BUDAPEST — Despite a tight employment market and wage appreciation, Hungary remains an attractive site for Mentor Graphics to expand its automotive networking software development team, said Joachim Langenwalter, director of Mentor's automotive networking business unit.

Mentor entered Budapest in 2000 through an acquisition. Today the company employs 35 developers who work on automotive networking software for OEMs in Europe and China.

Hungary has a severe skilled labor shortage in specific technical areas and Mentor has trouble finding people with solid experience on advanced tools, said Zoltan Mihaczi, senior engineering manager in Budapest.

Finding junior developers, however, is not a problem.

Software for automotive applications is booming, Langenwalter added. As electronics content proliferates in cars, a software-based evolution is taking place concurrently. In addition, automotive suppliers are moving to lower cost Central and Eastern Europe to set up software teams.

Bosch, for example, has 7000 employees at its operation in Hungary and buses some workers in from Slovakia. Continental, Visteon and Audi are a few of the other companies running R&D operations.

"Other companies are all trying to build up R&D teams here, so salaries rise," Langenwalter explained.

In 2006, Mentor launched a $20M development lab at the Budapest University of Technology and Economics, supplied with Mentor's software. Down the road, the company hopes to see more graduates emerge with comprehensive experience on its tools.

"You invest in people, train them, then upgrade their salaries because they get competitive offers," Langenwalter said. "But turnover here is rather low and stable and when we need to expand, we'd expand in Budapest."