The purpose of this paper is to assess the current state of the software industry in Finland. The GDP share of the IT industry in Finland has doubled during the last 10 years, being currently approximately 2 percent. In 2006, the Finnish IT industry consisted of approximately 8000 firms with 46 000 employees, of which the contribution of the software industry was 33 000 employees. In terms of firm size classes, the variances in profitability and productivity were large in software firms. There are signs that middle-sized software firms (30-70 employees) suffer from lower than average productivity and profitability, and their productivity growth rate has also been lower than in other size classes. On the whole, the labour productivity in the software industry seems to be at a rather low level, which may partly result from the handicraft nature of software development work.