Cloud market to produce exponential growth in Hungary and Eastern Europe

Sales revenue from cloud technology used in manufacturing and trade is set to grow at an average annual rate of close to 20% this decade in Eastern Europe, according to market researcher Fortune Business Insights. In Hungary, the growth of the cloud technology sector may outpace regional peers as the expansion of B2C e-commerce has been the most prominent in the region.

Revenue from the sale of cloud technologies in manufacturing and the commercial sector will grow by an annual rate averaging 16.7% between 2022 and 2029 in Eastern Europe and the Baltics, according to an analysis by Fortune Business Insights prepared on behalf of Microsoft. The rise is sales may be even steeper in Eastern Europe, reaching an annual rate of 17.8%. The total sales revenue of the regional market will almost quadruple to reach to about USD 31.5 billion dollars by 2029 versus USD 9.2 billion registered in 2021.
The continuously improving digital preparedness of the countries in the region, Europe-wide cooperation of large cloud service providers, as well as increasing demand for cloud technology solutions and the growing popularity of the SaaS (Software as a Service) service model all point in the direction of massive expansion.
The rapid development of e-mail marketing, online shopping, and e-commerce, the increasing use of advanced technologies such as AR/VR (virtual reality), the strengthening of Industry 4.0 - the introduction of 3D printing in production -, and the spread of the PaaS (Platform as a service) service model will give an additional boost to the spread of cloud technology in the medium and long term.

Hungary needs to catch up
Hungary posted the most dynamic expansion of B2C e-commerce in the region in 2020: the segment grew by 35%, followed by Croatia with 32% and Slovenia with 21%.
Nevertheless, the largest proportion of companies in the region that use the cloud technology is in Estonia - at 58% - while Bulgaria, with 13%, is at the end of the line. In Hungary, 26% of businesses make use of the cloud in their operations. The general level of digitization was the highest in Estonia, while Bulgaria and Hungary are among the laggards, according to the study. This is partly due to the incomplete integration of digital technologies (companies do not use new technologies extensively in their operations) and the relatively insufficient digitization of public services.
The analysis also points out that the level of digitalization and a country's competitiveness are closely related. The World Competitiveness Yearbook ranks Estonia as the 22nd most competitive country in the world, while Bulgaria is 53rd and Hungary 39th in the list - although Hungary has been improving its position since 2020.
According to the study, the increase in productivity resulting from the digital transformation of the economy will result in a surplus of more than USD 9 billion in Hungary's gross national product by 2025, which will also have a positive effect on its competitiveness. By 2030, nearly half (49%) of work activities in Hungary are expected to be automated using cloud-related innovations. The paradigm shift can bring productivity growth, additional foreign investments, and initiate corporate acquisitions and mergers.
The authors of the study stressed that the contribution of the SME sector to the expansion of the cloud market will be significant, as the sales revenue generated in this sector will increase by more than 19% annually from 2022 to 2029 in the Baltics and Eastern Europe. In the Hungarian market, the role of SMEs will be even more significant, as the revenue growth generated by them will be 21% annually, and their market share will increase from 30% today to more than 34% by 2029.