Saturday. 28.01.2023

Shortage of skilled labour threatens to halt software sector growth

Approximately 53,000 people are full-time employed in 7,000 businesses in this field. However, some companies need more and try to find abroad a workforce that does not come to Finland for several reasons.


The Ministry of Economic Affairs and Employment has released a new report on software services. One of the conclusions is that the shortage of skilled workers put at risk the growth of this sector, which has seen strong growth and development in the last decade.

Finnish companies are well aware of this lack of skilled labour, especially in the ICT sector but also in other fields like car and healthcare industries, according to official data.

The problem is not easy to solve. International competition to attract the best software developers is bloody. And Finland, which aims to build a competitive economy based on innovation and high tech, has several disadvantages such as the language barrier and the reluctance of some employers to incorporate foreigners to their staff.

To all this must be added the long processing time that the Finnish Immigration Service (Migri) takes to deliver residence permits. If in Canada for example an Asian IT professional needs a month to see their situation in the country regularized and receive their work permit, in Finland the process is sometimes extended more than half a year.

Those delays cause sometimes job loss and despairs the few companies that do want to hire highly skilled foreigners. And have earned Migri also bitter criticism from employers, foreign workers and students. The Immigration agency has blamed the lack of staff to process the applications.

In an attempt to solve the problem, the Finnish Government decided by the end of 2019 that from beginning of 2020, the Ministry of Economic Affairs and Employment will be the authority responsible for policies and legislation related to the immigration of workers, students and researchers, and the development of permit processes.

Increase in the turnover as well

However the solution is found, the reality is that the software sector needs the best trained professionals in order to deal with its growing workload and turnover. According to the report, the software sector turnover amounted to 9 billion euros in 2018.

This growth is driven by companies' establishment abroad, new innovative services for the market, rapid technological development and digitalisation in public administration and in other sectors.

The software field employed approximately 53,000 full-time personnel in 7,000 businesses. The majority of companies in the software sector are located in the Uusimaa region (Helsinki area) and in other major growth centres.

The 2017 data shot that over 50% of software sector companies are located in the ELY Centre area of Uusimaa and 60% of personnel in the industry are working in that area. Slightly over 70% of the sector's turnover is generated in Uusimaa.

Other significant regional clusters in the software sector are located within the areas of the ELY Centres of Pirkanmaa, North Ostrobothnia, Southwest Finland and Central Finland.

More than half of the software sector turnover is generated by companies that belong to the software design and manufacturing sub-sector. Software sector companies are mainly small and medium-sized enterprises (SMEs).

Exports grows in small enterprises

Export growth has been particularly notable in small enterprises and companies with a sales volume of less than one million euros. The report indicates that the growth of Finnish software sector exports is not in the hands of only a few companies but that many software sector companies are engaged in export activities.

There are more than 3,900 exporting companies, and the value of exports exceeds 100,000 euros in approximately 2,300 companies. Excluding the data of the two largest and most important operators in the software sector, the estimated volume of exports has increased dramatically from 2015 to 2018.

Shortage of skilled labour threatens to halt software sector growth