Hungary Information Technology Report Q2 2016
BMI View: We downgraded our estimate for IT market growth in 2015 to reflect the extent of forintdepreciation, and although conditions will ease in 2016 the forint and weak confidence levels will continueto be challenging for vendors. The medium term-outlook is considerably stronger stronger, however, andwe expect a faster growth trajectory from 2017 across all three market segments. Forint depreciation andhousehold income growth has the potential to ease price sensitivity in the retail hardware market, whileenterprise modernisation and rationalisation will drive faster growth for software and services spending.
We forecast IT spending will increase at a CAGR of 5.6% 2016-2020 to HUF679.1bn. Risks are weighted tothe downside, and global economic headwinds or political developments at the regional and national levelcould undermine the IT market growth outlook.
Headline Expenditure Projections
Computer Hardware Sales: HUF210bn in 2016 to HUF249bn in 2020, a compound annual growth rate(CAGR) of 3.6% in local currency terms. Weak performance expected in 2016, but purchasing powergrowth from 2017 should see the market accelerate, with deferred purchases from 2015 and 2016 addingto momentum.
Software Sales: HUF114bn in 2016 to HUF140bn in 2019, a CAGR of 5.0%. We expect demand growthfor enterprise applications as lower cost cloud models deepen the market and large enterprises modernise.
IT Services Sales: HUF212bn in 2016 to HUF291bn in 2020, a CAGR of 7.6%. IT services growthexpected to outperform based on the strength of enterprise demand for cost-saving solutions such asoutsourcing and cloud computing.
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