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By William Underhill
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Serial entrepreneur Niklas Zennstrom might serve as a model for Sweden's flourishing IT industry. This is the man who gave the world KaZaA, the file-swapping software that shook the global record industry. Recently he launched Skype, a program that's bringing phone service to the Internet. For his digital wizardry, Zennstrom doesn't draw on the skills of his own compatriots. Instead he looks across the Baltic to tiny Estonia. Says Zennstrom: "In terms of technical expertise I have never found anywhere better."
He is not alone in his judgment. Half of all graduates from Estonia's IT College in the capital, Tallinn, are now snapped up by multinationals. Many others find work with the scores of small software outfits in the country that process work from across the region. "[The] industry is growing all the time," says Ants Sild of the Association of Estonian Information Technology and Communication Entrepreneurs. "The biggest problem now is our shortage of specialists."
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Such demand is good news for today's whiz kids. "A young software developer here can earn three or four times the average national salary," says Ove Tuksammel, head of Proekspert, a Tallinn-based software house. His staff size doubled, to 40 employees, in the past year.
Estonia owes much of its popularity with foreign IT companies to cheap labor and its proximity to Western Europe. IT wages remain far below those of countries to the west; by some reckonings, Estonian software firms cost half as much to run as their Nordic competitors. And Estonia has a geographical edge over India with clients who feel more comfortable having their work done closer to home.
Since gaining independence from the former Soviet Union in 1991, Estonia has actively nurtured its IT industry. An emphasis on technical skills at schools, partly a legacy of Soviet rule, didn't hurt, and neither did the country's old-fashioned work ethic. "Even if prices were the same in Estonia as they are in Sweden, I would not hesitate to employ Estonians," says Zennstrom. "Estonians are happy to work hard. Elsewhere in Europe, people just take their jobs for granted." Take note, Sweden.
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