Edit: See the 2023 version here.
2021 was a year when software developers switched jobs very easily. The covid pandemic is one of the explanations for the high employee turnover – due to remote work, one gets distanced from colleagues and it’s emotionally easier to say yes to increased recruiters’ contacts. Suddenly promises of better compensation, extra paid holidays and other perks are more appealing. However, the most common reason of all time to switch jobs is salary. Switching jobs is the easiest way to increase your salary level.
Software developers’ salary level increased during 2021. The talents have been well aware of their negotiation power in the hot market, where everyone wants to hire a software developer. In fact, many interim reports from 2021 revealed that listed companies were struggling with the pressure to raise salaries. So, how does developers’ salary level in Finland look like in 2022?
We at Talented have met thousands of software developers and talked about salary with every single one of them. Most of the developers we meet have worked at Finland’s most attractive workplaces in senior or lead roles. At the same time we have been talking with hundreds of employers, from startups to listed companies. Discussions on both sides of the table keep us informed about the current salary levels and developers’ aspirations.
How is the salary determined?
Salary is a fee for the work done by a person and the value it generates to the company. In other words, salary is always justified.
Software consultancies build digital business for their customers, receiving a payment for the hours spent on projects. Of course, the consultants working on these projects are paid, and when it comes to salary, the consultant’s billing rate plays a central role. The hourly rate for an experienced software consultant falls on both sides of €100. For a specialist it can be close to €200.
For example, for a developer earning €5,000 per month, a salary with expenses would mean a cost of approximately €6,500 to the company (gross salary * 1.3, which roughly includes the costs associated with paying wages). Operational and administrative costs, from premises to sales, will be added to this, which will significantly increase costs. Especially in the companies where the working conditions are top-notch, this part of the costs is relatively high. However, as a consultant, you mainly work at you client’s premises, which can be frustrating when you still have to contribute to your employer’s luxuries and amusements at the office, where you rarely spend any time.
Product companies, i.e. companies that build and sell their own products, are in theory the only environment where high pay is possible. Product companies distribute and sell developer-built products throughout the world, so the obtained financial benefits can be really significant. However, in product companies software developers’ salaries are mostly fixed rather than tied to the business success of the company.
Developers’ Salary Level in Finland
The gross monthly salary for experienced software developers is between €4,800 and €6,000. At the top of the range tasks often involve responsibility in design, sales or team leading. Developers who make above-average salary can also have niche expertise or their salary can be partially based on commission.
Commission based salary refers to a model in which part of the salary is tied to the work carried out, for example the employee’s personal monthly billing from the customer. Projects sold at a higher hourly rate generate more euros for the company, but also benefit the employee directly in the form of higher monthly salary. If, on the other hand, the employee is on away from work a lot or the client is not willing to pay for their expertise, the commission based salary will be reflected in a lower than average wage.
One can increase their salary level by, for example, learning new skills, pursuing a senior or lead role, or changing jobs.
Examples of different commission based salary models in Finnish IT companies
Fixed €3,500/month + 10% of personal billing
€3,500 + €95/h * 150h * 10% = €4,925
€3,500 + €110/h * 150h * 10% = €5,150
Fixed €3,000/month + 10-20% of personal billing
€3,000 + €95/h * 150h * 10% = €4,425
€3,000 + €110/h * 150h * 20% = €6,300
Here the employee’s experience and competence affect the salary greatly. Customers are usually willing to pay more for experienced software developers, and more experienced employees tend to have a higher share of billing.
Fixed salary levels in Finnish IT companies
When it comes to fixed salaries, the amount of money earned correlates directly with the benefit that the employee generates for the company. More inexperienced software developers make less money and those with design, sales or team lead responsibilities earn clearly more. Roughly speaking, we have noticed the following wage ranges by experience level:
Junior Developer: 3000 – 4000 €
Developer: 3800 – 5000 €
Senior Developer: 4800 – 6000 €
Architect/Lead Developer: 5900 – 7500 €
The salary levels are a few hundred euros lower outside the capital area. However, if your current salary level falls notably below these ranges, it may be wise to discuss the issue with your employer or to switch jobs.
Only talking about the money is misleading
Recruiting software professionals is more challenging than ever. In order to attract and retain talent, companies have had to take action and adapt to new “rules”. For example, emission of shares as a way of commitment and rewarding employees has become more common. In addition, to make the salary seem greater and more attractive for new employees, paying different bonuses in advance is not so uncommon these days. Also hefty signing bonuses, that are business as usual in the Silicon Valley, have found their way to Finland.
In Finland, high tax rates offset the benefits of higher wages quite effectively. However, only talking about the money is misleading especially when it comes to the most prestigious employers, as many of these companies offer their employees a large number of different benefits with great monetary value. Consequently, when we discuss with developers, we aim to focus on the person’s dreams and career ambitions instead of salary, and thus find the most fun and suitable job for them.
Talented has been disrupting IT recruitment since 2016. We get senior software talent the best jobs and help companies to attract, recruit and retain the best software professionals through Talent Acquisition and Employer Branding.