The Nordic countries are home to some of the world’s most innovative companies, including Skype, Spotify, and Mojang. However, more skilled developers in these areas are needed for many regional companies.
Software developers are in high demand and short supply, especially in the Nordics. A report by Cedefop (European Centre for the Development of Vocational Training) found that Swedish IT & telecom industries have a combined shortage of 70,000 skilled workers. According to the 2016 Hays Global Skills Index, Sweden has the highest labor market stress level among 33 skilled-based economies.
Prospects in the region need help to find skilled talent through traditional hiring methods. According to a recent survey by Remote.com, Swedish companies need help finding tech professionals in their country.
The Nordics are in a unique position in hiring top talent because there aren’t enough developers in the region to meet demand. Companies are therefore forced to compete against each other for top developers, and this competition can drive up costs.
In recent years, it has become clear that the number of software developers employed in Nordic countries needs to be increased to meet demand. The shortage is a severe problem because it undermines the ability of companies to compete globally and offer their employees stable employment in high-tech industries.
Tomas Qviberg, CEO of Konsultkompaniet, said the following in an op-ed published for ComputerSweden.
“When I applied for my first job as a programmer (in the mid-seventies), there were 80 applicants for each job. We don't want to end up in a situation where there are 80 jobs for every applicant. Therefore, it is urgent. In a shortage situation like today, otherwise, the prices of IT skills will increase sharply. Runaway costs could slow down this important digitization,”
While there are many challenges involved with hiring in the Nordics (including language barriers), there are plenty of solutions as well – including outsourcing your entire team or working remotely from another country which we will talk about later.
Software developer shortages in Nordic countries are forcing companies to look for options all over the world as there is a high demand for qualified developers all over the world. With the anticipated growth of the software industry and development, it is only natural that supply has not kept up with demand.
The Nordic countries
It might sound strange to say that there is a shortage of software developers in a region where more than 90 percent of the population uses the internet regularly. But even though these countries are home to some of the world's most advanced and innovative digital economies, they still lack enough qualified software engineers who can meet their own needs.
In the past ten years, the number of students that have chosen to study computer science has steadily declined, and as a consequence, there need to be more skilled software developers in the labor market.
When we look at developing countries like India, China, and others, we see that their education system focuses on teaching computer science to their students. Also, in the United States, it's prevalent to study computer science before entering a university or college.
As we move more into a world where everything is digitalized, it becomes increasingly important to understand how technology works and how it can be utilized in different areas of life.
Sweden is a country that values technology and innovation greatly. It's a wealthy, developed country officially ranked 7th on the Human Development Index, but it also has one of the fastest-growing economies in Europe and a high standard of living.
Here are a few software development statistics about Sweden from Ibis World that gives us deeper insight into their economy:
The market size is €16.7bn in 2023.
The market size has declined by 5.0% per year between 2018 and 2023.
39,922 people are employed in Software Development as of 2023.
The average business within the Software Development industry employs more workers than it did five years ago.
The Software Development industry has a low market share concentration, and there are currently no companies with more than a 5% market share.
Denmark is ranked 6th on the Human Development Index. There are plenty of IT companies in Denmark, but, similar to Sweden, there remains a great need to find programmers and engineers.
Ibis World reports the following statistics on the software development industry in Denmark:
The market size will be €3.2bn in 2023.
The market size has declined by 5.3% per year between 2018 and 2023.
11,718 people are employed in Software Development as of 2023.
The average business within the Software Development industry employs more workers now than it did five years ago.
The Software Development industry has a low market share concentration, and there are currently no companies with more than a 5% market share.
IDA predicts a shortage of 13,500 engineers in Denmark by 2025.
Software developers are a precious commodity in Nordic countries. In Finland, the demand for software developers is constantly growing, but the supply of new graduates coming out of universities doesn't match that demand.
Finland reportedly lacks over 7.000 software developers (most in the capital).
The need has been estimated to grow to 15 000 unfilled positions in 2020, and we can only assume that the demand has increased by now.
Espeo Software reports that there are currently around 1100 students who graduate in the ICT field with degrees from Finnish universities each year. However, only 300 students out of this number specialize in software development.
The Union of Professional Engineers in Finland reports:
“People who graduated 15 years ago do not necessarily have skills that match the needs of today’s working environment."
