Ask Slashdot: Why Are American Tech Workers Paid So Well? 587
Slashdot reader davidwr is "an American-born, American-educated mid-career IT professional." But he's still curious about why American geeks earn more than their IT counterparts overseas:
If I'm a mid-career programmer looking for a job, why should I expect to be paid a whole lot more than my peer in India when applying for a job that could easily be outsourced to India? If I do get the job, why should I expect to keep it more than a year or two instead of being told "your job is being outsourced" before 2020? Is my American education and 5-25 years of experience in the American workplace really worth it to an employer?
Should we, as an industry, lower our salary expectations -- and that of students entering the field -- to make us more competitive with our peers in India and similar "much cheaper labor than first world" economies? If not, what should we be doing to make ourselves competitive in ways that our peers overseas cannot duplicate?
What's the secret ingredient that justifies those higher salaries? Leave your answers in the comments. Why are American tech workers paid so well?
Should we, as an industry, lower our salary expectations -- and that of students entering the field -- to make us more competitive with our peers in India and similar "much cheaper labor than first world" economies? If not, what should we be doing to make ourselves competitive in ways that our peers overseas cannot duplicate?
What's the secret ingredient that justifies those higher salaries? Leave your answers in the comments. Why are American tech workers paid so well?
Supply and demand (Score:3, Insightful)
Employers wouldn't be paying it if we weren't worth it.
Re: (Score:3)
Short but quite accurate. Supply and demand sets wages.
1) Living costs are also much higher in the US than the nations with much lower labor costs.
2) If a remote worker were really worth the same value to an employer as a local US worker, the difference in salary would not be so great. (Note: H1B workers fall between the two endpoints, indicating there is likely some value also created by "culture," mindset, or other non-strictly C.S. skills related attribute.)
Re:Supply and demand (Score:4, Insightful)
But if 1M people could do that job, and they would work for $1 per day, then the value of the job is still $1M, but you'd pay someone $1 to do it. So the workers set the minimum at $1, and the company sets the maximum at $750k. So the supply and demand is a factor, but far from the only one. As there are billions of people that would work as a CEO for $20M a year, but the pay for that position is still insanely high. So supply and demand fails, as it's only just one piece.
Re:Supply and demand (Score:4, Informative)
I think you misunderstand supply. There isn't a supply of billions of CEOs that will work for a $1. There is a supply of a several thousand (or so), the others are more-or-less "unqualified" (not that they can't do a similar job, but they are unhireable because the boards of directors don't want to get in trouble for hiring outside the expected hiring pool). Similarly there isn't a supply of billions of IT folks, and similarly hiring managers generaly don't want to get in trouble by going outside the "standard" hiring pool. This used to be called nobody got fired for buying IBM (but that probably goes the other way these days)...
The problem is that there is probably no good way to evaluate employees (including CEOs) before hiring, so most people simply pay the going rate, and hope for the best. The going rate is set by the limited supply and how desperate companies are (e.g., the demand side). The outsourcing comes in when the demand at the lower price point exceeds the supply and gets supplanted by a demand at a lower price point (and potentially larger quality variance) which matches the supply.
This used to be called the resistor tolerance dilemma. 1% tolerance resistors are much more expensive than 20% tolerance resistors. You might think if you bought enough 20% resistors you could cherry pick the ones that had lower tolerance, but in reality, the vendor pre-sorted for this, so if you bought the cheaper resistors you could almost guarantee they were crap. However, it was reasoned that by sophisticated design choices you could theoretically reduce the problem of high variance resistors so people started doing that. So you could solve your circuit design problem with a simpler scheme, but pay more for resistors, or have a more complicated circuit (with more things to manage that could go wrong) but get it done with cheaper resistors.
As expected, managers in 2nd rate companies didn't grasp this inherent tradeoff and wanted both cheaper resistors and the simpler circuits designed by novice designers. They bought loads of cheap resistors and put them in these simple circuits as a cost cutting move expecting the distribution of resistors to have normal statistical characteristics. Lo-and-behold they would eventually get a batch of resistors that were all low by 15% resulting in a 100% escape rate from their production line.
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CEO is easy. It requires all the qualifications of an entry level used car salesman. And yes, I've been both. Wasn't bad at CEOing either. They pay for past success, even when past success isn't an indicator of future returns. Simply put, the selection isn't rational. It's an inbred nepotistic game, not a rational business decision.
I wonder what you think it is (Score:3)
What exactly do you think that economic term, "supply and demand", means that's in some way different from what you described? It sure sounds to me like you could have copy-pasted your post from Economics 101, page 3 "Supply and Demand".
Re:Supply and demand (Score:5, Informative)
The US total cost of living is also higher, just because the salary is high and you get more in your hands don't mean that you actually earn more since a lot of that money is used to pay for your living like property taxes and various fees.
The US citizens pays property tax and a lot of fees, Europeans pays income tax - so the overall tax pressure isn't that different. The main difference is that cost of consumer products is relatively viewed lower in the US compared to Europe so a TV is cheaper.
Re: Supply and demand (Score:4, Insightful)
To live in cook county in the suburbs of chicago, a two bedroom home of less than 1000 square feet costs around 3500 a year in taxes. Add to that 4,800 a year to pay the mortgage for the home, retirement planning, gas, electric, water and food.
That's before you can get internet - which has been driven up to over 600 bucks a year.
Then there's mandatory car insurance and health insurance - also adding up.
So when you need to be able to pay 20 grand after taxes to live near where you work just for the basics, you start to get annoyed that someone living in a cesspool thousands of miles away for pennies on the dollar is arrogant about stealing your job.
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And that's still dirt cheap compared with the Bay Area, almost to the same degree that large cities in India are cheap relative to Chicago....
High wages are not a divine right (Score:3, Interesting)
So when you need to be able to pay 20 grand after taxes to live near where you work just for the basics, you start to get annoyed that someone living in a cesspool thousands of miles away for pennies on the dollar is arrogant about stealing your job.
The arrogance is all here in the US. We act like we are entitled to earn the highest wages in the world as if it is some sort of divine right. In reality we've had a good run and many have forgotten that we only got those high wages because we out competed everyone else. If we are idle and complacent then wages in the US will fall back towards the mean as surely as gravity. There are lots of smart folks in China and India and elsewhere and there are more of them. China has 4 people for every one in the
Re:High wages are not a divine right (Score:4, Interesting)
India had no wide-level destruction during World War II. China didn't have a lot of infrastructure to destroy - they were still mostly an agrarian society when the Japanese invaded in 1937. There wasn't a single bullet fired in WW2 on the continent of South America, and yet they still don't have the level of industry or world-changing advances.
