IT talent shortage in the Nordics

The global IT talent shortage has almost doubled compared to what it was a decade ago. 54% of companies worldwide report significant challenges in finding the right talent, and the Nordics are no exception. 

The Scandinavian countries are known for their highly developed and advanced technology industries. The Nordics are home to some of the fastest-growing global tech companies, including Skype, Spotify, and Mojang. Moreover, Sweden, Norway, Denmark, and Finland, are continually ranked among the best places for doing business, which has resulted in a significant inflow of venture capital over the past few years. With more investments fueling market growth, it has become apparent that there aren’t enough skilled IT professionals who can meet the region’s expanding needs. 

In this article, we will dive deeper into the reasons why the software developer shortage in the Nordics has gone into hyperspeed, and explore how Scandinavian companies can overcome the skills shortage in IT.

The digital revolution has been ongoing for the past decade and is still far from dying out, especially with the latest advances in generative AI. As this trend continues to blossom, we will see a significant surge in the demand for IT professionals. This includes not only the need for more programmers and developers but also individuals who possess a comprehensive understanding of technology and its potential for developing new products and services.

It’s already estimated that 40 million technical jobs go unfulfilled due to a lack of skilled talent. If left unchecked, the shortfall will more than double in the next decade, reaching 85.2 million. Thus, the fight for talent will become a much greater challenge.

The global talent shortage trend hasn’t bypassed the Nordic countries. Sweden and Finland are now seeing some of the world’s greatest year-over-year skills gap increases. Depending on the industry, between 66 and 90 percent of Finnish companies can not find the skills they are looking for. In Sweden, 56-65% of enterprises claim to be in short supply of seasoned professionals, while in Norway this problem is felt acutely by 15-40% of organizations. 

The reasons behind the skilled workforce shortage in the Nordics vary from country to country. However, there are several factors common for Sweden, Norway, Finland, and Denmark:

• Educational system. The education system in the Nordic countries can’t keep pace with the times. Its inability to adapt to the current market needs and graduate enough students with the required skills have triggered unprecedented demand for people adept in new technologies.
• Shifting demographics. The Scandinavian countries have some of the oldest populations in Europe. With a large proportion of citizens aged over 55, the Nordics see a rise in early retirees. Add to this the shrinking birth rate, brain drain, and a low number of students pursuing a computer science degree, and it becomes clear that there will be fewer young people entering the workforce in future years.

• Candidate-driven market. As the popularity of remote work grows, employees want more flexibility in terms of their working environment. Since location is no longer the deciding factor, seasoned software engineers are now enjoying the freedom to select employers based on who can best meet their expectations, and provide compelling compensation, benefits, and professional growth opportunities. 

• Russian factor. For a long time, Russia was one of the world’s biggest markets for sourcing skilled tech specialists. Many companies from the USA and Western Europe were hiring Russian IT professionals to overcome the skills shortage in their home countries. However, due to various sanctions on Russia, as a result of their ongoing assault on Ukraine, Russian software outsourcing industry has lost its position on the global tech scene, and can no longer supply engineering talent abroad.
• Geopolitical situation. The war in Ukraine has greatly impacted government priorities and policies in the Nordics. As Finland and Sweden are set to become part of NATO, defense spending is likely to increase, resulting in a possible shift in focus away from supporting the tech sector. This could make it more challenging to address the IT talent shortage and promote innovation in the region.

The high demand for IT specialists is a global trend, but the Norwegian case is special because the pressure is driven by a booming oil and gas industry. While stimulating economic activity, this sector creates an urge for home-grown high-tech offerings tailored to industry specifications. Therefore, the most in-demand services in Norway are: 

• Product innovation; 
• Digitization; 
• Robotics; 
• Network security. 

According to the Norwegian Society of Graduate Technical and Scientific Professionals (Tekna), 48% of Norwegian companies need a skilled tech workforce. Fast-growing software development companies in Norway are struggling to recruit technical personnel in sufficient numbers to support expansion. In fact, 30% of business executives cite the shortage of IT expertise as the principal obstacle to growth. 

With 77K people working in the Norwegian tech industry, the gap between supply and demand for IT skills is on the rise. The country is looking at a shortage of 10K software developers. In IT security alone, Norway could face a shortfall of more than 4K experts by 2030. 

At the same time, people are still attracted to Norway because of its thriving economy and low unemployment rate. The perks of work-life balance, nature, safety, and competitive salaries are also hard to ignore. The combination of these factors can create an influx of people with the right IT skills that can help Norwegian software development companies solve their tech talent shortage problem. 

Sweden is known as one of the world’s most innovative nations. A large presence of start-ups, research and development institutions, numerous technology parks, and international software development companies have contributed to a very high demand for qualified workers across the IT spectrum. To stay at the forefront of digital transformation initiatives, and strengthen the Swedish R&D climate, tech companies are increasingly looking for: 

• Process engineers; 
• Project leaders; 
• Laboratory engineers; 
• IT developers (Java, embedded);
• Testers/test leaders.

According to the Hays Global Skills Index, Sweden is amongst the most pressured labor markets. The talent shortage indicator has risen to the highest possible score of 10.0, which shows that the gap between the skills wanted by businesses and the skills available on the market is now at its greatest. 

From manufacturing to marketing, transport to trade, Swedish employers can not find IT professionals with the right blend of technical skills and human strengths to meet their current and future needs. The talent shortage has already reached 77% of the total demand, which roughly translates into 70K unfilled digital roles. That makes Sweden accountable for 4% of the European digital skills shortage. 

