<story><title>Programmers Should Plan for Lower Pay?</title><url>https://www.jefftk.com/p/programmers-should-plan-for-lower-pay</url></story><parent_chain><item><author>est31</author><text>Well the question is: why don&amp;#x27;t they replace the $370k&amp;#x2F;yr american employees by the $60k&amp;#x2F;yr indian ones? Why do they pay the premium for US employees? Except for defense projects, it doesn&amp;#x27;t matter where the code is made, US or India. The German software industry outsources heavily and tech wages don&amp;#x27;t reach the US levels. Why doesn&amp;#x27;t Google?</text></item><item><author>NeverFade</author><text>&amp;gt; &lt;i&gt;Yes but don&amp;#x27;t assume that people in india, africa, or eastern europe are too dumb to do the same work.&lt;/i&gt;&lt;p&gt;Where did I ever assume that?!&lt;p&gt;&amp;gt; &lt;i&gt;Nor do the outposts of the companies you mentioned pay the same US levels in those countries. There must be another component of this.&lt;/i&gt;&lt;p&gt;How about &amp;quot;they pay what they have to&amp;quot;?&lt;p&gt;In India, if they pay $60k&amp;#x2F;yr, plenty of talented candidates would work for them. In the US, if they paid that much, nobody would apply.&lt;p&gt;Simple.</text></item><item><author>est31</author><text>&amp;gt; Those companies became very profitable because technology made them so. It wasn&amp;#x27;t some accident that is here today and gone tomorrow. Technology is at the core of companies like Google, Netflix, Amazon, Facebook. Without the technology, which is implemented by SWEs, none of these would exist.&lt;p&gt;Yes but don&amp;#x27;t assume that people in india, africa, or eastern europe are too dumb to do the same work. Nor do the outposts of the companies you mentioned pay the same US levels in those countries. There must be another component of this.</text></item><item><author>NeverFade</author><text>Those companies became very profitable because technology made them so. It wasn&amp;#x27;t some accident that is here today and gone tomorrow. Technology is at the core of companies like Google, Netflix, Amazon, Facebook. Without the technology, which is implemented by SWEs, none of these would exist.&lt;p&gt;Their number isn&amp;#x27;t declining, it&amp;#x27;s growing.</text></item><item><author>Gatsky</author><text>This is a bit hand wavy... isn’t current comp due to a handful of tech companies that became very profitable very quickly, and a lot of venture capital money? Without either of these two factors I doubt wages would be at the same level.</text></item><item><author>pbecotte</author><text>But... we understand EXACTLY why developers are paid so well. Economics (the same reason EVERY profession is paid the way they are). There are two factors that come into play for employee pay- 1. Supply&amp;#x2F;demand: When demand outstrips supply, prices rise. The demand for software so vastly outstrips the ability to produce it that salaries are being driven very high because 2. The marginal value that an employee can produce. This is a hard cap on the salary that any profession can charge, and is the primary driver for demand. So long as 2 is higher than the prevailing salary, demand will continue to rise, which will apply upwards pressure on salaries.&lt;p&gt;Of course, high salaries will attract more supply over time, which will put pressure back down on salaries. The current dynamic is SO out of whack though- there is a ton of slack in the system.&lt;p&gt;This isn&amp;#x27;t a boom&amp;#x2F;bust thing either. There is SO MUCH business value that could be had if there were programmers available to build the software. I don&amp;#x27;t think we&amp;#x27;re even scratching the surface of everything that could be profitably built yet. I think betting on a big bust in software engineer salaries would be a bad move.</text></item></parent_chain><comment><author>Sacho</author><text>The answer would be: 1) they do, and 2) they can&amp;#x27;t&lt;p&gt;1) Google clearly hires plenty of people in India. Here&amp;#x27;s their new office in India, with allegedly ~10k employees: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;careers.google.com&amp;#x2F;locations&amp;#x2F;hyderabad&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;careers.google.com&amp;#x2F;locations&amp;#x2F;hyderabad&amp;#x2F;&lt;/a&gt;. The assumption that Google is only hiring &amp;quot;expensive american employees&amp;quot; vs &amp;quot;cheap indian employees&amp;quot; does not hold&lt;p&gt;2) Talking about &amp;quot;american&amp;quot; and &amp;quot;indian&amp;quot; employees is misleading. Your question could just as well be &amp;quot;Why not hire for $100k from &amp;lt;midwest&amp;gt; instead of $370k in CA?&amp;quot; At that level of salary, you&amp;#x27;re talking about attracting top talent from around the world, who are often happy to migrate. The salary is a reflection of an arms race between tech companies - the same person isn&amp;#x27;t going to opt for $60k to stay in India - they will either take a $350k job in Facebook, a $300k job in Amazon, or at worst, a $100k+ remote job to stay at home(numbers are illustrative). You simply cannot attract the same talent due to how global(and competitive) the top-end of the programming marketplace is.</text></comment>