You're probably right about the advantage over western Europe, Russia (USSR), and Japan, but it hardly explains the idea of American exceptionalism in the 20th century.
You are correct, and that word doesn't mean what (Score:5, Insightful)
You made a good point.
> but it hardly explains the idea of American exceptionalism in the 20th century.
American Exceptionalism does NOT mean "America is better." Somewhat the opposite, in fact. If the US government and the govetnment Spain both spy on their citizens, the US has failed to live up to it's responsibilities, while Spain has not necessarily failed, according to American Exceptionalism. AE says that due to certain historical facts, the US has responsibilities that other nations don't have.
Most states are also nations, the borders of France (the state) define the area controlled by the French people, the ( ~ ethnic) nation. American Exceptionalism is the historical fact that the US is a state (country) founded not based on a nation (ethnic group), but rather on a set of ideals; and that fact creates different responsibilities. Japan (the state) is basically the area controlled by ethnic Japanese, so they would be expected to preserve and defend Japanese culture. Germany is the area controlled by Germans, so they would be expected to preserve and protect German culture. The US is not a state, not an ethnic group; it was explicitly founded on the ideals that each person is endowed by their creator with certain inalienable rights, etc. The US claims to be "the brightest beacon of freedom", therefore the US should be expected to defend and preserve freedom and liberty. Spain wasn't founded as a bold experiment in individual freedom, so they have no special responsibility to do that- Spain is supposed to be Spanish, that's all. The US government, being founded for a particular purpose, has a special responsibility to honor that purpose. When we fail to preserve and protect freedom, we fail at our national identity, at our national purpose. That's American Exceptionalism.
Effects of WWII (Score:3)
Neither were India nor China..
China was absolutely devastated by Japan [wikipedia.org]. India was a part of the British Empire at the time and suffered accordingly. There was a huge famine [wikipedia.org] in India during WWII which killed about 3 million people.
It only really affected Europe and northern Africa, and several island nations in the pacific.
WWII devastated infrastructure around the entire western pacific rim. Japan, Korea, China, Vietnam, Philipines, Burma, etc. Of course Europe was hugely damaged as well. India wasn't a big player in the world economy at the time and didn't get investment because the British Empire was falling apart.
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Re: Supply and demand (Score:4, Insightful)
That's what people dont know, the fact that 50% of the world lives on less than $2 a day, and in India you can hire servants for that price in the boonies. The fantasy is that the US wages can keep dropping to compete with this, without things like real estate values crashing.
Re: Supply and demand (Score:4, Interesting)
Thing is, that $2/day stuff is a myth. That does not put any value to all the labor of doing everything yourself.
Standard of living is the big factor. We in the US could live on $2/day if we cut everything, and I mean everything. Not just no Internet and cable TV, but no electricity, water, sewage, and road. You could then spend your time working in your vegetable garden and milking your goats so you'd have something to eat, and trudging to the nearby creek for fresh water, trying to avoid all the shit on the trail, hoping you don't catch cholera or some of those lovely intestinal parasites, and chopping wood so you don't freeze next winter and can have a cook fire. If you do get sick, you tough it out, or die. Transport? Walk, or saddle up, or hitch up the wagon. Clothes? Grow some flax or cotton, spin the fibers yourself with a spinning wheel, weave it into cloth, then cut and sew into shape. So what if that takes weeks, what better things do you have to do? Sanitation? Forget the daily shower, you're going to bathe once a week, maybe. You only washed when you were so heavily coated with grime and filth that it was interfering with your ability to labor. Mow the lawn? Ha ha, are you nuts? Send in the goats, dummy! Refrigerator? Without electricity? No, you're going to use a root cellar, and maybe an ice house. There's also canning. Cold? Put on a coat. Hot? Sweat it, A/C is for sissies. Wash your clothes by hand in a wash tub and hang them from a clothesline to dry. That's not too far off from how my great grandparents lived: farm with a veggie garden, no electricity or indoor plumbing, just chamberpots stowed under the bed, except they didn't do their own clothes, they bought factory stuff for that, and they had a well, none of this hauling of water 1km or more.
We've really run wild. Many modern conveniences are great to have, but enable a great deal of waste and foolishness. Many companies made a businesses out of catering to our dumber instincts. The biggest things the daily shower does are waste a whole lot of fresh water, make water infrastructure businesses and shampoo and soap manufacturers richer, and actually make us less healthy by washing away beneficial bacteria! And we do it because we've brainwashed ourselves into believing that body odor is offensive. We've all dealt with suburban sprawl. Car manufacturers have brilliantly exploited our foibles to promote the car at the expense of all other forms of transportation. Then there are expensive hobbies such as boating, owning your own swimming pool, off roading, hot rodding, skiing, or flying your own private plane. Even something less intense on required equipment such as golf isn't too cheap either. So many sports have commercial interests dangling options in front of us to turn it from not too terribly costly to insanely expensive.
A relevant incident is the 2010 suicide of Joseph Stack. He was angry that the government had bailed out big banks but he personally was being audited by the IRS. He flew his private plane into an IRS building in Austin. While I sympathize with his complaints, the fact that he had a private plane shows he wasn't hurting for money.
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Shh! Don't let the secret out - I don't want all the Bay Area hipsters discovering that there's just as good living at 70% or less of the cost here. I enjoy making a Bay Area salary with a Midwest cost of living!
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Meanwhile in Europe work that was outsourced to Indian companies is being replaced by Eastern European outsourcing companies: sometimes cheaper with far better quality.
It really boils down to cost. That is it.
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Well, let's see. I'm going to be 50 soon. That's supposedly a detriment in IT. I make a lot more money than my younger colleagues. That's supposed to hurt me too. I don't know an H1B worker who can even do my job, so I guess I must be worth it. Don't get me wrong. The latter probably exists. I just don't see them lining up to replace me.
Re: Supply and demand (Score:5, Insightful)
Forty to fifty years ago, Japan was known for making crappy products. Then they (among other things) revolutionized how cars were built and anything made in Detroit after 1980 or so looked like absolute crap compared to Japanese cars. Only in the last fifteen years or so have the American cars caught up.
