The Insider Guide to Careers
Insider information, secrets and tips about getting hired and building careers. For employees and job candidates.
The tenure of engineers in a company is a topic most managers do not like to talk about. Tenure and attrition go together. The attrition of engineers at Google is between 15-20%. The average tenure at Google is 1.3 years and at Facebook is 1.7 years. The biggest reason is the nature of the selection process. The top FAMG companies keep seeking the best talent. There are innumerable rounds of interviews to winnow the top folks. As much as the company want the best folks, the individuals also have choices.
A frequent complaint at Google is that while the selectivity is 1%, the pay is pegged at the 90th percentile. This discrepancy was a question that the CEO, Sundar Pichai, struggled to respond to during an employee meeting. People who can get into FAMG companies also get headhunting calls from startups and other elite software companies. One may think that this trend decreased in the last year, but it has actually increased for top talent, especially in emerging areas like AI.
Not all AI folks are paid the same. These are the wage premiums for super specializations as per Compa Peer Group.
Companies like OpenAI are paying close to a million dollars for top software talent in the Bay Area because the company valuation is also huge. Even though these companies have access to a large amount of talent impacted by layoffs, niche domain skills are rare to find. Scarcity chokes supply and drives up compensation in a labour market with high demand and low supply. Niche skillsets are not impacted by recessions and layoffs.
In the long run, things have to change rapidly. There has been too much froth in software engineer compensation, which is double that of Vice Presidents in traditional brick-and-mortar companies. The reluctance of companies to move away from the East and West Coast of the United States is keeping this skewed equilibrium alive. It is easy to predict that one or more companies will begin to shut down offices in the Bay and move jobs to India, where the employee cost is 20% of the cost in the US. This is a dramatic change in operating costs. So far, zero interest rates in the US have prevented any thought of operational efficiency. Now that the bank interest rates are higher than ever before, tough calls about efficiency and distribution of work need to be made. Google has already begun to Bangalore many of the high-cost centre jobs in the Bay Area.
If you are a manager working in a tech company, you have an easy way to meet all your targets for operational efficiency and decrease employee costs by up to 80%. Take India seriously and open up new jobs there. There is an inefficient system where students from top Indian universities come to the US to find jobs and, after 2 years of a master’s program, are offered 5 to 6 times what it would have cost to hire them in India. Many of these folks would have never left India if they had a chance. Companies like Zoho are making a killing by exploiting this compensation asymmetry and making fantastic products in remote villages in South India.
Even long term this strategy to outsource jobs to India makes sense. India is to the services sector what China was to manufacturing. Chase the talent where they reside. Around 40 to 50% of the engineering teams in the US are packed with Indians born in India. India is among the rare countries where the first choice of high schoolers is computer science. This is unlike the undergrads in the US wanting business, law and the soft sciences. If it is going to be all about hiring Indians, why not get them as early as possible and get them to work for you in India? This is how the next wave of trillion-dollar companies will be created.
