Hiring remote software developers from Hungary can bring many benefits to an international organization. The country’s ICT sector is experiencing growth, with a thriving start-up scene, government initiatives, and digital advancements. This article discusses Hungary’s ICT industry, developer salaries, and hiring remote Hungarian developers.
Country Overview
| 🏛 | Capital | Budapest |
| 🕑 | Time Zone | UTC+1 (Winter) / UTC+2 (Summer) |
| 👥 | Population | 9 689 000 |
| 💼 | Working in ICT | 168 000 |
| 🗣 | Official Language(s) | Hungarian |
| 🇬🇧 | English Proficiency | High Proficiency (18th of 111) |
| 📈 | GDP per Capita | 15 869 EUR |
| 💰 | Currency | Forint (HUF) |
| 🇪🇺 | European Union | Yes (since 2004) |
Hungary’s Expanding ICT Sector
The significance of Hungary’s ICT sector has been steadily increasing, marked by a growing workforce and higher wages. Currently, the sector employs 168,492 individuals, constituting 3.6% of the nation’s total workforce, a rise from 2.5% in 2015. Though ICT’s value-added contribution to GDP has grown from 4.09% in 2015 to 4.65% in 2021, ICT exports as a share of GDP experienced a more modest increase from 1.45% to 1.70% during the same period.
Hungary’s Thriving Start-up Ecosystem
Hungary has emerged as a prominent Eastern European start-up center, despite a slight decline in its GSEI rank to 13th in 2022. The start-up scene is flourishing, with over 1,500 start-ups receiving support from more than 140 investors. Notable Hungarian start-ups like Prezi, SEON, Fraud Fighters, Bitrise, Codecool, Logiscool, and Xeropan, as well as a growing foodtech industry, are bolstering the country’s entrepreneurial environment. The combined enterprise value of Hungarian start-ups soared to 2.4 billion euros in 2022, a significant increase from 584 million euros five years earlier.
Government Initiatives and Digital Advancements
Hungary is committed to fostering a business-friendly environment by offering tax incentives and subsidies to foreign investors, including a competitive nine percent corporate tax rate. The Digital Workforce Programme prioritizes digital skills and industry growth, aiming to expand the ICT workforce. The government’s National Digitalisation Strategy (2021-2030) addresses four key areas in alignment with the Digital Decade Compass: digital infrastructure, skills, economy, and state.
Significant progress has been made in digital public services, with 81% of internet users interacting with public administration online in 2021, a considerable increase from 64% in 2019, and above the EU average of 65%. By 2021, over 3,000 public services were available online, nearly double the prior year’s number. Since 2018, online administration has been mandatory for businesses.
In education, the number of graduates has consistently risen over the past seven years, from 1,714 in 2015 to 4,034 in 2021. The most significant year-over-year increase occurred between 2015 and 2016, with a 72% spike in graduates. Overall, there was a 135% increase in the number of graduates from 2015 to 2021.
Hungary has advanced to 5th place in the IT Competitiveness Index, up from 9th the previous year. The country ranks 2nd in Emerging Europe for average broadband internet speed (118.79 Mbps). Hungary also remains a major and rapidly expanding IT student hub, placing among the top four in the region for the number of IT students and annual growth in IT graduates. In terms of English proficiency, Hungary ranks 18th according to the EF English Proficiency Index score.
Hungary’s dedication to fostering a business-friendly environment, along with its commitment to digital skills and industry growth, make it an excellent destination to hire remote software developers.
Software Developer Salaries in Hungary
Software Developer Salaries in Hungary
The data from Glassdoor and Hays highlights average annual earnings of software developers in various regions, emphasizing Hungarian salaries. When hiring a software engineer from Hungary, it’s crucial to consider variations between sources and compare with other countries.
Glassdoor reveals that software developers in Hungary have an average yearly income of 18,200,000 HUF (around 53,800 USD/48,500 EUR), while Hays reports a slightly lower figure of 16,800,000 HUF (approximately 49,700 USD/44,700 EUR). These numbers show that hiring a software engineer from Hungary could result in lower costs compared to countries like the United States, the United Kingdom, Germany, and the Netherlands.
Comparing Hungarian salaries to the US, Glassdoor data indicates that developers in New York and California earn almost twice as much as those in Hungary. Even the US national average is significantly higher. Hays’ data also underlines the considerable gap between Hungary and the US, with the US national average more than double Hungary’s figure.
In a European context, software developer salaries in Hungary are relatively lower than those in the UK, Germany, and the Netherlands. Data from both Glassdoor and Hays demonstrates that developers in these European countries earn 30% to 60% more than their Hungarian peers.