India and China has been used largely as "hired hands" for crap work in dev/IT until recently so they didn't "own" the problem. As they become owners of the concept, solution, and problem, they will adapt and learn. As more of their devs have spent 36 hours straight getting a customer around a problem that someone in their organization created, they will push quality in to their work more and more or just go out of business.
Don't be too smug. The US is tiny in population compared to China and India and there is no indication that the random melting pot in the US is genetically better suited for producing quality products. Hence, the center of international development will move to China and India -- it's inevitable just by the numbers. Additionally, many Chinese and Indians kids are striving (at their parent's insistence) to excel and learn to work hard at a very early age to get good grades etc. just as American kids are increasingly being praised for being "special snowflakes" and "the best you you can be" and getting "participation awards" just for showing up. It won't end well for Americans in HW/SW dev or IT unless we wake up (I don't think we will).
Re: Supply and demand (Score:5, Insightful)
The thing that you're missing about Japan's rise is that, as quality increased, so did price. The same thing is happening in India and China and this is a big part of why quality usually sucks when you outsource to India. If you're someone competent in India, then you quickly learn that many of the companies that are paying you 10% of what they're paying an American will happily pay you 50% of a US salary, which works out as a lot more than the US salary in terms of local purchasing power and quality of living. If you're not competent, then you stay with the outsourcing firms.
The only companies that are doing well out of moving development to India are the ones that establish a big local presence, focus on retention, and pay well relative to the local market. Companies that aren't willing to do this are slowly learning that offshoring isn't worth the extra costs. The end result of this is more inflation in India, which will push up wages (this has already happened a lot and is a big driver for Indian companies moving work to China).
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I rather think that depends upon government institutions. Want to trust your company's secrets to the tender loving care of the Chinese judicial system? Or the creaking Indian system?
Then there is the problem of sourcing. Do you want your company's systems reliant on Chinese or Indian gear or software? How far can you trust that gear to not spill the beans of your organization? And if they do, what will you be able to do about it. Trying suing them in China or India and see how far that gets you dragging on
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Forty to fifty years ago, Japan was known for making crappy products. Then they (among other things) revolutionized how cars were built and anything made in Detroit after 1980 or so looked like absolute crap compared to Japanese cars. Only in the last fifteen years or so have the American cars caught up.
This is almost wholly attributable to the American W. Edwards Deming.
Deming gave a speech at the Hakone Convention Center in Tokyo in 1950 on "Statistical Product Quality Administration".
The Japanese immediately embraced his philosophy, while Deming was still not getting traction at home:
1. Better design of products lowers service costs
2. Higher uniform product quality
3. Improved product testing in both research and manufacture
4. Greater sales through side markets ("halo effect")
Part of the problem was the
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1) Absolutely correct... once someone actually *reads* what Deming wrote, you can almost see the lightbulb go off over their heads. It is solid stuff.
2) The younger folk may not know/remember this, but during the early-to-mid 1990s, Dr. Deming's writings became the basis of that wonderful little fad which most in the business world called "TQM" (that is, Total Quality Management). It spread like wildfire - I saw it slathered around in everything from government (Dept. of Veterans Affairs) to private industr
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I have no idea - I buy German.
Found the Volkswagen owner If he had a BMW, he would say so...
Re: Supply and demand (Score:5, Insightful)
I've had good experiences with development teams from China, actually, but that's just one data point. India, however...
It's like the developers out of India simply don't care. Code quality, functionality, deadlines, figuring anything out on their own, the amount of hand-holding I've had to do is extremely frustrating. So, I spent some time one night searching the 'net and looking for information on how the schools work over there.
Turns out that many of the schools in India don't actually teach you much. Their courses are geared towards rote memorization and following instructions. If you want them to do A, and only A, with no changes, they can do A very, very well. Once you deviate from A, even just a bit, they won't know what to do.
They call it "mugging" over in India (and no, not mugging as in attacking someone and stealing their cash - I have no idea how the term came to be). You memorize. You don't deviate. You do not think for yourself. You do not understand a concept and come up with a solution; you only follow the solution that's been provided.
It really does seem to explain all of the issues I've ever had with IT workers out of India. There's limited capability for problem solving because they're not taught how to solve problems in a general sense, they're simply taught the solution to a specific set of problems. Give them a step by step set of instructions and it will be done - but then why not just automate?
In contrast, American schools push students to understand concepts first and then apply them to find a solution. We're trained to solve problems and to think. That seems to be the core difference.
Re: Supply and demand (Score:5, Insightful)
Another problem is with Indian management. Any problem they will claim they can solve it. Get the business first, then yell at the employees to get the impossible task done. If it fails blame the workers. It feels somewhat adversarial between management and worker, rather than being parts of the same team.
As for Indian workers who know how to do stuff, most of them are already in America and other countries.
I do foresee a problem for India in the future as it seems they've put too much emphasis on a single things - basic IT. Manufacturing and design is lagging.
Re: Supply and demand (Score:5, Insightful)
but then why not just automate?
There's an intermediate step, and companies have learned to do it reasonably well in IT: do what McDonalds did. Reorganize the work so that it can be done by an army of cheap, replacable labour instead of a handful of ace professionals. The works isn't quite ready for robots or AI, but using strict processes to dumb down and compartimentalize the work means that you now can get away by having much cheaper workers. You do need more of them... at first I was surprised how much more, and how companies thought that this was a good and cost effective solution. But since then I've learned that offshoring has other benefits. For one: if you have only cheap workers with a narrow, well defined skill set, then you can get away with managing them as resources instead of people. Need 5 more of X or 3 less of Y? Need to temporarily replace a sick Z? That can be painlessly arranged if you have 100s of these to go around. If you have only 10 who do the same work, that problem becomes much harder and you quickly find yourself having to deal with individuals, with individual skill sets.
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I've noticed the same thing in engineering. The Indian engineers never thought outside of the box or even deviated from a known script they had been following.
We had one spend half a day diagnosing a problem that one of our American engineers solved in 15 minutes. They never checked to see if the databus was connected.
And I'll admit fault with that. I didn't ever think to put it on the 'debugging checklist' because I thought it was an obvious step.
Re: Supply and demand (Score:5, Interesting)
You do know there are other jobs in IT besides being a help desk phoneslap, right? I know this might be a shock for you, but not every business can run on Quickbooks. Sometimes a company will have a very complex billing structure, based around many factors that make it unique to that business, requiring custom software development in order to make it work. This software isn't written by "IT help desk flunkies" but by real software engineers, working in IT.