Although there seems to be light at the end of the tunnel for the European market as Poland is making waves within the IT industry. Aki Inkeroinen, Managing Director of Espeo Software Finland said this in a report.
“The latest forecasts show that the demand for software developers is constantly growing. It is estimated that there is a shortage of up to 14,000 developers in the IT sector in Finland. If we consider the situation in Poland, where 15 000 new IT workers enter the market each year, the need on the Finnish market could be satisfied within a year by new Polish developers.”
Norway has a thriving economy and a low unemployment rate – ranked 2nd on the Human Development Index.
With at least 80,000 people working in the IT industry, the gap between supply and demand for IT skills continues to rise in Norway. It is reported that the most in-demand tech jobs in Norway are Software Engineers.
Rune Buseth, partner at the recruitment firm Birn & Partners, a recruitment firm, said the following in a statement.
“But people are still attracted to Norway because of the work-life balance, the nature, the safety, and the salaries. As a result, there is an influx of people with the right IT skills, which is fortunate, because the Norwegian educational system doesn’t produce the amount of people companies need. Moreover, those they do produce tend to get picked up very early."
Here are a few more stats on what the technology industry is like in this country.
Nearly 30% of companies have said that there is a great need for IT expertise as the principal obstacle to growth.
Norway currently has a shortage of nearly 60,000 roles in technology.
In Norway, they're looking at a shortage of 10,000 by 2030.
48% of Norwegian companies need IT staff.
Why is there a shortage of software developers?
The tech talent shortage in the Nordics is most likely due to a combination of factors. There are many reasons for this, but three main factors stand out:
The Nordic countries have some of the oldest populations in Europe. A large proportion of Nordic citizens are aged over fifty-five years old, which means that there will be fewer young people entering the workforce in future years.
This creates a problem because many people who would be working in technology are retiring. The number of young people entering the workforce is decreasing, while the number of older workers retiring is increasing.
The younger generation is not as interested in taking their place, so there need to be more people to fill these positions and keep companies running smoothly. In addition, many young people leave their home countries to work abroad where they can earn more money.
The education system
Another reason for the tech talent shortage is education. Although many people in these countries receive secondary educations and go on to attend university, they're not necessarily pursuing careers in technology or science fields like they used to – and many of those who did pursue such careers have moved abroad for better opportunities.
There are also fewer people graduating from universities with degrees in computer science than there were ten years ago. This means fewer potential candidates for companies looking to hire programmers or developers for their products or services.
Rules and regulations
Employment and immigration laws in these countries are very strict, which means that not everyone can come to these countries and work there. It can be hard for non-EU nationals to get visas for work permits or residency permits due to the bureaucracy associated with these processes.
This process can take months or even years for some companies, which means that if you want someone who specializes in something like machine learning or artificial intelligence, you're out of luck unless you can wait around for a while until everything gets cleared up so he can get hired.
What are the actual needs?
As the software market grows, the Nordic countries need help finding enough developers. Software developers are in high demand in all Nordic countries, but they are especially difficult to find in Finland and Sweden. The problem is not only affecting tech companies; many industries are experiencing a shortage, so even non-tech firms are looking for new ways to recruit employees that are skilled in coding.
What are your hiring options?
Software developers are one of the most in-demand jobs in most modern societies. With the advent of the internet, software is no longer something that can be acquired only by rich companies or people who live in large cities. The Internet has allowed anyone with a computer and an internet connection to purchase or use software products. As a result, software developers are being hired left and right for fast-moving startups and big tech companies.
Sweden is open to remote work but is not taking full advantage of global opportunities. More than half (57 percent) of Swedish hiring managers search exclusively in their own country to find tech talent. This indicates the country’s HR leaders are open to remote work. Only the Netherlands has a lower percentage of local talent searches. More than a quarter of all companies (26 percent) in Remote’s survey say they’ll hire anywhere in the world, but only 16% of Swedish companies are willing to take the leap.
Viktor Jarnheimer, CEO at Proxify, shared his insight into the state of remote tech hiring with Toggl.com. He highlighted the below critical steps to take in a remote recruitment process in his statement.
“Before you start looking for a remote developer, the most important thing to do is crystalize what exactly it is your company needs. What are the expectations for this professional, both in terms of their technical skills and experience, and in terms of their place in the team?”Viktor Jarnheimer
He added that it’s important to know exactly what you want and make this known to the hiring team.