<story><title>Programmers Should Plan for Lower Pay?</title><url>https://www.jefftk.com/p/programmers-should-plan-for-lower-pay</url></story><parent_chain><item><author>est31</author><text>Well the question is: why don&amp;#x27;t they replace the $370k&amp;#x2F;yr american employees by the $60k&amp;#x2F;yr indian ones? Why do they pay the premium for US employees? Except for defense projects, it doesn&amp;#x27;t matter where the code is made, US or India. The German software industry outsources heavily and tech wages don&amp;#x27;t reach the US levels. Why doesn&amp;#x27;t Google?</text></item><item><author>NeverFade</author><text>&amp;gt; &lt;i&gt;Yes but don&amp;#x27;t assume that people in india, africa, or eastern europe are too dumb to do the same work.&lt;/i&gt;&lt;p&gt;Where did I ever assume that?!&lt;p&gt;&amp;gt; &lt;i&gt;Nor do the outposts of the companies you mentioned pay the same US levels in those countries. There must be another component of this.&lt;/i&gt;&lt;p&gt;How about &amp;quot;they pay what they have to&amp;quot;?&lt;p&gt;In India, if they pay $60k&amp;#x2F;yr, plenty of talented candidates would work for them. In the US, if they paid that much, nobody would apply.&lt;p&gt;Simple.</text></item><item><author>est31</author><text>&amp;gt; Those companies became very profitable because technology made them so. It wasn&amp;#x27;t some accident that is here today and gone tomorrow. Technology is at the core of companies like Google, Netflix, Amazon, Facebook. Without the technology, which is implemented by SWEs, none of these would exist.&lt;p&gt;Yes but don&amp;#x27;t assume that people in india, africa, or eastern europe are too dumb to do the same work. Nor do the outposts of the companies you mentioned pay the same US levels in those countries. There must be another component of this.</text></item><item><author>NeverFade</author><text>Those companies became very profitable because technology made them so. It wasn&amp;#x27;t some accident that is here today and gone tomorrow. Technology is at the core of companies like Google, Netflix, Amazon, Facebook. Without the technology, which is implemented by SWEs, none of these would exist.&lt;p&gt;Their number isn&amp;#x27;t declining, it&amp;#x27;s growing.</text></item><item><author>Gatsky</author><text>This is a bit hand wavy... isn’t current comp due to a handful of tech companies that became very profitable very quickly, and a lot of venture capital money? Without either of these two factors I doubt wages would be at the same level.</text></item><item><author>pbecotte</author><text>But... we understand EXACTLY why developers are paid so well. Economics (the same reason EVERY profession is paid the way they are). There are two factors that come into play for employee pay- 1. Supply&amp;#x2F;demand: When demand outstrips supply, prices rise. The demand for software so vastly outstrips the ability to produce it that salaries are being driven very high because 2. The marginal value that an employee can produce. This is a hard cap on the salary that any profession can charge, and is the primary driver for demand. So long as 2 is higher than the prevailing salary, demand will continue to rise, which will apply upwards pressure on salaries.&lt;p&gt;Of course, high salaries will attract more supply over time, which will put pressure back down on salaries. The current dynamic is SO out of whack though- there is a ton of slack in the system.&lt;p&gt;This isn&amp;#x27;t a boom&amp;#x2F;bust thing either. There is SO MUCH business value that could be had if there were programmers available to build the software. I don&amp;#x27;t think we&amp;#x27;re even scratching the surface of everything that could be profitably built yet. I think betting on a big bust in software engineer salaries would be a bad move.</text></item></parent_chain><comment><author>NeverFade</author><text>&amp;gt; &lt;i&gt;The German software industry outsources heavily and tech wages don&amp;#x27;t reach the US levels.&lt;/i&gt;&lt;p&gt;German SWE work doesn&amp;#x27;t pay well domestically. It&amp;#x27;s also struggling to attract talent. Probably a reason why Germany isn&amp;#x27;t known for its many profitable software companies.&lt;p&gt;&amp;gt; &lt;i&gt;Well the question is: why don&amp;#x27;t they replace the $370k&amp;#x2F;yr american employees by the $60k&amp;#x2F;yr indian ones?&lt;/i&gt;&lt;p&gt;In the case of an engineer making $400k in the US, I suggest this is a fairly exceptional individual, with a level of skills and abilities that are rare in _any_ country.&lt;p&gt;Since that individual produces large profits for their employers, employers struggle to hire them at any price that is lower than their productive yield.&lt;p&gt;Strong SWEs can make companies like Google and Facebook millions of dollars per year. So these companies will gladly pay any six figure salary for these individuals.&lt;p&gt;Of course, if they can get away with only paying them $60k in India, they will. It&amp;#x27;s not their goal to pay well; it&amp;#x27;s a necessity.</text></comment>