People who build data centers, and networks are in IT. People who keep servers running, secure, and performing as best as they can to deliver the information and services that the business needs are in IT.
The help desk job used to be the foot in the door - something you do that helps hone troubleshooting skills and gets people familiar with systems and how they operate, and how they can fail, and what to do about it. But there's other people that put those systems together to begin with - people who looked at systems from different vendors and providers, tested them and discussed the merits of each, and then chose and implemented them. Or, even built and coded the thing from the bare metal on up. All of that is IT's job, and it didn't just magically genesis itself.
Sure, you can say that some of that could be done on contract, or outsourced as well - but the results are usually far poorer than the often terrible results of even outsourcing the help desk.
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That's what I was about to say. Arbitrage in labor markets takes a long time to go to the no-arbitrage state. There is friction from Labor Laws, Labor migration rules, other local laws in general (such as data privacy laws, data warehousing laws).
And then there is government interference. The US government for instance, encourages international Phd's and Masters students to find jobs in the US by giving them OPT permits and favoring them for H1B etc.
And then there are managers, who know that if there is no
Cost of Living (Score:2)
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Re:Cost of Living (Score:4, Insightful)
OK so I don't live close to the bone, but contracting means moving around a bit even within the same sate as contracts change. Renting, cost of living, etc takes my "higher" salary. I could cut out my humble bundles and loot crates, but frankly it's a drop in the bucket compared to general living costs.
Cost of living in places where tech workers in North America are forced to live largely cancels out the higher salary. When it comes down to it, apples for apples, they end up being paid less.
I've worked in tech companies in 3rd world countries. The salary I was earning was like a kings ransom in local terms. I work in North America now and I get a normal salary in local terms but, boy, it doesn't add up to a kings ransom and my quality of life is, if anything, lower. There are plus sides to working in 1st world countries but at the end of the day it feels like you make less.
What it comes down to is that a dollar in one place isn't worth the same as a dollar in another place which anyone with any international experience should already know.
Difference in work product (Score:5, Insightful)
Obviously this is not applicable to all tech workers, but...
In many cases, there's a fairly substantial difference in expectation of work product, both in terms of quality of work produced, and in ability to execute anything more than rote work. While it's true that those qualities may not matter for those organizations who choose to outsource tech labor, there can be a very quantifiable increase in product quality from workers who are more vested in and capable of producing a higher quality product, which can be translated into demand for higher compensation.
It's kinda the same as the difference between a certified general contractor, and a guy you pick up at Home Depot to do some work for you. You don't expect to pay the general contractor a small amount of cash under the table, and he doesn't have any need to make his rate "competitive", because he'll be able to find people willing to pay for a higher quality of skill, knowledge, and ultimately work product. There's a reason that most tech companies who outsource their high-skill labor to inexpensive countries don't stay competitive long...
That's my experience, anyway.
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This is pretty close to correct. But tech folks like to pretend that the split is domestic vs foreign. Sorry, but most domestic tech talent is not competent. Outsourcing occurs because foreign incompetent talent is far cheaper than domestic competent talent, and management needs are similar. Meanwhile, there is a cutthroat bidding war for competent domestic talent, which is in seriously short supply.
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This is very true. In the software industry, especially, there is a vast difference between people who are good developers, and people who are "just able to write code". For the organizations who employ a lot of the latter (either though legitimate need, or simply inability to attract and/or hire the former), outsourcing can be economically viable... as long as you are able to still stay in business, that is.
I know, anecdotally, that several "smarter" organizations who experimented with outsourcing software
Re:Difference in work product - AND communication (Score:2, Interesting)
Disclaimer: I am a lucky white dude that grew up in the United States and I have worked with a few teams in India and tons of people that moved to here from India and other countries, and I have nothing against them and have several Indian friends. They are just like you and I, they want to work hard to provide for their family and make a better life for themselves. Don't hate the individuals for just trying to work hard and get ahead in life. If you want people to blame and be angry at for job loss, direct
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I'd like to add that there are plenty other cheap countries besides India and China. i'm talking about countries where communication barrier simply doesn't exist. Yes, those countries are much smaller in terms of population, both compared to the USA and the giants that are IN and CN, and that's why most people aren't even aware of them, but they exist.
Now, large companies are increasingly hiring people from these countries, and the findings are that people hired there would work almost as cheap as people fr
Re:Difference in work product (Score:5, Interesting)
The UK might become the new India for outsourcing. Perfect command of English, only 5 hours time difference so at least there is some overlap, similar culture... But much lower wages. As the value of our currency continues to decline and we push for cheaper labour and lower pay, we will start to become very competitive with India for highly skilled developers.
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Well, you're bolstered by Russia messing with the former Iron Curtain countries. For a while it appeared that Ukraine was going to upset India for sub-contracting. High quality English, smaller time zone difference and they had no problems pushing back on tech issues and coming up with alternative solutions. Now Western countries are fearful about placing all their bets on a place that could go up in smoke overnight.
It's not just plug-n-play (Score:5, Insightful)
Sometimes outsourcing to lower cost countries might work, but often it just doesn't work as expected. My employer tried India outsourcing 10 years ago and it was a failure. First, while the direct employment costs are cheaper, there is overhead that is complicated and expensive: protecting intellectual property, management from 12 hours away, project planning, code culture and standards.
IT and software engineering pay well especially in Silicon Valley and other major areas because it's worth it to pay that. Proximity has its own intrinsic value. I work with 50% Indian workers, but they are here in SV and paid well, most 100k+ because that's what the work is worth.
Hard to put a finger on it... (Score:5, Informative)
As a guy that owns a small IT security startup and has some developers on contract in India and as many full time North Americans as we can afford right now I would say this:
Creativity. Understanding the why as well as the what (aka seeing the big picture), and a general drive to see the company succeed.
None of my contractors give a shit if my company succeeds beyond their next invoice. None of them really seem to care to understand why we are doing what we are doing, they are only focused on their silo of work. And OMG if you don't give them EXACT to the letter specs, the work wont get done. Likely because of the other two things I mentioned, but also I think it might be a culture thing where they are taught both at home and in school to never question, and just memorize and regurgitate to succeed. Yeah they are kinda like human robots in some cases.
I will always pay more for an innovative self-starter that's in my time zone.