“When you know the answers to these questions, you can easily relay your needs to our recruitment team and client managers, and you won’t have to worry about the usual obstacles in hiring. The same goes if you’re hiring internally—set the expectations and manage people accordingly. With a good foundation, you can’t go very wrong.”Viktor Jarnheimer
Hiring distributed talent is one of the most common ways companies fill their tech needs. It can be beneficial because it allows companies to focus on their core competencies while outsourcing other tasks, such as the development and maintenance of software products and services.
With Proxify, you can get skilled developers from international teams at a fraction of the cost of hiring a team member in-house. Our developers are vetted, have extensive experience in several popular programming languages, and can work on your engagements within days!
Here’s what sets us apart from our competitors:
And if you’re thinking, what’s the catch? There is no catch.
We work with developers worldwide who have done incredible work for our clients. Yes, you may be in two minds about outsourcing, especially when it comes to the quality of work and possibly how they may fit in with your company culture.
Before a developer is signed, they go through an extensive vetting process where we test their technical skills and communication skills.
So when they finally meet you, you can rest assured that you’re getting the best of the best.
Teach coding in-house
If your company has an existing app that needs updating or building from scratch, consider training employees who might not have the right skills yet—but could learn them if they had the time and resources. If you'd like to teach coding in-house, we recommend looking for classes through your local universities or community education centers. You can also consider hiring a consultant from abroad or having someone more senior in your team who can teach team members how to code.
This approach may help address some short-term staffing needs while providing long-term benefits by creating internal knowledge transfer opportunities between experienced senior engineers and junior engineers who are just starting on their career paths.
Consider relocating talent from abroad
In many cases, it can be more expensive than outsourcing due to visa fees and travel costs; however, if you're looking for a specific type of developer (like one who speaks a certain language), it may be worth your while.
How to solve the talent shortage?
The talent shortage in the Nordic region is a significant concern for employers. Qviberg added:
“We must immediately ensure that enough system developers are trained. In the long term, the market will surely give the professions such good salaries and high status that they will automatically attract competent personnel. But it will take time. We have to sort out the situation now,”
Here are some suggestions on how we could increase our interest in coding and programming among young people in Nordic countries:
✅ The first thing that can be done is to provide training programs to people who want to become software developers. This will help them acquire the necessary skills to get a job in this field. Furthermore, it will also reduce the number of candidates applying for available positions.
✅ Another way to solve this issue is by offering internships for students interested in learning about IT but without experience. This will allow them to gain some experience before they graduate from college, which should make them more attractive when applying for jobs later on down the line.
✅ Companies can offer incentives such as bonuses or additional benefits if someone stays with them longer than expected (e.g., six months instead of 4). This will help employers find employees willing to stay longer, which may lead them to become permanent employees later on down the line once their contract expires (or earlier if possible).
✅ Have more schools offer courses in coding and programming.
✅ Ensure there is enough work for developers to do. The companies that have the highest turnover rates are those that fail to provide their developers with opportunities to grow and expand their skills. They may also be lacking in job satisfaction or other factors.
✅ Show how technology can be used to make our society better.
✅ Diversify recruitment channels. While it may seem obvious at first glance, recruiters should take advantage of all available channels to find talent. This means using social media platforms like LinkedIn and traditional methods such as newspapers and job boards.
✅ Focus on quality over quantity. Businesses should focus on finding high-quality employees rather than just increasing their numbers.
What does the future hold for the Nordic countries?
Nordic countries are leading the world regarding technology and innovation, but we all must work toward a common, collaborative goal. We must continue to push forward into new technologies and find creative solutions, but let us also not neglect the present and how we can improve people's lives with software today.
It is no secret that the digital revolution has been ongoing for the past decade, and it is still developing. We will see a huge increase in the demand for IT professionals over the next ten years. Not only will we need more programmers and developers but also more people who understand the technology and how it can be used to develop new products and services.
The reasons behind the shortage of software developers in the Nordics vary from country to country. Some believe there is a general lack of interest among high school students who don't see programming as a viable career path. Others cite an overall need for more investment from employers who aren't willing to invest in long-term employee training.
The question remains: what is the future for software developers in the Nordics? Will we continue with this shortage, or will we have enough developers to meet our needs?
Only time will tell.