Sweden Software Development Market - Forecast(2024 - 2030)

Sweden Software Development Market Overview

The Sweden Software Development market size is analyzed to be $7,720.7 million in 2021 and is projected to reach $10,856.3 million in 2027, growing at a CAGR of 5.9% during the forecast period 2022-2027. The global Sweden Software Development Market size is estimated to surpass $3.7 billion by 2027, growing at an estimated CAGR of more than 5.8% during the forecast period 2022 - 2027. Software development is the process of creating, designing and deploying software, which is independent of computer hardware and makes the computer programmable using various programming languages. Software development is primarily conducted by computer programmers, software engineers and software developers. Programmers and coders write source codes to program computers for specific tasks like merging databases, processing online orders, routing communications, source code generation, conducting searches or displaying text and graphics among others. According to a report by OECD, Sweden has one of the most digitally savvy populations in Europe; when it comes to familiarity with the internet and the adoption of this medium in their daily lives. The recent shift towards digitization, coupled with the growing trend towards Industry 4.0 and the Internet of Things, are some of the major factors that are driving the growth of the Sweden Software Development market. Software development in Sweden has gained a lot of traction in recent years. The markets have witnessed an increasing number of investments and acquisitions, particularly towards Computer-aided software engineering, which is projected to propel the growth of the Sweden software development market. For instance, in May 2021, the Swedish Foundation for Strategic Research (SSF), an independent public research funding organization, announced an investment of $19.7 million in software development in SSF Future Software Systems.

Report Coverage

The report: “Sweden Software Development Industry Outlook – Forecast (2022-2027)” by IndustryARC covers an in-depth analysis of the following segments in the Sweden Software Development Industry.

Key Takeaways

• With the growth of software development, artificial intelligence and data sharing, the need for proper guidelines and policies relating to cyber security has become more crucial than ever. In order to combat the cyber security challenge, the Government of Sweden introduced the NIS directive in 2018, which introduced the requirements on information security and incident reporting for providers of infrastructure that are critical to the Swedish society.
• As of now, most of the threat surveillance work has been handled by the financial institutions themselves and had no centralized mechanism for the purpose. Due to the growing need for a regulatory framework, in April 2019, the government of Sweden updated its Swedish Protective Security Act, which is set to tighten requirements for the security of IT systems at critical infrastructure providers under the supervision of Finansinspektionen, including the banks and market infrastructure firms. Developments like these are proving the market with new growth opportunities and is analyzed to boost the demand for the software development market in Sweden.
• Although Sweden established a national strategy for cyber and information security in 2016, yet this strategy does not provide any specific guidance on how to prevent, handle or mitigate cyber-attacks in the financial sector. According to the Combatting the Cyber Threat in Sweden 2020 report by Oliver Wyman, the publishing of a sector-specific strategy for cyber security to direct the work in the Swedish financial, is set to provide the regional market with high growth opportunities in the near future. Factors like these are creating high growth opportunities for the Sweden Software Development Industry.

Sweden Software Development Industry Outlook, by Deployment Type, 2021 (%)

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Sweden Software Development Market Segment Analysis - by Industry Vertical

In terms of End-use industry, the government segment also accounted for some market share in 2021 in the Sweden Software Development industry. The segment generated a revenue of $1,011.3 million in 2021 and is analyzed grow at a high CAGR of 5.87% during the forecast period to reach $1,424.3m in 2027. This is mainly due to the growing government efforts to coordinate and support digitalization within public administration and establish a framework for digital security in financial institutions in recent years. Additionally, according to the Digital Public Administration Factsheet Sweden 2021 report, the government formally launched the open data portal, dataportal.se which is aimed to provide way access to data resources from both private and public sector organizations. Furthermore, In December 2020, the Swedish government signed the Berlin Declaration on Digital Society and Value-Based Digital Government, which is aimed to foster digital transformation and Internet of Things adoption in order to allow citizens and businesses to harness the benefits and opportunities offered by modern digital technologies.

Sweden Software Development Market Segment Analysis - by Language

By Language, Java segment accounted for the dominant market share in 2021. The segment generated a revenue of $1,554.1m in 2021 and is analyzed to grow at a CAGR of 5.8% during the forecast period to reach $2,172.3m in 2027. This is mainly owing to the high penetration of java programming language across enterprises and the availability of resources across the region. Additionally, the high rate of digitally skilled personnel in Sweden has propelled the demand for the programing language in the region. Sweden has one of the highest proportions of digitally skilled users in the world. According to the EU Education and Training Monitor 2020, 71% of the 16–19-year-old population have above basic digital and computer programming skills which is higher than the EU average. Furthermore, the growing demand for personalized software products in the region has resulted in an increase in demand for Java programming language. For instance, according to the Open Trade Gate Sweden Report by the National Board of Trade, almost 49% of the large companies, regardless of industry, develop their own software products.

