVISION (%)

SERVICE AREAS

FINANCE

TOTAL NET REVENUE IN 2017 (HUF MLN)

COMPANY WEBSITE

www.bbj.hu

Budapest Business Journal | June 15 – June 28, 2018

YEAR ESTABLISHED

9

Special Report NO. OF EMPLOYEES WORKING FOR SSCs ON MAY 1, 2018

RANK

20 | 3

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

2009

– BP Global Investments Ltd. (100)

Jamie Anderson Viktor Knezevics –

1095 Budapest, Soroksári út 32–34.

(1) 866-6300 (1) 866-6300 EBSCReception@ bp.com

Béla Zagyva Erzsébet Tóth Rita Sebők

1083 Budapest, Bókay János utca 36-42.

(20) 977-7797 (1) 216-9715 nokia.hungary@ nokia.com

–

Ÿ Ÿ

✓

✓

✓

Ÿ

2007

– Nokia Solutions and Networks B.V. (100)

✓

✓

–

200

2009

– CPL Resources International Holding Ltd. (100)

Simone Olivo Edit Lőkös –

1114 Budapest, Bartók Béla út 43–47.

(70) 417-9874 – edit.lokos@cpl.ie

Ÿ

50

2016

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

Alan Knight – –

1138 Budapest, Népfürdő utca 22.

(1) 777-2111 (1) 777-2516 info@hu.ibm.com

2000

– Eaton Corporation Plc. (100)

Csaba Szende – –

1123 Budapest, Nagyenyed utca 8-14.

(1) 499-9100 (1) 499-9100 bscofficemanagement@ eaton.com

Tamás Horváth – –

8000 Székesfehérvár, Verseci utca 1–15.

(22) 531-200 (22) 315-373 erika.sas@arconic.com

765

32,071

✓

✓

✓

–

–

–

–

✓

–

Ÿ Ÿ

755

4,482(1)

–

–

–

–

✓

–

✓

–

–

20 25

483

14,865

✓

–

–

–

–

–

–

–

✓

– 10

✓

60 3

–

✓

✓

Ÿ

CPL JOBS KFT. www.cplis.com 11

12

IBM CAPITAL HUNGARY KFT.

13

EATON ENTERPRISES (HUNGARY) KFT.

14

www.ibm.hu

www.eaton.com

ARCONIC-KÖFÉM SZÉKESFEHÉRVÁRI KÖNNYŰFÉMMŰ KFT.

457

Ÿ

✓

✓

✓

✓

✓

✓

–

–

227,676

✓

✓

✓

–

✓

✓

–

✓

–

400

4,400

✓

✓

✓

–

✓

✓

–

✓

–

2 5

✓

Ÿ Ÿ

www.arconic.com

15

CELANESE MAGYARORSZÁG KFT.

16

KCI HUNGARY KFT.

17

AGCO HUNGARY KFT.

www.celanese.hu

www.acelity.com

www.agcocorp.com

30–60

454

253

217

2,835

3,260

✓

✓

✓

✓

✓

✓

–

✓

–

–

–

✓

–

–

–

✓

Ÿ

Ÿ

✓

Ÿ

✓

–

60

–

✓

✓

30

1941

Arconic Európai Keréktermék Kft. (23.61), Fairchild Fasteners Fémipari Kft. (0.97) Arconic Inversiones Internacionales (75.42)

✓

✓

✓

10

2007

– Celanese Corporation (100)

István Katona Zsuzsanna Bodó Zsuzsa Kovács

1134 Budapest, Váci út 80–84.

(1) 627-7400 – –

2010

– KCI Europe Holding B.V. (100)

Péter Fazekas Zoltán Krizbai –

1133 Budapest, Váci út 76.

(1) 880-2501 – –

2011

– AGCO International Holdings B.V. (100)

Emese Szakács – –

1117 Budapest, Alíz utca 4.

(1) 882-8300 (1) 882-8380 Lilian.Seres@ agcocorp.com

Ivett Nagy – –

1093 Budapest, Czuczor utca 2-10.

(30) 836-5364 – info@ randstadsourceright.eu

✓

–

–

Ÿ

–

Ÿ

✓

–

✓

25

2016

Randstad Hungary Kft. (100) –

Ÿ

Ÿ

Ÿ

Ÿ

1991

– ES Hague B.V., ES Hague II B.V. (100)

Zoltán Czibók, Krisztián Kovács – –

1114 Budapest, Bartók Béla út 43-47.

(1) 229-9999 (1) 229-9000 info@hp.com

✓

✓

✓

Ÿ

2008

– Lexmark International Technology Sárl (100)

Péter Csucska Ágota Ferenczi Alexandre Cole

1095 Budapest, Lechner Ödön fasor 8.

(1) 501-7200 (1) 501-7311 info@lexmark.com

10

✓

✓

✓

70

RANDSTAD SOURCERIGHT KFT.

www.randstadsourceright.com 18

NR

ENTERPRISE SERVICES MAGYARORSZÁG KFT. www.hp.com

LEXMARK INTERNATIONAL NR TECHNOLOGY HUNGARIA KFT.