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Do your domestic developers have equity? If not, they don't have any more incentive to care about your business than your contracting partner. The cost of finding another job is similar to the cost of finding another customer. And employees get unemployment compensation. Salaried employees don't have much skin in the game.
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Some people have pride in their work and the company they work for. Not all companies are soul sucking demons.
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Do you have equity? If not, then what incentive do you have for caring about the success of the venture you're involved with?
I own my own company now. Before I owned my own company, I realized that my success, and the success of the organization I worked for, were tied together. If I succeeded, and the company did not, that would be very short term for one of us. The same if the company succeed, and I did not. This is how Americans, with any understanding of economics, sense of connectedness, and general wo
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Equity is mostly pointless. It amounts to a tiny fraction of annual compensation. A small fraction of companies may have equity pay off more than a normal annual bonus, but you can't count on that (though there are enough gamblers out there who are suckers for it that it keeps the startup industries alive). Salaried employees have skin in the game because that money keeps the food on the table and the mortgage paid off. Unemployment insurance is nearly worthless, it won't cover even a fraction of the cost
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How much do you invest in making them feel like part of the company and its future? Are you talking to them live everyday, and visiting them for a week at a time once per quarter?
This is a brilliant question (Score:2)
Tech workers who have been in the field for long enough are unable to analyze it like you have. You are detecting a market issue. Partly, wages are sticky. For jobs where this is the problem, you see complaints about outsourcing and H1-Bs. Secondly, the market is actually extremely tight for competent domestic tech workers, and employers are in a constant bidding war for these few folks. This bleeds into the majority of less-than-competent domestic tech folks through a number of mechanisms, including employ
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The 1st world will never be competitive (Score:3, Informative)
Salary Growth Closes A Lot of Gaps (Score:4, Interesting)
Some numbers from my personal experience.
1) Salary Growth. In general, the Indian Salaries are increasing by 10%, US Salaries are increasing by 3%.
2) Salary Scalability. In general, Junior staff are about 5 offshore to 1 onshore. Mid level staff are about 3:1. Senior staff are 2:1.
China used to be a good low cost offshore location, however senior staff are now more or less the same cost (assuming remote team management). You offshore to China for reasons *other* than cost reduction. India will ultimately be no different.
Mid to senior engineers will be generally cost neutral within a decade, junior engineers - not so much.
Near-shoring will likely replace the off-shoring - in some cases it already does.
Former Director of Software Development Here (Score:5, Interesting)
For my dollars, I'd much rather work directly with people who are a committed part of a team. It's tough enough to achieve that with direct hires; I don't think you can do it with outsourcing.
I think part of this relates to the nature of software. People always talk about writing software - but that's the easy part. The hard part is *expanding* and *maintaining* software. And generally speaking people who have a history with the code are going to do a better job of it: faster, and more precise. You can also have a much tighter development loop between developers, testers, and users if you have them all in-house. I used to have my developers spend some time using the tools they built with the people who actually used them for the job (I did this myself as well). You learn practical details that are hard to communicate any other way. And speaking of communication: I had a few outsourced workers (forced on me by upper management) and communication was always inferior.
I'm not saying that there's no use for outsourcing, or that it's always the wrong choice. But my experience is that proximity matters. And history matters. And personal familiarity matters. So one needs to factor all that in when making the choice. And yeah, I think I got about 4x the quality and productivity out of my in-house people as my outsourced people.
Re:Former Director of Software Development Here (Score:4, Informative)
Re: (Score:2)
I swear, half my career has been fixing outsourced code.
Me too!
The other half of my career has been fixing internally sourced code!
No, that's not really true, sometimes I'm writing the code the next guy will look at and insist on replacing, er "fixing."
Re: (Score:2)
I've been working with and managing off shore teams since 2006. You're right about communication, and this where the management toll strikes.
What a lot of domestic works don't see is that the same applies to telecommuting versus being in the office everyday. Face time counts for so much as even the most introverted developer is still human, and people actually contact with other people.
Being together just works out way more efficient in terms of time and effort. Off shoring only really works if you can g
Availability and inflation rate (Score:2)
Most companies want to retain some level of control, but the value of the service provided doesn't always warrant the cost. There are only so many things that a business can cover as necessary evils that
Location (Score:5, Interesting)
North American companies are absolutely idiotic about this. They will happily employ remote employees from India who (obviously) never come into the office, ever for a discount. Typically the quality of work output is low as is the knowledge level. At least that's been my experience.
Yet those jobs aren't offered to Americans, and I don't get why not. If you have low skill with computers, but an aptitude to learn, you could do the same quality of work that's being outsourced for $20 - 30k a year. So why not offer the job over here with the same standards? (100% work from home, no expectations that you'll work any standard hours, ever. And if you get the project done early, enjoy the vacation time.) You would be surprised at how many people would take such a job and find it is enough to keep them going and give them the experience they need to enter the field. Sure, if you live in NYC $20k means you'll be dead inside of 12 weeks, but move to Mississippi and it's enough for a single guy to live frugally for the year while he ups his skills.
In fact, honestly, I don't get why companies don't offer work from home for most tech jobs. You get to pay lower salaries for the same work because people don't have to live in extremely expensive cities and you get to save further on not having to have an office.
Work life balance? (Score:5, Interesting)
As others have posted, the ultimate answer that the marketplace dictates the value, and the labor market place currently values American tech workers highly.
Re: (Score:3)
in general harder working people are more productive
The only thing that is certain is general harder working people burn out faster and that productivity is short lived. All this has nothing to do with tech workers being valued highly, but you are right about one thing the marketplace dictates the value. Cost of living and cost of doing business comes into that. The local cost of living for tech workers in major hubs skews the pricing upwards. This local competition can't really be offset by outsourcing as that comes with downsides that make the result less
Re:Work life balance? (Score:5, Interesting)
Another way of looking at it is that US workers are more exploitable. The lack of safety nets, the need for private health insurance, incredibly high student debt, lack of unions. They all work to make it easier to exploit US workers with long hours and poor conditions.
It seems like the high wages are just to cover living costs, especially in places like Silicon Valley where rents are insane. It also creates a race to the bottom where everyone is competing to work longer and harder than the next guy.
Japan and the EU have laws to prevent exploitation and limit the number of hours people can work a week, specifically to prevent all that from happening. Wages are lower but so is the cost of living. Except for the UK most students don't have massive debts, and getting sick isn't the leading cause of bankruptcy. Except for the UK, there are often rent controls too.
