Invest in Finland

Finland’s software business is growing and creating more jobs

29/08/2008

A newly published study about Finland’s software business reveals a dynamic sector with good prospects for further growth. According to the study, conducted by the Helsinki University of Technology in cooperation with other Finnish universities, the turnover of Finland’s software companies increased by 8.6% in 2007 (13.1% in 2006) to a total of EUR 1.52 billion (EUR 1.41 billion in 2006).

The companies’ domestic turnover increased 5% to EUR 840 million, while the international turnover increased by 12% (9.8% in 2006), reaching a total of EUR 678 million. The profitability of the companies was 10.4%. The sector is growing steadily and is more profitable than before, although last year’s growth was not as fast as the previous year’s.

Product development, marketing and sales, as well as know-how and personnel development, are the most important development objectives for the software businesses. According to the companies, growth is their single biggest challenge.

For those companies looking for funding, the most popular types of funding were public funding, risk funding and private investors. As in previous years, investment in product development was in decline. The sector employed 14,400 professionals and the number or personnel increased by 9.4%.

“Finland needs more software companies that are aiming for rapid growth. In practice, the companies need to go global in order to grow. In particular, the public business services should be directed more to supporting internationalization than is the case now, and private investment should be supported with tax relief. The participation of a private investor is often the most direct route to the growth and success of a company,” emphasizes Jukka Viitasaari, director at Teknologiateollisuus ry.

“The software business has become a significant growth sector and a part of Finland’s technology industry whose impact also reaches beyond the independent companies of the sector, as the Finnish software used by industry improve the competitiveness of our whole industrial sector. This is why there should be more and more investment in training and research of the sector,” says Jussi Autere, Professor of Software Business at the Helsinki University of Technology.

The study showed that about a third of the companies had turnover form international operations. As in previous years, the most common international markets for Finnish software companies are Sweden, United States and Germany.

“There is excellent potential for growth and opportunities for internationalization in the software business. The Finnish Funding Agency for Technology and Innovation, Tekes, can offer funding background research and actual product development projects. Companies that are less than five years old, which are looking for rapid growth and have already carried out basic product development, can also apply for funding for internationalization. For many years, the software sector has been leading in the number of Finnish growth companies. Tekes’ services are being developed further to strengthen this and to meet the needs of the sector even better,” says Risto Setälä, director at Tekes for the Software and Digital Media Industries.

The study on the Finnish software businesses sector was conducted by the software business laboratory of the Helsinki University of Technology in cooperation with the University of Turku, Tampere University of Technology and the SoberIT laboratory, a unit of the Department of Computer Science at Helsinki University of Technology.

The study included responses from 660 software companies, which make up an estimated 88% of the whole sector’s turnover. There were about 1050 software companies in Finland at the end of 2007.