The tech industry is facing headwinds – but new entrepreneurship is pointing upwards

Despite the recession, layoffs and reduced investments, Sweden’s tech sector is showing signs of both resilience and renewal. While some sub-industries are shrinking, demand for cutting-edge expertise is increasing – and the number of new tech companies is growing rapidly.

The economic situation remains challenging for the technology sector in Sweden. The combination of a prolonged recession and a tense geopolitical climate continues to slow growth. However, the impact varies depending on the segment.

In 2024, turnover, adjusted for inflation, increased by 7 percent in the software and services area. Telecom and infrastructure also showed growth, with an increase of 7.2 percent. At the same time, things were worse for retail and service, where revenues fell by a full 6.3 percent. In hardware manufacturing, a smaller decline of 0.7 percent was noted.

Fewer employees – but more job ads

Employment in the tech sector decreased by an average of 6,250 people during January and February 2025, compared to the same period the previous year. This corresponds to a decline of approximately 2 percent, according to the industry indicator Tech Temperature.

The number of layoffs has also increased significantly. Between March 2024 and February 2025, nearly 5,900 people in the tech industry were given notice of layoffs – a 31 percent increase compared to the previous year. The telecom sector accounted for almost half of these layoffs, despite only accounting for just over a fifth of the industry’s total revenue.

Paradoxically, the number of job openings increased in the fourth quarter of 2024, after falling for four straight quarters. In December, there were 11,600 vacancies in tech. The increase in job postings, while employment is declining, points to a shift in skills. Companies are increasingly looking for specialists in areas such as artificial intelligence, cloud services and cybersecurity – while other functions, such as customer support, are being streamlined.

Risk appetite among investors is cooling

The difficult economic climate has also affected investment willingness. By January 2025, corporate lending had declined for twelve consecutive months, with a decline of 0.5 percent at an annual rate.

At the same time, venture capital investments continued to decline. According to preliminary figures from Dealroom, investments in Swedish tech startups landed at 2.4 billion euros in 2024 – a decrease of 48 percent from the previous year.

Technology stocks have also had a shaky start to 2025. Trade conflicts and political tensions, especially between Europe and the US, have increased anxiety on global stock markets. Swedish tech companies have so far fared better than their American counterparts, but investors’ risk appetite has become noticeably lower even here at home.

Strong new entrepreneurship despite the challenges

One bright spot in the otherwise gloomy situation is that new entrepreneurship in the tech sector has picked up. In 2024, 6,072 new tech companies were started in Sweden – an increase of 11 percent compared to the previous year. This is stronger growth than the average for all industries, where the increase was 9 percent.

The fact that so many new companies are being started despite economic uncertainty indicates that faith in the future in the tech sector is still alive – and that many entrepreneurs see new opportunities, not least as the demand for high-tech solutions increases.

Source: National Institute of Economic Research.