170

1,821

–

✓

–

–

–

✓

–

–

✓

15 2–3

Ÿ

16,754 (2016)

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ Ÿ

Ÿ

4,775

✓

–

–

–

✓

✓

–

–

✓

www.lexmark.com

Ÿ= would not disclose, NR = not ranked, NA = not applicable

60

Ÿ

This list was compiled from responses to questionnaires received by June 12, 2018 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

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

NOTES (1) Data of business year July 1, 2016-June 30, 2017.

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Photo by Jack.Q/ Shutterstock

Swapping the Utca for the Spanish Strand I’m back on the Balearic Island of Mallorca, far from my more usual haunts of Budapest.

Swapping the street for the beach has offered me a splendid opportunity to ponder the differences between the Hungarian and Spanish national character.

DAVID HOLZER

Having said that, I would point out that many of this proud island race would regard themselves as Mallorquin first, Catalan second, and Spanish last. Still, to the outside eye, and for our purposes, they’re Spanish.

Although there aren’t so many things the Hungarians and Spanish obviously have in common, there are surprising similarities once you start really looking.

The most obvious one to me is in the cuisines of the two countries. It’s not so much the food itself. There’s a world of difference between the calorie-loaded, salt and cream rich Hungarian diet and that of the traditional Mediterranean.

I say traditional because, apparently, Spanish kids are now among the fattest in Europe.

But what is common to the two cuisines is their simplicity. When I dine out in either Hungary or Mallorca, I’m not looking to try a bewildering diversity of dishes. I’m trying to find the best version of something I already love.

In Hungary, this is fish soup. When I’m in Mallorca, it’s Frito Mallorquin. This is made from potatoes, onions, artichokes, red pepper and either liver, meat or – my favorite – squid or cuttlefish.

I know where to go for amazing Frito Mallorquin. If you’re ever in Palma, there’s a bar in Santa Catalina called Joan Frau which does the best I’ve yet to taste. Of course, I’m still looking.

No Tomb-like Quiet

Joan Frau represents the apogee of Mallorquin food and culture for me.

You eat standing up and share your

Dance show “Evening Banquet” performed by Hungaryʼs ExperiDance troupe in Chengdu, China, on October 25, 2008. David Holzer says he has detected flamenco rhythms in Hungarian Roma music. food with your companions. It’s also spectacularly noisy, unlike the tomblike quiet of most Hungarian cafés and restaurants.

Having been away from Mallorca for several months, I’d forgotten how much I love noise.

Not so long ago, I was watching a gypsy band perform on a Hungarian TV talent show and I realized that the rhythms they were using were the same as flamenco. Hungarian gypsy music isn’t as Arabic as flamenco, but it certainly has the same passionate, tragic feel.

Incidentally, I have a rule of thumb with paella. If someone recommends a place as doing “the best paella I’ve ever tasted”, don’t go there. It’s bound to be the worst paella you’ve ever tasted. Go on your own quest for spicy, ricey heaven.

Something else Mallorquin and Hungarian cuisine have in common is the use of spices. This is down to the influence of the Moors, who were in Mallorca for several hundred years, and the Turks, in Hungary for around 150.

This simple cuisine is, I guess, down to the innate conservatism of both Hungary and Mallorca. Outside Budapest, Hungary can hardly be said to be international.

Despite the tourists and foreigners who’ve settled in Mallorca, the island people themselves remain stoically Mallorquin and wary of foreigners.

Apart from food, the other main similarity I’ve noticed is when it comes to music. Like Hungary and its Roma, Spain has a substantial gypsy (or Gitano) minority. Also, like Hungary, I suspect far more Spanish people are gypsy than would be prepared to admit.

Not so long ago, I was watching a gypsy band perform on a Hungarian TV talent show and I realized that the rhythms they were using were the same as flamenco.

