Cloud technologies in Hungary – economic impact study

 

Cloud technology represents enormous economic potential, yet not enough companies use it

Despite the measurable economic and competitiveness benefits associated with its adoption, cloud technology is still not sufficiently widespread in Hungary, according to a study commissioned by IVSZ – Association of Digital Enterprises and prepared by Deloitte and BellResearch. The technology remains primarily the privilege of larger companies, even though it has significant transformative potential for both individual businesses and the economy as a whole. According to the impact study, a supportive government approach could generate more than HUF 7,000 billion in additional GDP over ten years. The study also contains recommendations from IVSZ for both businesses and regulators.

In its publication entitled Cloud Technologies in Hungary – An Economic Impact Study, IVSZ, with the involvement of Deloitte and BellResearch, assessed the domestic adoption of cloud computing following the European Parliament elections and immediately before Hungary’s presidency of the Council of the European Union.

The larger the company, the more likely it is to use cloud technology

According to the 2023 results of the annually published EU Digital Decade research, 44.9% of companies in Hungary use cloud technology, meaning that the country is not significantly behind the EU average of 45.2%. However, the findings of the newly published impact study do not support the view that the use of cloud technologies is spreading rapidly and on a large scale in Hungary. Instead, larger companies tend to use cloud technologies at a higher rate than smaller businesses. While 34.9% of companies employing between one and nine people use cloud services, the corresponding proportion among Hungarian companies with more than 250 employees is 81.7%. Nevertheless, 63% of Hungarian companies do not use cloud technology at all.

By sector, transport and warehousing, at 55.1%, and the financial and services sector, at 37.78%, perform the strongest. By contrast, approximately 72% of companies in agriculture and mining do not use cloud technology. The most significant barriers include a lack of expertise, insufficient understanding, data security concerns, budgetary constraints, regulatory difficulties and contractual obligations.

Supporting cloud technology could increase GDP by HUF 7,000 billion

According to the study’s authors, promoting the adoption of cloud technology is also of strategic importance from a national economic perspective. The annual revenue per employee of Hungarian companies using cloud services is nearly HUF 2.4 million higher than that of competitors that do not use such services. Based on this, further growth in cloud adoption could contribute an average of 1.7–2.7% annually to Hungary’s GDP over the next ten years, calculated on the basis of the 2023 value, depending on whether the government’s approach to cloud technology is neutral or supportive. The difference between the two scenarios would amount to approximately HUF 7,000 billion in additional GDP over the ten-year period.

“The figures clearly show that this is an issue with implications for the national economy. We need to take education and regulation seriously and encourage the use of the technology, which could improve competitiveness and support job creation across the entire SME sector. At the same time, we must dispel outdated assumptions that the cloud is not secure from a data protection perspective. Today’s cloud solutions provide an extremely high level of control and regulation over our data, while offering substantially stronger cybersecurity capabilities than on-premises solutions,” said Miklós Zaránd, Partner in Deloitte Hungary’s Technology Advisory practice.

There will be no AI revolution without the cloud

The combined use of artificial intelligence and cloud technology creates economic and business conditions that justify coordinating their development. Machine learning combined with cloud technology enables rapid innovation on a large scale. The cost of the computing time required for an average AI workload is significantly higher when investing in locally installed infrastructure than when renting the same computing capacity in the cloud. In light of this, the study concludes that the widespread acceptance and routine use of cloud technology is an essential condition for realising the expected economic benefits of AI.

IVSZ recommendations for promoting cloud adoption in Hungary

IVSZ believes that appropriate government measures and investments can encourage the adoption of cloud technology. Furthermore, the transition of government bodies to cloud services not only promotes innovation, but also establishes high security and regulatory standards that can help strengthen confidence in and acceptance of cloud technology in the private sector.

“This study also clearly demonstrates the economic benefits that can be achieved through cloud adoption. It is therefore essential that we take rapid action to support the spread of this technology in the interests of the entire national economy. In our view, Hungary needs to develop a national cloud strategy based on the Cloud First principle. It is also worth changing the approach under which data must be kept within the country’s borders for data security reasons. If we continue to follow this principle, Hungary’s size will prevent us from developing a cloud infrastructure that can be operated economically. Another important lesson from the research is the considerable support smaller Hungarian companies require to adopt the technology. In addition to ensuring that funding is available, we must also focus on raising awareness and providing education in order to achieve a genuine and lasting impact,” said Balázs Vinnai, President of IVSZ, outlining the organisation’s recommendations.

 

The full study is available here:

About the research

The study was prepared by IVSZ with the involvement of Deloitte and BellResearch. It was based on three principal types of analysis:

Primary research and data collection: With the support of IVSZ, Deloitte conducted interviews with relevant market participants, policymakers and advocacy organisations. The topics covered by the study were discussed with these stakeholders using a comprehensive, semi-structured methodology.

Secondary research and literature review: An analysis of professional literature concerning the trends, challenges and opportunities of the cloud technology market.

Modelling and analysis: The development and application of quantitative models based on the BellResearch Hungarian Infocommunications Report and other data sources to examine the relationship between cloud technology adoption and companies’ financial performance. A model based on the input-output table was also used to demonstrate the macroeconomic effects of cloud adoption.

Several IVSZ member companies supported the implementation of the research, including Microsoft Hungary, Google and Amazon Web Services.

Contributors to the research