Revenue per employee in the computer industry | Hacker News Reader

Revenue per employee in the computer industry

devdaily.com

17 pointsMaro14 comments

I find these numbers are not so useful because they are artificially inflated by outsourcing things like building maintenance. If the people actually producing iPhones were Apple employees, their number would be much lower. Profits per employee would say more, but can quickly turn zero or negative in a bad year.

Every company aims to keep costs low, employees count at a minimum, and profits high. I don't see why these companies should be any different.

The companies that 'actually produce' the physical products have their own set of numbers to worry about, too.

Revenue-per-employee doesn't tell you anything about "aim to keep costs low", though, only about keeping employee count low. You could improve your revenue-per-employee figure by finding $100m of employees, firing them, and then hiring an external firm for $200m to do the same job. All that's really done though is just hidden the employees: they're now employees of another firm, but they're still indirectly costing you $200m. To account for that, you need a measure other than revenue-per-employee, like perhaps revenue-per-dollar-spent.

It really tells you more about corporate structure than anything else. Companies that do a lot of in-house work will do badly on the measure, while companies that prefer to mostly pay others to handle large portions of their work will do well--- regardless of which company manages to get the work done cheaper.

Exactly!

Take it to an extreme: Berkshire Hathaway has 21 employees at the headquarters ('09 annual report), with revenue of about $130.22B (yahoo finance). How's $6.2B / employee sound? Of course, if you add in the head count from the subsidiaries, you're up to about 257,000 (again, '09 annual) and $506k / employee.

The point is that companies like Accenture or Dell Services by their nature can't outsource their money makers. A comparison between Apple and Accenture on this subject, especially using revenue as opposed to profit, is just not valid.

Dell makes its own motherboards and hard drives? No, it buys all the hardware from suppliers.

Accenture is a little tougher. They ARE the outsourcing, which proves my point about the outsourced company having to make a profit as well. But they still provide solutions for their customers, which will include physical hardware, which they don't even put together... They just order it.

No company stands alone. They all work to minimize cost and employee count, and maximize profit. Saying some numbers are inflated because they do this doesn't make sense. They ALL do it.

The linked post mentioned "Dell Services". I am assuming this is a, uh, service company, not a commodity hardware design and sales company.

The vast majority of value, or at least the perceived value, provided by Accenture to its clients comes directly from Accenture employees by the very nature of the consulting business. They might sell you physical hardware, but the real reason you're hiring them is the expertise in knowing how to use it for your specific project, otherwise you'd just get it directly from Dell yourself. They don't, or at least aren't supposed to, design a product once and then sell it to millions of customers. On the other hand, once an iPod is designed (to be fair, that isn't trivial), it's handed off to a third party who no longer figures in the employee count and basically used to print money.

Maximizing profit per employee is reasonable, though cross-industry comparisons can still be problematic. It's revenue per employee that's a little meaningless as mentioned by _delirium.

edit: this post follows the value proposition of Accenture services as stated by Accenture itself. Let's not go into how accurate that is right now.

Those of us working in the low revenue-per-employee companies really want to work for the high revenue-per-employee companies. It also makes me wonder if the high revenue-per-employee companies are getting the 10x value out of employees that is oft mentioned (and debated).

Of course, revenue is misleading as others (Torklingberg, _delirium) have pointed out, because it doesn't reflect cost.

What I am most interested in is the productivity per employee, which is rather elusive.

I wonder how much these figures are skewed by hiring practices at google, et. al, where they tend to outsource a lot of non-tech jobs.... are all those amazon people who pack boxes counted as employees? Maybe some of those figures would be different depending on who you considered an employee.

I'd like to see an analysis of revenue per engineer......

The fact that Apple and Google generate about $1.2 million in revenue per employee is amazing.

I've seen a few specialty Property-Casualty insurance/reinsurance companies that do better, but I don't know much about other industries, so I'm not sure if it's common or not (probably not).

I believe advertising companies can do better than this - I remember a friend telling me where he worked they had 200 employees and a turnover of about $300 million.

bluenile.com does better

This list of specific to software or software services companies. If you open it up beyond this (still with dev/rev ratio) I'd bet small and algo-trade/hf/hedge fund would rank at the top.

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