Hungarian gypsy music isn’t as Arabic as flamenco, but it certainly has the same passionate, tragic feel.

One last profound observation on the subject of similarities: the Spanish and Hungarian words for jellyfish and car are the same. Medusa and coche. I wonder why.

Now for the differences.

Manaña, manaña

Whatever else they may be, I find Hungarians to be efficient. Handymen, for instance, have always arrived when they said they were going to. Touch wood, they’ve always done a great job.

In Mallorca, I have to say that the opposite tends to be the rule. So much so that I’m pleasantly surprised when someone turns up to fix something, even if it’s the next day.

The problem is that I’m usually so grateful I tend not to notice the quality of the work until later.

In defense of the Spanish, I would like to share something I’ve been told about the whole “manaña, manaña” thing. It seems that when the ultra-efficient Germans and Brits, who like to think they’re the same, turned up in Spain they had no idea of the realities of getting things fixed.

Even though it has come to mean “tomorrow”, “manaña” actually means in the indefinite future.

Leaving that aside, it’s interesting to watch the two Hungarians I know on Mallorca at work. They’re hardworking, of course, but you could put that down to economic necessity alone, and they’re politeness personified.

I have to make another aside here.

Hungarians are obsessed with tipping.

Spanish people never tip for things like coffee or drinks. They’ll only tip a decent amount if food has been exceptional. I’ve been told the reason is that Spanish waiters and waitresses are paid a decent salary while Hungarians have to survive on tips to supplement their wages.

But it’s not just a question of being hardworking. The two Hungarians, one a waitress and the other a café owner, are whip smart.

I wrote an article on the new café the owner had opened that appeared on a blog about the island. The first time I visited, the owner, who to the best of my knowledge I’d never been introduced to, greeted me by name and made a point of thanking me.

A Spanish bar owner probably wouldn’t do that.

22 | 4

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www.bbj.hu

Budapest Business Journal | June 15 – June 28, 2018

Hungarian Wines Pulling in the Points Hungarian wines performed admirably at this year’s Decanter World Wine Awards (DWWA), with four Magyar entries achieving the much-coveted Platinum medals, the category that sits above gold, and each achieving 97 points from the DWWA panel.

ROBERT SMYTH

Two of those platinum medals went to wines from Tokaj. The Mád-based St. Tamás winery made it an impressive five platinums in three years with its Mád Late Harvest 2016. This wine always manages to do precisely what the Late Harvest category should, capturing lots of delicious fresh fruitiness in a very drinkable style without feeling very sweet thanks to its zesty acidity that balances the sugar. It’s a blend of 70% Furmint, 25% Hárslevelű and 5% Sárgamuskotály (Yellow Muscat or Muscat Blanc à Petit Grains). DWAA commented: “Lovely expression and complexity on the nose, including notes of quince, acacia and ripe pineapple.

The palate delivers powerful flavors of marmalade and vanilla spice, with a silky texture and interwoven fine, pure acids. Long, fresh and demonstrates finesse.”

While much of the focus at Sauska Tokaj is on dry wine, the team showed that it is right up there when it comes to making botrytized Aszú wines, scooping a platinum medal for Sauska Aszú 6 puttonyos 2013, a wine considered

by DWWA as “off the charts with its pulsating aromas and flavors!” This wine (HUF 18,500 from Bortársaság) is a rare single varietal Furmint Aszú. While Tokaji Aszú is usually a blend of Furmint (typically the most dominant partner, providing a steely and linear backbone) with other grapes permitted from the region, especially Hárslevelű, providing some extra juicy and

The state-of-the-art Kreinbacher’s Somló winery. luscious flesh, Furmint can have the goods to go it alone in top vintages, such as in 2013. It was also fermented in French barrels, rather than the usual local Zemplén oak.

Incidentally, Sauska also has a prominent winery in Villány, the predominantly red wine region in Hungary’s south-western corner.

Sauska has been a key player in the quest for quality Kadarka, contributing to clonal experiments with the thin-skinned and tricky to cultivate red grape, and has been rewarded with a bronze medal and 88 points at DWAA 2018 for its 2015 Kadarka (HUF 4,950 from Bortársaság). Villány is not normally associated with Kadarka, but Sauska has managed to retain the grape’s exciting rose hip, raspberry and mixed spice notes in a bigger, rounder style that reflects its warm place of growth.