The talent shortage in Finland is a side effect of the country’s technological rise. The IT services industry has now become the largest sector of the Finnish economy, with a projected revenue of $8.69 billion in 2023. With the current annual growth rate of 5.79%, its market volume is expected to reach $10.88 billion by 2027. However, that won’t be possible without a steady supply of skilled tech talent. 

There are currently around 1.1K students graduating in the ITC field from Finnish universities every year. However, out of these, only about 300 specialize in software development. The situation is exacerbated by the fact that nearly 1K Finnish developers retire each year, and a lot of those who stay do not necessarily have skills that match the needs of today’s working environment. 

On top of the education system’s inability to provide the required number of IT professionals, over 30% of polytechnic students in Finland are foreigners. Statistically, only about half of them usually choose to stay in the country after graduation, further deepening the skills gap. 

The combination of these factors has contributed to a shortage of up to 15K engineers in the IT sector. The skills mismatch is particularly acute for the following positions: 

• Telecommunication engineers; 
• System analysts; 
• Software developers; 
• Web and multimedia developers. 

Although Finnish companies receive significantly fewer applications than the European average, employers are still reluctant to hire developers outside the country. 

Despite a low rate of unemployment and a fast-paced, ever-evolving economy, Denmark is experiencing a severe talent mismatch in existing tech skills. The most sought-after specializations are: 

• Software developers;
• Marketing specialists (digital/communications); 
• Mechanical engineers; 
• Regulatory affairs managers; 
• Quality assurance managers. 

The country, which is now home to almost 100K software developers, is expected to fall short of 19K IT professionals by 2030. The situation may worsen as a number of global tech giants, including IBM, Microsoft, and Uber, are either setting up or expanding their R&D facilities in the country. 

To bridge the tech gap, enhance Denmark’s position as an attractive digital hub, and boost the country’s IT ecosystem, the Danish government launched Digital Growth Strategy 2025. This initiative is aimed at supporting the development of a highly-skilled talent pool of qualified professionals by encouraging the development of more digital talents in the STEM field, and improving access to skills training. 

Software engineers are one of the most in-demand jobs in modern, digitally-driven societies. A skills gap can lead to delays in production, increased costs, inability to scale operations, and reduced competitiveness, putting the very existence of tech businesses at risk. 

Nordic companies are painfully aware of this. They know well from their own experience how much time and money it takes to find the right talent. That’s why they are open to new hiring strategies, more accepting of remote work, and eager to take advantage of global opportunities. 

While solving the talent shortage problem is not something that can be done overnight, there are a few potential solutions that Nordic countries could consider: 

One of the ways to fight the skills shortage is to grow the necessary expertise on-site. This includes launching initiatives to encourage more students to study computer science, establishing research partnerships with local universities, and offering internships and co-op programs. On top of investments in education and training programs, Nordic companies should embrace upskilling and reskilling of the existing workforce as a part of their talent strategy. 

However, this approach calls for for large-scale efforts which would bear fruit only in the long term, since it takes several months to teach a person the basics of software development. Another downside of this method is that it works well only with junior or trainee positions, still leaving a huge skill gap at more senior levels. 

A great solution to solving talent shortage problems is to leverage foreign talent. While Nordic companies are increasingly looking beyond borders to fill their tech needs, they are not yet fully embracing this opportunity. For example, in Sweden, 57% of IT recruiters scout top tech talent almost exclusively in their own country. 

The reason behind the low interest in relocating foreign workers lies in high levels of red tape. While sourcing skilled software developers abroad gives access to an unlimited developer pool, it also requires significant investments of time, money and resources, due to the bureaucracy and restrictions in migration policies of some countries. That is why this method is usually only leveraged by large, enterprise-level companies with long-term growth outlooks. 

Another viable option for Norway, Sweden, Finland, and Denmark to solve the talent shortage problem is to hire skilled software developers remotely. Unlike relocation, this method doesn’t require IT professionals to move to the Nordics, meaning the employers can skip the bureaucratic hassle associated with visa processes, travel costs, accommodation, and taxation. 

To accelerate the hiring process and cut overhead costs even further, Scandinavian tech companies can partner with professional tech talent sourcing vendors. Such partnerships can yield several valuable benefits:

• Top tech talent. Outsourcing agencies typically pre-screen developers based on the client’s requirements, so you can rest assured you will get the best team for your project.
• Direct communication. The client personally manages remote developers using preferred methods and tools.
• Commitment. Each remote developer works exclusively for one client and is fully dedicated to the project.
• No back-office hassle. With the time & material model, the vendor usually handles payroll, taxes, workstations, office management, HR, and retention.
• Flexibility. You can increase or decrease the size of your offshore team with only one month’s prior notice.

Grid Dynamics has 15+ years of experience in digital transformation and software innovation, helping Fortune 1000 companies accelerates their business growth and bolster competitive advantage.

Our service offerings include team extension, dedicated teams, pod teams, and remote development centers. With offices across the Americas, Europe, and India, we have built a vast talent pool of software engineers from multiple regions who can develop custom solutions that drive growth for our clients worldwide.

Our service model has already helped dozens of startups and companies grow their business despite increasing skills shortages. To find out how Grid Dynamics can help you extend your team with remote software developers, fill out the form below.