Quality and accountability (Score:5, Interesting)
There is simply a completely different type of employment culture in India than in the US. In the US we are used to interacting with a self-selecting group of immigrants who work really hard and often put up with a lot of stuff under H1 or other visa programs that American citizens wouldn't tolerate from employers.
Back in India though, there is a culture of treating employees like shit, and consequently a culture among employees of working as little as possible. Employers also don't screen candidates well for off-shore call centers and the like because if they are working on a large contract, all the accountability is based on metrics that can be manipulated and the US based business that contracted them probably only cares about reducing their costs.
My Indian and other immigrant coworkers work their asses off. The support teams I deal with in India can't even be bothered to show up to a phone call and are usually incapable of anything more than opening up a ticket with the software/hardware vendor directly.
So Go Ahead... (Score:4, Interesting)
...and hire all foreign staff. When they eventually leave, hire someone else that wants to learn the code base, waste however long it takes them to learn it, and then say goodbye to them when they too go back to wherever they came from.
Or go ahead and outsource the whole thing to half-way round the world, so's you have to talk to 'em at 2 AM when you're tired as F and get stuff screwed up, or alternatively, they're working at 2 AM when the human being is at his worst and they get stuff all F'd up.
We're worth it 'cuz we're here, and won't necessarily be saying goodbye so's you have to retrain a whole new crew every couple-three years. You won't have to repeat yourself to be understood nor listen very, very closely to understand what we're saying either.
But the American business is always going to go for the short-term gain, so go ahead - the people that would have graduated from American universities with software degrees are also smart enough to realize that you're going to skimp on wages, and make them compete unfairly with the rest of the world, and decide to get into some other line of work that is more steady and maybe doesn't even require all that study. There's lotsa jobs with decent, but not breathtaking pay that don't require accumulating a huge debt - maybe they can be OK with being a welder, or a railroad locomotive engineer, or 1 of a 100 different things to do that can't be outsourced and don't commonly involve a lot of layoffs. Hell, some of those jobs even have unions, something that makes it hard to feel sorry for the uppity software bunch that think they're too good to need a union, in spite of actors and pro sports players using them - but nooooo.... software people are too proud to form a union that would sue the asses off some company like Disney that (illegally) hires 250 software people from overseas to replace 250 of their US Citizen software people simply because the furriners will work for peanuts.
If the furriners are at all better at this than than US citizens, then its probably because the smartest US citizens are too smart to put in that sort of time and expense to compete for a job with a US company that's going to s*** all over them and fire them simply for wanting a salary commensurate with living well in the USA for the efforts required to acquire similar knowledge for other more lucrative careers.
So, suck it up, US industry. You created this situation. Just go ahead and suffer when you can't control your cheap labor because... losing your penny-pinching salary isn't worth enough to do what you want them to if they want to go home and you want 'em to stay. Y'all deserve each other.
Track record. (Score:2)
Cost of Living requires it. Businesses pay it because the area's talent has defined the computing era. A random "senior" group (read: just about anyone in SV) knows second-nature Agile, Scrum, code smell, architecture, multiple languages, tools & technologies they've used to build amazing things successfully.
A marketable product idea and a 5 - 20 SV senior engineers will usually have a high % chance of success. Investors know this. No extra layers. Meanwhile patents & novel solutions (thought leader
Engineers are worth it (Score:2)
As having worked in tech in another country, and moved to the US to work in tech, it's 100% to do with the US understanding the value of the engineers. Among my other expat acquaintances, it's not just my old country, either.
A couple of good engineers can pull off the next google, instagram, Facebook etc. Folks in the US know this and harness that power. Other countries see an computer engineering degree like an accounting degree. Until other countries clue in, the US will continue to be a power house.
Less than 1/3 the output (Score:5, Interesting)
I currently supervise a team in Bangalorre, along with a couple of junior developers here in the US. The US developers, though only a year or two out of college, easily outperform even the "mid-level" developers from India. The price our company pays for Indian developers is about 1/3 the cost of US developers, but so far, we have not been able to make the math work. Even 3 Indian devs cannot produce the same quantity and quality of output as a single junior US developer. This is a pattern I've observed numerous times at different companies.
This disparity has not been missed by accounting departments. Bringing offshore tech jobs back to the US has become so commonplace that it has come to be called "reshoring." I don't think US tech salaries are in any kind of jeopardy.
Re:Less than 1/3 the output (Score:4, Interesting)
Re: (Score:2)
The US developers, though only a year or two out of college, easily outperform even the "mid-level" developers from India.
So why do you think this is? Are the Indian colleges not teaching well enough?
Other professions in other countries (Score:2)
The cost of living is one obvious factor to look at; the cost of living is much lower in many developing countries.
It may make more sense to look at the relative rates of professions within a given country. For example, how much do Indian accountants and cops make compared to Indian coders?
If the ratios are about the same, then the question is not really about IT salaries in the US, but why general salaries and the cost of living is different between countries.
Why are managers paid so well? (Score:3)
After all, it's even easier to outsource being unproductive.
Outsourcing doesn't work (Score:2)
think differently (Score:2)
Mythical man month (Score:2)
The real answer is you can't be so easily replaced by someone in India:
- You're available. Is the guy in India available to work now? Why do you think he is?
- You have the skills and the experience needed. Why do you think the guy in India does?
- Presumably you have a history of staying at a job more than a year and not demanding large raises ever year to stay. Check out page 12 of this report [actuariesindia.org]. India salaries grow at ~12% per year according to this. If the guy in India is really good, he's probably ge
Re: (Score:2)
Re: (Score:2)
If that's true, it's because some Indians are getting into the field for the money, even when they have little actual aptitude for it. That can probably happen in the US too, but it seems like it would be a less prevalent.
A mix... (Score:2)
Accountability (Score:2)
I expect my employees to not only be responsible for their product, but accountable for the quality of it. Maintaining data integrity and security is worth paying for. Also, it directly translates into revenue for the company. Like a chef, use cheap ingredients and have a cheap (low quality) product... nobody will come back to your restaurant.
Because we make great shit (Score:2)
Just like Swiss watchmakers or German car manufacturers. When there is Indian Google, Chinese Apple or Vietnamese Facebook, their engineers will be paid well too.