While the Late Harvest and botrytized wines of Tokaj are unquestionably among the world’s best, a dry wine from the region claimed one of Hungary’s four gold medals – the other three, from Gábor Orosz, Gróf Degenfeld and Zombory Pince being sweets. The dry wine – Holdvölgy Vision 2016 – with 95 points provides further proof that white blends work wonders in the dry category, striking just the right balance between freshness and complexity.

“A playful nose of pear, peach, flowers and spicy undertones. Generous on the palate with beautiful lemon and lime, a light sprinkling of thyme and a pinch of sage. Concentrated.

Persistent. Wonderful,” said DWWA. This is a blend of 40% Furmint, 40% Hárslevelű

and 20% Kabar, the latter being a crossing of Hárslevelű and Bouvier.

Another great dry white blend from Tokaj is Gizella’s Szilvölgy Furmint-Hárslevelű. Note that it was actually a Kabar (Péter Pincészet’s 2016) that came out of the blue to claim top spot in Tokaji Március’ Top Ten, a list compiled from the results of a blind tasting involving a number of local experts here in Budapest. Gizella’s Szilvölgy Furmint-Hárslevelű 2016 came in second in that particular taste off.

The Furmint grape is proving itself very versatile in making everything from dry to sweet, and increasingly sparkling wine, as shown by Kreinbacher’s Prestige NV (HUF 5,500 from Bortársaság), which also bagged a platinum medal with a little help from that sparkling wine super grape of Chardonnay – the blend being 85% Furmint and 15% Chardonnay.

The accolade is just reward for Kreinbacher’s remarkable attention to detail in the making of traditional method sparkling wines. No expense has been spared, both in financial and sweat equity terms, and the results are spectacular. Not only did Kreinbacher bring in Coquard presses and Champagne yeast from France, it also called in the Champenoise savoir faire in the form of Christian Forget, winemaker of Champagne Paul Bara.

“A wonderfully complex nose of green apple, vibrant citrus, floral and quince tones.

The palate carries a healthy dose of acidity through to the finish, with lovely intensity and finesse,” opined the DWWA panel.

Three of Kreinbacher’s sparkling wines will be featured at the Pezsgő Június Nagykóstoló (pezsgojunius.hu), in a mini course hosted by wine expert Ivett Vancsik.

Pezsgő Június Nagykóstoló will held at the Corinthia Hotel Budapest on June 16 from 2 p.m. and will feature 200 sparkling wines (not just Hungarian; there will be many foreign bubblies in the mix), as well as 120 Champagnes. Kreinbacher’s sparklers were not entered for the Top Ten, which was won by Garamvári Szőlőbirtok Furmint Brut 2015.

There are several sparklers made by the huge Törley Pezsgőpincészet in the Pezsgő Június Top Ten, including the great value Hungária Pinot Blanc Brut Jubileum Edition, which is made by the more cost effective transfer method. It shared eighth position with François President Brut 2014, also a Törley brand, which also took a bronze at DWWA. Several still wines made

by Törley also received gongs.

The oft dissed Olaszrizling grape also made it into one of Hungary’s platinum medal-winning wines at DWWA – Figula’s Köves 2016, a blend of 60% Szürkebarát

Villány is not normally associated with Kadarka, but Sauska has managed to retain the grape’s exciting rose hip, raspberry and mixed spice notes in a bigger, rounder style that reflects its warm place of growth.

(Pinot Gris) and 40% Olaszrizling. Both grapes can achieve excellent results on the northern side of Lake Balaton.

“A big, bold style. Rich and long with textures of honey, spice and racy acidity.

This is an expressive wine that definitely stands out and delivers,” said DWWA. Figula is also a great exponent in showing the complexity that the Olaszrizling can deliver in single vineyard wines.

France won the most Best in Show medals at DWWA, followed by Italy, in the category that sits above platinum.

www.bbj.hu

Budapest Business Journal | June 15 – June 28, 2018

BMW CEO Experience TN: The gesture control and the digital display key were the cherry on the cake, but the Driving Assistant Plus package impressed me most with its semiautonomous driving option.

BBJ: Would you recommend the BMW 6 Series Gran Turismo as a business or family car?

TN: The sophisticated design and the technical attributes of the car makes it a unique partner for both business purposes and long family trips.

With Thomas Narbeshuber, BASF South East Europe BBJ: How did you like the car overall?

Thomas Narbeshuber: My first impression was that, besides all the traditional BMW design characteristics, the 6 Series has a unique atmosphere. The frameless side windows provide the essential coupe feeling and the hushed six-cylinder engine in the BMW 640d xDrive test car was impressively refined and vigorous, too.

