Talent Shortage in the Nordics: Finland, Sweden, and Denmark Are Coming Short of Software Developers

Aug 18, 2017

Ranking high among the best countries for business, the Nordic countries, including Sweden, Norway, Denmark, and Finland, have seen a significant inflow of venture capital recently. The region’s total funding grew almost 600 percent since 2012, with 2016 being a record year yet. And the trend is set to continue.

This, however, can pose serious problems for the region in the near future. With more investments fueling the market growth, the demand for software developers will grow. Yet, some companies are already experiencing the shortage of the local tech talent.

Tech Talent Shortage in the Nordics. Is Your Country at Risk?

“Sweden is one of the toughest places for a company to develop and grow even though the economy as a whole is currently doing quite well."

Johan Alsén, Managing Director of Hays Sweden 
(source - The Local)

According to Hays Global Skills Index 2016, Sweden has already outpaced the USA as the country with the highest labour market stress level. The country ranked first among other 33 developed economies, with engineering and technology sectors facing the worst skill shortage.


The main reasons for the talent shortage in Sweden are: 

  • inability of the education system to adapt to the current market needs,
  • difficulties matching the available skills with the existing jobs, 
  • the growing wage pressure.

Another Nordic economy already experiencing severe skill shortage is Denmark. The country is facing a serious talent mismatch, according to the Hays Skill Index research mentioned above. As a result, Denmark is expected to come short of 19,000 IT professionals by 2030

The situation might get even worse as a number of the global tech giants, including IBM, Microsoft, and Uber, are either setting up or expanding their R&D facilities in the country.

Finland currently has an immediate need for 7,000 software developers, Finnish Information Processing Association, TIVIA, reports. With the anticipated 7 percent annual sector revenue growth, the country will lack over 15,000 skilled professionals by 2020, causing about €3-4 billion in lost GPD per year.

Similar to Sweden, Finland’s talent gap can be blamed on the inability of the education system to prepare the required number of professionals. Out of 1,100 information and communications technology students graduating Finnish schools every year, less than 300 specialize in software development. 

Furthermore, over 30 percent of polytechnic students in Finland are foreigners, so only about half of them usually choose to stay in the country after graduation.

“There is a very great demand for software graduates, especially those who specialise in algorithms and big data. This year, we doubled our intake and instead of applying to the Danish Ministry of Education for a grant, like we usually do, we financed this expansion ourselves because the need is to acute.”

Mads Tofte, rector of the IT University of Copenhagen 
(source - Business Insider Nordic)

Sourcing Tech Talent Amidst the Skill Shortage: 3 Ways Nordic Businesses Can Tackle the Problem

Skill shortage can be extremely dangerous. It can put the very existence of your business at risk, not to mention the inability to scale and grow your company without the required amount of skilled software developers.

In the face of the growing talent shortage problem, many Nordic businesses are trying to find a way to hire and retain the right talent. One of the ways to fight the skill shortage is to grow the expertise on site

Waiting for the government to introduce the required changes to the education system might be a real waste of time. That is why many companies are already introducing their own training programs. There are even some projects aimed at teaching refugees to code.

Integrify, for example, claims to “create 10,000+ developer jobs by 2030”. The company is on a mission to turn refugees, asylum seekers, and immigrants into skilled workforce while helping tech companies and startups fill the vacancies.

However, this approach can be viable only in the long-term outlook: It takes several months to teach a person the basics of software development. Moreover, this method will only allow to fill the junior or trainee level positions.

Another option to grow your staff despite the skill shortage is to relocate skilled specialists from abroad.

By sourcing skilled software developers abroad, you open the access to unlimited skills pool. However, the given method requires certain investments as well as time, especially taking into account the bureaucracy and certain restrictions in migration policies of different countries. That is why this approach is mostly preferred by large or enterprise-level companies with long-term growth outlook.

On the other hand, many Nordic countries choose to hire skilled software developers remotely, as a viable option to solve the talent shortage problem. In this case, most businesses choose to partner with the professional staffing agencies.

Trusted by dozens of European and global companies, Daxx is a reliable solution provider when it comes to hiring top software developers. We help leading tech companies and startups tap into the largest European tech talent pool, Ukraine, providing end-to-end recruiting, HR management, and staff retention services. We help you hire and retain qualified professionals fast, safely navigating the related bureaucracy and risks.

The described model has already helped dozens of startups and companies grow despite the global skill shortage. 

To find out how Daxx can help you set up your own remote R&D center in Ukraine, fill out the form below. We will get back to you as soon as possible.

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