Sweden Software Development Market Drivers

Increasing adoption and promotion of AI by the Government of Sweden

Artificial Intelligence is playing a vital role in the digital transformation, as it enables human capabilities including understanding, reasoning, planning and more, to be undertaken by software. This significantly increases efficiency and helps in the reduction of costs. As a result, to tap into this opportunity, in 2020, the Ministry of Enterprise and Innovation issued a report on the National Approach to Artificial Intelligence, which acknowledged the transformative nature of AI across the Internet of Things and computer programming sectors, while also emphasizing the need to create a framework that allows for the safe, secure and favorable climate for digitization and harnessing the opportunities of AI. Additionally, According to a report by Indiai.gov, for the years 2018 and 2019, the Swedish government allocated a sum of SEK 40 Million to increase focus on further education within Artificial Intelligence. Furthermore, according to a report by Indiaai.gov, the Swedish Government research and innovation agency Vinnova, invested around SEK 3Bn each year in fostering innovation across technology, transportation, communication and labor. Developments like these are promoting and boosting the adoption of Artificial Intelligence in Sweden, which is, in turn, driving the growth of the underlying software development market in Sweden.

Growing adoption of digitization in Public Administration

Sweden has one of the highest rates of internet users in the world. According to World Bank Data, in 2020, 94.5% of the Sweden population used the internet. Additionally, according to Eurostat data, 91% of the percent of the population used to the internet to interact with public authorities. Due to this high internet usage in the region, the government of Sweden is increasingly focusing on digitizing the public administration process, which is propelling the demand for the underlying software development market in the region. In January 2019 the Government established the Ministry of Infrastructure which was responsible for digitalization and facilitating seamless coordination within the Ministry with support from the unit of Digital Government. Additionally, according to the Digital Public Administration Factsheet Sweden 2020, the Government launched the Oppndata.se portal, which is set to publish open data and boost data-driven innovation in this field. According to the Digital Public Administration Factsheet Sweden 2020, at the end of 2019, the government launched two new projects which were aimed to establish a national basic data framework for basic data in public administration. Furthermore, In November 2020, changes to the justice legislation were passed through the act(2020:918) amending the Swedish Code of Judicial Procedure which is aimed to further enable and facilitate digital communication in court proceedings. Again, in March 2021, the government of Sweden started the development of Ombud, which is a Swedish national infrastructure for secure and digital management of powers of attorney and is currently under development by the Swedish Companies Registration Office, in close cooperation with the Swedish Tax Agency and the DIGG. Developments like these are some of the main factors that are driving the growth of the Sweden Software Development Market.

Sweden Software Development Market Challenges

The increasing cost of Logging and high tax brackets are restricting the growth

Since the beginning, software engineers and developers use Logs for troubleshooting issues. As a result, maintenance and storage of the logs have become quite expensive. For instance, according to a report by Forbes, logs are becoming extremely noisy and expensive to store, especially in the Martech industry, where there is a lot of quick transactions. This significantly reduces the profit margin of enterprises, thereby hampering the growth of the underlying market. Although enterprises like Logz.io are trying to address the issue, it is still prevalent as one of the major challenges that are restricting the growth of the Software development market in Sweden. Additionally, Sweden has one of the most expensive labor rates in the Europe region along with the highest tax brackets, which significantly reduces the profit margin. According to a 2021 report by the International Trade Administration (ITA), a VAT rate of 25% generally applies to the import or sale of most products in Sweden, which represents about 18% of Sweden’s GDP, is higher than the EU average of 13%. As a result, various enterprises are outsourcing their work to a different regions where a skilled workforce is available at a cheaper rate along with lower tax brackets. Factors like these are some of the major challenges that are restricting the growth of the Software development market in Sweden.

Sweden Software Development Industry Outlook

Product launches, acquisitions and R&D activities are key strategies adopted by players in the Software Development Market. The top 10 Sweden Software Development companies include:

1. Exoft
2. Seeba
3. Ecommatrix
4. Innovise Group
5. Rite NRG
   
6. Codeblue
   
7. Source A Network AB
   
8. LoopLabz
   
9. SolveIT
   
10. Beetroot AB

Recent Developments

• In March 2022, Talenom announced the acquisition of three accounting firms in Sweden named Lindgren & Lindgren Ekonomi AB, Confido AB and Redovisningsbyrån Öckerö AB. This acquisition is set to combine Talenom’s software development with expertise in the accounting industry in a unique way and strengthen its position across Sweden.
• In March 2022, Swedish startup 'My Telescope' secured $3 million for its market intelligence software.
• In November 2021, Swedish telecommunications giant Ericsson snapped up US cloud-service provider Vonage in a multibillion-dollar deal which is its biggest acquisition in recent years.

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