BBJ: What was its most surprising or most useful feature?

BBJ: Would it suit an executive fleet?

TN: BMW’s all-new 6 Series GT is flawlessly built and remarkably comfortable, but the price tag places it in a higher class.

However, it provides a slight touch of fresh individuality, combining the 7 Series exclusivity with the 5 Series sporty handling. I think this makes the BMW 6 GT a considerable choice and a more appealing alternative in the high-end executive business car segment.

PRESENTED CONTENT

BBJ: How long have you been in Hungary?

TN: I moved to Hungary in 2014 with my family from China, where we spent four years.

BBJ: What kind of manager would you describe yourself as?

TN: I truly believe in people: motivating, inspiring and encouraging my colleagues is what I enjoy most.

BBJ: How long has BASF been in Hungary?

TN: BASF started operations in Hungary in 1991. We operated a polyurethane production site in Solymár for almost 30 years besides our sales organization in

4

Socialite | 23

Budapest, and currently we have two legal entities, BASF Hungária Kft and Chemetall Kft. BBJ: Are there any special attributes about BASF’s presence in Hungary?

TN: Budapest has a special place within BASF, as this city hosts the headquarters for the region: we are responsible for overseeing operations in Austria, Slovakia, Czech Republic and South East Europe.

BBJ: What is your staff headcount?

TN: In Hungary we employ 107 colleagues, in the South European region 446.

This is an occasional column run in cooperation with BMW Group Hungary.

BBJ: Where did you take the BMW 6 GT and why?

TN: We enjoyed a family trip to Visegrad with this car. Driving on the curvy roads alongside the Danube makes this drive really enjoyable.

BBJ: What kind of driver would you consider yourself?

TN: I would say I am a sporty but conscious driver.

ADVERTISEMENT

Weekend Lunch by the Champagne Garden There’s a fine dining place in Budapest that’s easy to access by public transport, has a lovely secret garden and offers close to unlimited sparkling wine to go with the line of ten small meals within its weekend lunch. Arany Kaviár, or Golden Caviar, was renewed and redecorated recently. Its larger windows and champagne wallpapers add more light to the interior.

The restaurant now comfortably seats up to 50 people, but certain areas can be isolated for private events. The new part of the restaurant opens toward the beautiful inner garden, also new, that features a smoking corner and a small fountain. The garden is closed from street view, which results in an intimate milieu that echoes private clubs.

Still, the weekend menu is affordable even for those who have thus far been too scared to check out this elegant place. For HUF 13,900 (or EUR 46) euros plus service fee, guests may choose from three types of main meals and two desserts, in addition to cold and hot starters, water and a coffee. And Törley Brut sparkling wine, generously topped up along the way.

The meal kicks off with cold starters, or zakuski in Russian, served with three types of home-baked bread. A small quantity of caviar, wood garlic butter, duck liver are the flavors here, followed by warm starters including pelmeni

(dumplings) filled with boar and Russian mushroom Julienne.

Prestige Materials

Although the weekend selection isn’t focusing on caviar and lobster, a variety of

seafood such as herring, salmon gravlax, smoked sturgeon and grey sea bream are on the card, alongside traditional Russian meals that resemble the Hungarian Sunday favorite, the breaded chicken, only that it’s prepared Kiev style here. Some of the fish are acquired in Hungary, some come from France. The restaurant only uses prestige materials and ingredients; therefore it is key to find the best sources, Attila Molnár, one of the owners says.

“While we attempt to acquire as much as we can in Hungary, there are some ingredients we cannot replace. Sour cream or some pickles therefore still come from Russia,” he adds.

The dessert is simple and light with a real Russian twist. The traditional cottage

cheese plate called syrniki, coming with strawberry and dill ice cream, is marvelous, crowning the memorable lunch experience.

Throughout the lunch, the beautiful and professionally served plates come one after the other, and are available for two people or more between noon and 2 p.m. on weekends. The stylish but warm service isn’t by chance, either: the 22-person staff is highly trained. Kaviár regularly takes on trainees too, partly to tackle the lack of workforce that is general in Hungary.

One great result of this commitment is László Kanász, the 30-year-old head chef who brings the momentum of youth to this fine kitchen. Despite his young age, Kanász has been working in Arany Kaviár for ten years, only leaving the restaurant for short gigs abroad where he gained experience in other top kitchens.

Coming from Lake Balaton, he admits his favorites are fish plates, and he also likes catching some himself when he has the time and opportunity.