Are there enough competent developers on the market?

Introduction

With its advanced technological infrastructure, Norway is grappling with a pressing issue that could impact its global standing—the shortage of skilled professionals in system development. In an era of rapid technological development, the demand for competent developers, engineers, and IT specialists has surged, creating a notable gap in the workforce. Let us explore the possible root causes behind this and delve into the statistics that underscore the severity of this challenge.

Understanding the demand

Norway's reputation as a tech-savvy nation is well-deserved, but the escalating demand for skilled professionals in system development reveals the strains within many industries. Several factors contribute to this heightened demand:

1. Technology underpins every business. As even the most advanced technologies have been democratized in the last decades (e.g. cloud computing, robotic process automation, large language models), more and more businesses have started using new technology to serve their customers or make their processes more effective. That leads to the need for competency to create and adjust these solutions to particular business models.
2. According to ICT-Norway (IKT-Norge), the average annual employment growth in the ICT industry has been approximately three times higher than for other market-oriented businesses during the same period. That means the industry is expanding rapidly.
3. Traditional sectors are undergoing digital transformations, creating an increased need for professionals with expertise in system development.

Statistics Reflecting the Shortage

The shortage of system development competence in Norway is evident when examining key statistics:

1. Abelias's 2023 industry report indicates an existing and growing demand for developer expertise on both bachelor's and master's levels.
2. According to NHO reports, in 2022 alone, around 40% of their member businesses had some or largely unmet needs for ICT competence.
3. In their latest report, ICT-Norway (IKT-Norge) points out that projected growth in the number of employable specialists in the industry will not catch up with the development resulting in 40.0000 unfilled positions by 2030.

What does it mean for the businesses?

So, how expensive is it to acquire talent nowadays? There are many things to consider:

• Salary According to Statistics Norway (SSB), senior developer or lead developer salary ranges from 830.000,- to 842.000,- a year. We could adjust with +10-15% for the private sector since Statistics Norway also gathers data from governmental companies and institutions.
• Benefits. These have lately been driven to high standards by the competition for tech talent and might include an extra week of vacation, gym sponsorships, top-of-the-line equipment, free lunch and much more.
• Employers tax (arbeidsgiveravgift). It was recently increased for everyone earning above 750K a year. Online businesses call it "competency tax" since it applies primarily to highly skilled workers, system developers included.
• Recruitment costs. Only some businesses have an HR or talent acquisition capability, and many rely on external agencies. Depending on your chosen model, these cost 100K to 300K per successful recruitment.
• Employee branding. According to recent Academic Work reports young, highly educated professionals who have the most attractive skills choose to work for companies that spend millions (sometimes USD) on employer branding and employee retention. You can see the list of these companies here.

To summarise, attracting tech talent is a sizeable investment for some businesses, and the risk of making a bad hire can have tangible consequences. Despite the current dip in the consultancy market, which led to the relocation of talent to other companies, many still struggle to fill the positions. We monitor the market closely and see the exact positions reopen month after month.

The road to permanent competent hires is difficult but possible. Most businesses should hire permanent employees who can take responsibility and ownership for the products company deliveries; that is often what we recommend to our clients.

When scaling development capacity, doing temporary projects or starting a new business or product from scratch, choosing a more flexible option is a good idea.

How Devspace can help?

We created our model precisely to address the abovementioned challenges and provide the following:

• Local presence. We are located in Oslo, have worked in Norwegian business for >15 years and have delivered local tech projects on all levels, from startup to enterprise. In addition to being allocated 100% to their clients, our developers can travel and visit our clients for workshops and team-building activities.
• Tailored competency. Technical specialists sourced and explicitly interviewed for your project or business needs. We don't have a "bench" that we need to sell.
• More access to talent. With access to the EU area, we provide a virtually unlimited talent pool, especially for niche competencies. That also means unlimited scale-up/down capacity.
• Competitive Pricing. An affordable personal taxation scheme in the EU motivates professionals to provide service to foreign clients and offers competitive rates to end customers.
• Operational flexibility. With us, you spend 2-4 weeks onboarding a new developer. The work can be stopped on 30 days' notice. You are not paying for vacation and sick leaves.

Still, some businesses refrain from tapping into the international tech talent pool, but many are taking advantage of this. The latest ICT-Norway (IKT-Norge) report pointed out that Norwegian businesses spent upwards of 30B (milliarder) NOK in 2019, which has been pointing upward since then.

How are you planning to address this challenge in 2024?

References and sources

Abelia - IKT Næringens kompetansebehov 2023

IKT Norge - Behov for og tilbud av IKT kompetanse 2021

Academic Work - YPAI mest attraktive arbeidsgivere 2021

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