Considering Hungarian software developer salaries, the data suggests cost savings for companies hiring a software engineer from Hungary. However, it’s essential to account for factors like cost of living, quality of life, and labor market dynamics when comparing salaries across countries. Also, acknowledging that salary data may vary between sources, consulting multiple sources can provide a more comprehensive understanding.
Senior Software Developer Salaries in Hungary
This data sheds light on the average annual earnings for senior software developers in the previously mentioned regions, as reported by Glassdoor and Hays.
Per Glassdoor, senior software developers in Hungary earn an average yearly salary of 23,400,000 HUF (approximately 69,200 USD/62,300 EUR). In contrast, Hays cites a marginally lower average of 21,600,000 HUF (around 63,900 USD/57,500 EUR). These numbers reveal that senior software developers in Hungary earn substantially less than their counterparts in countries such as the United States, the United Kingdom, Germany, and the Netherlands.
When comparing Hungarian salaries with those in the US, Glassdoor data indicates that senior developers in New York and California earn over twice as much as those in Hungary, and the US national average remains significantly higher. The Hays data also emphasizes the considerable salary disparity between Hungary and the US, with the US national average more than double that of Hungary.
In a European context, senior software developer salaries in Hungary are relatively lower than those in the UK, Germany, and the Netherlands. Both Glassdoor and Hays data demonstrate that senior developers in these European countries earn between 20% and 55% more than their Hungarian colleagues.
Considering the Hungarian senior software developer salaries, the data implies that Hungary offers cost benefits to companies looking to hire experienced IT talent. When comparing this analysis with the previous one concerning average software developer salaries, it’s evident that the salary gap between Hungary and other countries is somewhat smaller for senior software developers than for their less-experienced counterparts. This suggests that the Hungarian market may be more competitive for seasoned developers, though the cost advantage for companies hiring in Hungary remains significant.
How to Pay When Hiring Remote Software Developers from Hungary
The approach you choose for hiring software engineers remotely from Hungary will be contingent upon their preferences or business structure
Engaging and Paying as Freelancers
A considerable number of contractors operate as self-employed freelancers, often collaborating with multiple clients. This method of payment is straightforward as long as there is an agreed-upon method for verifying performance and project completion. It is advisable to commence with smaller milestones and payment amounts until trust is built with new contractors.
Paying Contractors through Their Limited Company
Seasoned contractors might have established their own limited company in Hungary to take advantage of business and tax benefits. This arrangement does not impact your organization, as you will enter into a contract directly with the limited company, providing you with a sense of business stability. The limited company will effectively ‘lease’ the contractor to you and must adhere to local business registration requirements.
Employing an Umbrella Company in Hungary
When hiring a new contractor, utilizing an umbrella company can be an ideal solution for remote software developers. The umbrella company serves as an intermediary for the contract, working with both parties to confirm payment and performance. You would send the payment to the umbrella company, which would then distribute it after withholding taxes and contributions.
This arrangement offers both you and the contractor the reassurance that there is supervision of the contract and that the local umbrella company would facilitate the resolution of any disputes or disagreements. A service fee is charged for this arrangement, which could be split between the two benefitting parties.
Establishing a Legal Entity in Hungary
Setting up a legal entity in Hungary to hire remote software developers is strategic for accessing its talent pool. Creating an LLC lets businesses hire local developers directly, promoting a stable work environment. The process is straightforward with expert help. Compliance with regulations allows companies to benefit from Hungary’s tax rates, workforce, and business environment while offering secure jobs.
Taxation when hiring directly through your Hungarian entity:
- Employer
- 13% – Social Tax (Social Security)
- Employee payroll taxes
- 10% – Pension Contribution
- 7% – Health Insurance
- 1.5% – Unemployment Contribution
- Employee income tax
- 15% (Flat rate for all employment income)
Conclusion for Hiring Remote Software Developers from Hungary
Hungary’s expanding ICT sector and its thriving start-up ecosystem contribute to the growth of the country’s digital economy. Software developer salaries are lower compared to the US and Western Europe, providing cost benefits to companies looking to hire. However, the salary gap is smaller for senior software developers, suggesting a more competitive market for experienced professionals. This still makes Hungary a viable destination for hiring remote software developers.
Various options for hiring remote workers from Hungary include working with contractors, employing umbrella companies, or establishing a legal entity. Understanding the local business environment and taxation structure is crucial for successfully navigating the Hungarian ICT landscape.
Contact euDevelopers for IT recruitment services:
https://eudevelopers.com/contact-us
Sources
- Emerging Europe: Future of IT: https://emerging-europe.com/future-of-it-2022/
- EF English Proficiency Index: https://www.ef.com
- Glassdoor: https://glassdoor.com
- Hays Salary Guides: https://hays.com
- Dealroom: https://dealroom.co
