Nordic IT service sector Q2’25: Difficulties across geographies

Translation: Original published in Finnish on 9/19/2025 at 4:33 pm EEST.

In the rest of the Nordic countries, organic revenue development turned downward and profitability weakened in Q2. Thus, even applying the Rule of 20, the situation in the IT services market remains distinctly challenging, with only one company achieving good performance and two achieving satisfactory performance. Looking at the geographical breakdown, Danish companies achieved the best performance in the sector. The market situation in Finland and Sweden remains difficult, and in Norway the situation also appears to have weakened slightly in terms of company performance. However, the situation in Denmark is not clear-cut either, as several companies there also faced challenges. You can also read our Q2 summary of Finland's listed IT services sector, which we published previously.

Rule of 20, Q2'25

Rule of 20 = Organic growth-% + EBITA-%

Source: Inderes

Rule of 20 shows that the market is weak across the Nordics

Last year, we launched our own Rule of 20 for the IT services sector, which we believe works well, or even as the best single parameter, to measure the sector's and especially companies' operational performance, especially when viewed over the cycle. The current market situation is more challenging than in the previous 10 years, and achieving an excellent level in the Rule of 20 is more difficult, whereas in the past, more companies achieved excellent performance.

The difficult market situation in Q2 is illustrated by the fact that only one of the listed IT service sector companies in the Nordics achieved good performance, and only two achieved satisfactory performance, as measured by the Rule of 20. The best performers in the sector were Exsitec (17%), the consistently strong Netcompany (13%) and Bouvet (10%), which is still a good or satisfactory performance in our range that looks beyond cycles. The performance of the remaining companies in the sector can be considered poor or very poor.

While Denmark is the only bright spot, even the Danes are not completely out of the woods

In this review, we have included 14 Nordic listed IT service companies operating in the same service areas as the Finnish companies we monitor. We removed Addnode from the peer group because it clearly falls into the software company category. The organic working-day adjusted median growth of the other Nordic companies was slightly negative (-0.8%) and reached its lowest point during our two-year monitoring period. However, growth in other Nordic countries was better than that of Finnish companies (-3.4%).

Nordic listed IT service sector, organic revenue development (median)

Source: Inderes

Denmark had two fewer working days than in the comparison period, while Finland, Norway, and Sweden had one fewer. The impact of one working day on revenue is around +1.6%. The working day adjustment we use is rather crude as it does not take into account the revenue generated by different companies in different geographical areas. However, this is not a major problem, as the domestic market is the largest for all companies. A summary table of the companies can be found at the end of the review.

Due to the small sample size, it is difficult to draw more profound conclusions in geographical terms. However, in our opinion, it could be said that Danish companies (4 companies) performed best on average among the group. Even with Danish companies, it is not possible to draw any major conclusions, as several companies (such as Netcompany and KnowIT) reported fairly weak business development in Denmark. Like in Finland, Swedish and Norwegian companies also experienced weak growth. In Norway, the trend weakened more clearly, whereas previously the trend for Norwegian companies had been relatively positive. This was the first quarter since 2016 in which Bouvet, one of the largest companies in the group, experienced a decline in revenue (-2% when adjusted for working days). The company has also experienced exceptionally strong development in recent years.

Knowit, which operates in all the four countries, says that the Nordic markets are developing in different directions. The company is confident in the Norwegian market thanks to the public sector. Knowit views the Finnish market as reasonably stable but faces more challenges in Sweden and Denmark.

There was considerable variation in revenue growth among the companies. Trifork and Netcompany, both Danish companies, performed best. The worst performers were Finland's Vincit and Sweden's B3 Consulting and KnowIT.

Q2'25 working-day adjusted organic growth-%

Source: Inderes

Profitabilities weakened due to lower revenue

On average, the profitabilities of other Nordic companies weakened slightly, and considerable variation in profitability was observed between companies. Only three companies in the group managed to increase their profitability compared to last year. The median among the companies was 6.7% (Q2’24: 7.5%). Profitability levels in Finland also weakened from the comparison period and were lower than in the Nordic peers (average 3.8% and median 3.7%). Many companies implemented efficiency measures, but declining revenues and fierce competition weighed on their profitability. The lower number of working days than in the comparison period also slightly impacted profitability negatively. It is worth noting that although Denmark saw moderate revenue development, profitability levels declined there as well. The gross margin of Danish giant Netcompany declined rather significantly in the Danish segment, partly due to the reasons mentioned above and the transfer of billable employees to product development. In our opinion, however, this speaks for itself in that the market situation in Denmark is not particularly promising either. When comparing profitability, it is important to keep in mind the limited number of companies and their different business profiles, which are not examined in depth in this review. Some companies have more product and recurring business, which supports profitability.

Q2'25 EBITA-%

Nordic listed IT service sector, adj. EBITA-% (median)

Source: Inderes

The IT service sector is facing widespread challenges as revenues decline and efficiency measures are "naturally" implemented after the fact, which makes managing profitability difficult. Therefore, it would be important for companies to stabilize their revenue and improve their profitability. Unfortunately, however, the outlook for the near future is foggy, and there is no apparent signs of improvement on the horizon.