Only they need to make equivalent technological breakthroughs for future technologies, not copy actual Google, Apple or Facebook. And, a country that wants to create their own Silicon Valley may discover that involves things they are not gang ho about. Like intellectual freedom and startups with unhealthy work hours that hurt diversity. This is har
they are not (Score:3)
Scale differently (Score:2)
Reminds me of an old Soviet joke (Score:5, Interesting)
Here it goes: "An old man is lying on a bed in his room. It's year 1917, the Socialist revolution is in full swing. His grandson runs excitedly into the room and proclaims: "The Bolsheviks are winning, there won't be any rich people anymore!" To which his grandfather replies: "Weird, back in our day we revolted so that there wouldn't be any poor people, not to get rid of the rich".
Which is a long way of suggesting: maybe a better question to ask is why the non-US programmers are paid so poorly. TBH I don't think US programmers are that well paid, outside of relatively few outliers. They tend to live in the areas with some of the highest cost of living in the world. That's out of necessity: all the high paying jobs are there. I'd say a good fraction of US high tech professionals is what real middle class is supposed to look like. Not rich, but with a roof over their head and non-zero savings. I don't consider that a privilege. I consider that a bare minimum.
Re: (Score:3)
Bingo! I consider myself "comfortable", but far from rich. I have a good house in a tolerable area, I can pay cash if my front porch collapses, and I can buy a reasonable number of "kewl toys". I can't afford Silicon Valley, large mansions, or Teslas.
I'm paid well because... (Score:5, Interesting)
A. I can rig your entire building for gigabit wired and wireless transfer speeds. T568B all day.
B. I can configure your stuff from MPLS to ASA to software-defined stacks.
C. I can get on-site when your remote access inevitably fails, assuming you're not stupid enough to rely upon cloud-only solutions.
D. I actually speak and understand English.
E. I have other skills that your company might want, and I am asked about quite often (Doorbell job after wiring up their patch panels? $40/hr.)
F. I possess got over two decades of experience.
G. My warranties and guarantees on my work actually mean something.
H. I don't read off a fucking script, nor do I ever need to.
I. And the list goes on.....
Race to the bottom (Score:2)
Recently i was talking to a chinese gamer friend on teamspeak and we where joking about how much one could make goldfarming. Turns out he was dissatisfied of his wage of about $300 US a week working in a resturant. Thats not that far off what an American worker could expect. He was studying to work in IT, and told me his friends in IT are making just north of $1K a week, again not quite as much as an American worker, but still in the vicinity of "Western Wages".
Turns out in China people are worried about jo
The reason is huge (Score:4, Interesting)
How many great software products have you seen being invented and created in India ? Is the number around null ? Or is it a large NULL ?
There are many reasons why Indians are not really a threat, and it is not only the language problem. It is their culture. Been in a startup in Bangledesh for 3 months, most employees from Indian universities. They work very hierachical, and not independent. It is almost impossible to make an employee choose between a blue and a red ball, we want hios managers approval first. I could not get my employees to to code things using stuff not part of their curriculum. I had to train them in those chapters in their book from university that was not part of their university education. Their attitude is, that it is better do make nothing than to make a mistake. They don't know the word no. They can't say they can't do it, but would rather delay forever.
Now I am in a large company, and the code quality we get out of India, no matter what huge front company we use, is nowhere as good as an average local person with a bachelor in CS can deliver. Their missing ability to think and read documentation, and explore is a killer.
The big threat comes from christian countries, countries with our culture. The threat comes from eastern europe and south america. They think more or less the same way. They can work independent. If they don't get an answer, they will decide on a direction to go. Even if they go the wrong direction, it is stillbetter than looking out the windows until the boss comes around.
And one important fact that you forget is, that brain workers, including IT developers, has a salary way above average salary in whatever country they are from. Personally, I would say it takes 3-5 average indians to be as efficient as an average westerner. that is $10.000-$15.000/month. So there is not good economi in using indian developers if they are available locally.
Outsourcing of jobs is mostly operations, where it is accepted that the level will be much worse at half the cost. And partly development because you can't get the skills locally. Operations today is waiting for the server to burn and then piss on it. Nothing proactively, except from scheduled reboots. So whatever is outsourced to india is not the same thing as the comanies used to get. They get less $ for $. They could save more money by deciding on the same service level with inhouse staff, and fire 90% of IT operations staff, and use external consultant when things are bad. They would even get a better service from that solution. Outsourcing to india is the new black. Everybody does it, nobody is happy, but because everybody does it, it must be the best.
Access is the key (Score:4, Interesting)
The US private sector enjoyed contracts.
The US gov pushed for the world to accept US standards and tech as part of free trade deals.
So all that creating for a global economy, funding and skill kept other nations locked out and US products as the only option.
Other nations never had that free flowing cash for science, students, the mil. To them it was limited hard currency, a loan or US charity to only buy a US product.
Their best had to be careful with funds or could only get so much out of education, the private sector or their mil.
The US also enjoyed freedom, freedom of speech, freedom to study, read. Its students had a well funded creative and smart side other nations lacked due to wars, poverty, faith, cults or type of gov.
That all worked well for decades. The changes now are a global workforce and a lack of visa tests.
US universities are no longer getting the best wealthy students, giving loans to the best middle class and testing for free access to the gifted poor.
With ever more university students with average ability taking up limited places or been granted limited places for non academic reasons a change will result.
The few really bright and gifted graduates will command the ability to select work they want. With the rest of their fellow students been well below average they have some option in who to work for and will accept a great offer.
The secret is:
The very best US graduates come with security clearances, trust and the ability to attract gov and mil funding. They have been the best in the world for decades.
But with changes to education, a flood of average students been passed now seeking the same granted access to work only the best will command good wages.
I have dealt with overseas IT (Score:5, Interesting)
Then there is this strange touchiness about any perceived insult. You say something doesn't work and they will either pretend they didn't hear you, or they will list off the resumes of all those involved. "Mamdoop, graduated top of his class, in a program that only accepts 100 students from over 1 million applicants. Are you saying that you know C++ better than he?" To which I reply, the program is crashing, it is crashing because he didn't do any tests at all and any client ID over 100 will crash the software.
Boom contract time: "Your sample set of clients only had 100 clients." This ignores the fact that the contract also stipulated that there will be 100,000-500,000 clients.
And it just goes on and on and on. Then after you finish successfully managing to sue them in an American court, you see that they are using your company name for a positive reference.
