Our Swedish colleagues are seeing a clear shift in the defence industry – and it may well be relevant beyond Sweden.
Saab reports growth of over 30 per cent. GKN Aerospace is set to hire hundreds of engineers. BAE Systems Hägglunds is ramping up in Örnsköldsvik. Those are the headlines everyone in the industry knows.
But behind every major delivery to the Swedish Armed Forces or a NATO ally stands a large number of companies that rarely appear in the press: the composites company supplying an aircraft manufacturer, the electronics firm whose components sit inside a sensor system, the software company that built a critical module for a larger platform. Much of the current growth in output is happening in this tier rather than among the large, visible companies.
And it is in this tier that the recruitment challenge is greatest – especially when it comes to the leaders, commercial professionals and specialists who will drive these companies’ growth alongside their existing teams.
The supplier tier is bigger than it looks
According to the industry association SOFF, the Swedish defence and security sector had a turnover of around SEK 100 billion in 2024, with roughly 28,500 employees. But that figure captures only part of the picture. According to Teknikföretagen, every job in a high-tech company creates, on average, two additional jobs elsewhere in the value chain. In the defence industry, the multiplier is even higher, at close to three. This means that the roughly 28,500 people directly employed by defence companies generate employment for an estimated 85,000 additional people through subcontractors and adjacent industries.
And the pressure is rising. As Sweden’s defence budget moves towards 3.5 per cent of GDP by 2030, and EY estimates that this level could generate around SEK 110 billion in increased annual revenue for Swedish businesses up to 2035, demand is flowing rapidly down the supply chain. This is also confirmed by the Swedish Export Credit Agency, EKN, which describes how the defence sector – from large exporters to smaller subcontractors – has grown into the largest sector in its guarantee portfolio.
But it is not only about production capacity. According to several players in the value chain, companies do not build new capacity on the basis of political commitments to future procurement. They need firm, long-term orders. A single large order rarely justifies a new production line if the next order is uncertain. This creates a particular type of risk that lands directly on management’s desk: deciding which deals justify investing in additional capacity and which can be delivered using existing resources.
In other words: when the major players scale up, their entire supplier tier must do the same. And it is rarely the big names that are the bottleneck. It is the subcontractor tier – and the decisions about how fast that tier should grow are made by its management, not by political commitments.
A different kind of recruitment challenge
Compass HRG works primarily with the search and recruitment of leaders, commercial professionals and specialists. It is within this area that we see the subcontractor tier facing a distinct and partly unexplored recruitment challenge, different from the challenges faced by large, visible companies.
They often lack an employer brand tailored to the defence sector. A mid-sized industrial company that has become a critical link in the defence supply chain is rarely recognised as part of the defence industry. Candidates who would be an excellent fit for a commercial or leadership role there may not even realise that the company operates within the defence sector.
They compete for the same rare profiles as the large companies. In practice, a smaller supplier looking for a business developer who understands the defence sector and government processes is competing for the same candidates as the major players, but without the same HR/TA resources or the brand recognition that can make recruitment easier.
The need is often for commercial rather than technical skills. A clear pattern we have seen in our own assignments in this segment is that the most critical hire is rarely a highly technical specialist – it is often a business developer or salesperson who can build and maintain the relationship with a major customer. In a couple of our recent assignments for subcontractors to the defence industry, the candidate’s network carried more weight than deep technical knowledge. This calls for different hiring priorities from those commonly associated with defence recruitment, which tends to focus on engineers and security-cleared specialists.
Specialist functions such as export control are a clear example of the skills required. Alongside commercial expertise and leadership, companies in the supplier tier also need specialists who combine legal, regulatory and commercial understanding. Export control is one example, but the same pattern applies to several roles that only become critical once a company becomes part of a defence supply chain. This is another reason why recruitment in this tier requires a broad assessment of skills and experience rather than a focus on a single “typical role”.
Security vetting looks different – but does not disappear. Many roles at subcontractors require no formal security clearance, or require a lower level of clearance, than roles at a prime contractor. In one sense, this makes the process faster, but it also creates a risk that companies underestimate the importance of structured background checks and procedures for handling confidential information when they begin working with sensitive material or formally become part of a classified supply chain.
The position in the value chain is rarely fixed. The same company can be both prime and sub-supplier depending on the deal – determined by who owns the end-customer relationship and which component constitutes the product’s core value. That mobility places extra demands on commercial leadership: the ability to navigate different roles in different deals, rather than optimising the organisation for a single fixed position in the chain.
What it demands of recruitment
Recruiting leaders and specialists to the subcontractor tier is, in our experience, a different discipline from recruiting to a prime contractor:
- Mapping rather than advertising. The most relevant candidates are rarely active jobseekers, and they are not searching for “defence jobs” – they may not even know that a particular supplier is part of the chain. That requires proactive search and relationship-building, not a job advert.
- Selling the assignment, not the brand. A smaller company can rarely compete with the names of the major players. What attracts the right candidate is instead the growth journey, ownership of the role and the opportunity to build something from a smaller base – combined with the sense of purpose in contributing to a critical supply chain.
- Network understanding before technical matching. For commercial roles, it is often more important to map which candidates already have established relationships with the key customers in the chain than to match a long list of technical requirement specifications.
- Appropriately scaled security awareness. Even if the formal security clearance is lower or not applicable, the process still needs to allow for the possibility that the company may come to handle sensitive material further down the line – and that the candidate understands what that entails.
- The ability to communicate the industry’s time horizon to owners and investors. Defence procurements often take two to three years from tender to payment – a completely different rhythm from most commercial industries. Leaders in the supplier tier need to be able to explain and defend that time horizon upwards in the ownership structure, especially in companies whose capital is not already used to the industry. It is a skill rarely asked for explicitly in a candidate profile, but one that often determines whether a company can last through the entire procurement cycle.
Why it matters for the whole chain
In a sector where lead times are already long and pressure on supply chains is high, a hard-to-fill leadership role or key commercial role at a subcontractor quickly becomes a constraint that spreads upwards through the supply chain – not just an internal challenge for the individual company. When demand grows faster than the supplier tier can build capacity and organisation for, the right leadership and commercial competence are required for a company to scale at the pace its customers demand.
We do not only recruit for the large, visible defence players. We recruit for the companies that enable the larger defence companies to deliver.