Then there is the endless changing of the contract. Somehow the monthly billing of $40,000 goes up to $45,000 and the extra is for "administrative excesses" and you say no, but it takes months for them to remove it, and as the end comes closer it goes up and up and up with subtle threats about the software ever being delivered if it doesn't get paid.
The best is when one of your own employees turns out to be related to the company in India that got the contract in the first place. You are never able to prove that something scummy happened but your employee gets wildly upset when the contract is canceled with extreme prejudice. Like holy shit losing his mind upset.
Somehow they have created a facade of competence without actually creating the competence. A simple test is how many companies in India are actually making viable software products for themselves. Not the government, not for others, but an Indian Facebook. I don't think that it is possible. I suspect that there are all kinds of Vapourware companies, as they would have that nailed down cold; but a company that does something cool, has lots of customers, makes lots of real money, and doesn't have a government department firehosing money into it.
Without that excellence, why would we go there again? This is why Western Programmers make the big bucks; they deliver what was wanted.
Re: (Score:2)
Face time (Score:3)
Cog making is fine and good anywhere, but, honestly, many bosses want to be able to hold someone's feet to the fire. Someone in the room. Someone in the room with people in their room. If you have a product that requires specific communication and intense deadlines, being able to look someone in the eye is most of the justification for a premium. Managers don't get paid for results — they get paid for the appearance of results. They justify your expense to justify their own expense.
Answering questions on stackoverflow (Score:4, Funny)
Why is it cheaper for wages abroad? (Score:4, Insightful)
It's cheaper for a two big reasons:
1. India's Rupee is considered less valuable than the USD because the USD is the world reserve currency amongst other currency manipulative tactics.
2. India neglects basic protections we take for granted in the US. No unemployment insurance, crappy schools, and a lack of a requirement to pay for "pensions". Hence it is more "expensive" to pay a US worker.
American companies want to pay workers Indian salaries with a massive currency disparity while not bothering to pay for the things that make America great such as a highly educated work force, paved streets, social welfare, food/drug safety, and other items.
False equivalence (Score:3)
Around the year 2000, Indian developers could expect about 1 lakh/year income for each year of experience they held, with a significant number of said developers having 5 or fewer years of experience - except, of course, when being shopped as H1-Bs to US employers wanting 10 years experience in Oracle 11 in the year 2000.
That's roughly one eighth the pay rate for an equivalently-experienced US developer. Under $10,000 a year in most cases.
Try living as a professional in the USA on under $10K/year, even 17 years ago.
So how did they do it?
Simple. In India, home air conditioning is a luxury, not the essential that Southern locales in the USA consider it to be. Firstly, because the equipment itself is no cheaper over there than in the US, secondly, because residential electrical service back then was extremely unreliable.
And not just air conditioning. Refrigerators were the "in" thing for the up-and-coming. Look at an Indian cookbook sometime. Most everything in it is either something you'd eat immediately or something that doesn't perish if not refrigerated. Ghee, for example, removes the components of butter than go rancid.
Electricity was so unreliable that the tech employers would maintain their own private power plants.
Another thing that tech companies over there would do is run transportation for their employees. This actually was done in my town back in the 1960s, but not any more. Indian tech employees are far less likely to own a car.
Then there's food. Indian diets are much less meat-heavy and frequently vegetarian. Rice and dal cost a lot less than hamburger and steak.
And don't forget social nets. The Indian social net is you die in the streets. You can have a free college education, but you have to pay for all the schooling that gets you there yourself.
Last, but not least, it's a veritable Libertarian paradise as far as regulations go. Not that everything's unregulated, but for a fee, it often can be. No pesky pollution regulations, little oversight to make sure that the food isn't contaminated, toxic fumes wafting from the nearby Union Carbide plant, stuff like that.
India has advanced considerably in the last 20 years, but it's still a lot cheaper to live there than it is in the USA. As long as you're willing to make some concessions.
Actually, since Indian developers aren't stupid, whatever you may think of their work as coolie labor, they've pushed up salaries considerably. Still much less than US levels, but significantly. So their side of the coin has been "why should we be paid so little when other countries pay so much? Should we as an industry raise our salary expectations?"
Comment removed (Score:3)
Re:We aren't paid well (Score:5, Insightful)
Wages are not proportional to profit you generate. The profitability question is binary. If you generate profit above your cost, you may be employed. How much you are paid depends only on supply of labor and the demand for that labor.
Re: (Score:2)
The purpose of government is not profit. However, to a certain extent, the government must compete with the market to attract employees, so the wages do tend to reflect the market. That the government offers less than the market is because of its other benefits as an employer, primarily extreme stability.
Re: (Score:3)
It isn't just the skills, it is also the environment. Take Facebook as an example. Suppose that you code for Facebook and they are making record profits. Could you leave Facebook and
Re:False premise (Score:5, Insightful)
And it isn't surprising. You can outsource product development, sure. But most tech workers aren't just prepping files for a factory. Most of the work is in constant customization, and understanding the needs of the client/user is just as critical to success as the actual programming skills.
It is highly unlikely that some random programmer in India with a masters degree is going to have a better understanding than I do of the business needs in my community. Just like, as a foreigner I wouldn't be able to offer as good a service to somebody in India, because I don't understand the business needs in their community.
Re:Retarded question (Score:4, Informative)
The difference in cost of living between my country's capital and New York is not that big.
Consumer prices are 1.5 times higher in New York; restaurant prices are 1.7 times higher in NY; Groceries prices are 2 times higher in NY.
Indeed, rent is much higher in NY (7 times higher) but that's an average and can vary greatly (Central Park view apartments cost a LOT more than periphery places).
In order to keep the same standard of life from my city (considering my current salary here), I need to make 4500 dollars a month as a specialist in NY. The average salary for my specialization in NY is a little bit over 7K dollars a month and could go as high as 11K dollars a month.
Here in my city I make 7.5 dollars an hour, working late shift (because most my customers are from the States). In NY I would make an average of 43.75 dollars an hour (accounting for salary ranges), that's almost 6 times higher than here, and in order to maintain the same living standard I would only have to earn 3.75 times as much.
The difference, mathematically speaking, is overhead. by moving to NY, with average salary, my standard of life would greatly improve. So there's your cost calculation right there.
Source: https://www.numbeo.com/cost-of... [numbeo.com]
Feel free to compare any USA city with Bucharest and you'll see that the cost of living difference isn't that great.