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Comment by ido | Hacker News Reader

Ok let me make a probably very unpopular comment here: their 3rd point lists "companies benchmarking against all regional or global companies" but in fact what they mean is "companies benchmarking against the highest paying US tech hubs".

I assure you "all regional or global companies" also include Vietnamese companies paying junior devs $300 per month - what is the advantage of the European engineer that is worth paying >=10x as much?

If you're comparing globally you can't cherry pick only the best paying regions because these are not your only competition. And there are a hell of a lot more Bangladeshi, Vietnamese & Nigerians than there are people living in SFBA or Seattle, and if you're truly competing globally you're also competing with them.

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Well that really depends. I was outsourcing to India when it was still cheap. I probably did something wrong, but I provided definition of the project, set of unit tests and access to git repository so they can upload the result. I got completely useless trash code, incoherent excuses and wasted time.

I paid the company for their "work" and never considered outsourcing again. Sometimes cheap means horrendously expensive.

How did you select the outsourcing company?

7 years ago, I don't really remember anymore.

Any developer charging $3k will not be good. And even then you need to pay lot of attention on how they are doing.

This might get a bad rep but I've had this experience too. It's not a blanket statement though. Outsourcing is fine but you definitely have need to do your homework. That's why you see a few of the outsourcing companies being bought over by their employers, because they're good.

Out of curiosity and related to another HN topic, have you ever hired freelancers directly?

I tried to on the Upwork. But it is really hit or miss there.

1. I got hardware electric engineer to help me with a design of PCB. Guy was worth every cent.

2. Got embedded developer on separate project. Guy pretended that he can do a lot. I tried to explain to him, that I need a USB CDC device driver in MCU which has USB PHY and I want Windows to recognize and use usbser.sys (generic COM driver) or something similar. He told me that he understand what he is doing, I sent him the dev kit and then he ghosted me and I have ended up doing it myself with TinyUSB.

So as I said, really hit and miss on Upwork. Some people are writing lofty skillset so they can get more per hour and then failing miserably.

You have to know people personally or have contacts to people who do to reliably get the good ones, I would never rely on outsourcing websites like Upwork for exactly the reason you stated.

In that case, I’d like to chime in and say that I have the opposite (or at least better) experience. Our contractors in India are fairly decent. We sometimes hire them directly from the company that sources them to us.

You can get very good quality work from India. You won't get it by sending a "fire-and-forget" file to some cheap consulting company.

So my read of the second and third groups was that the companies are being competitive against the top of that range (vs the first group that is just benchmarking against local peers). If I'm competing to win a competition, it doesn't matter how low the lowest performer is. It does matter who the highest performers are.

So I feel like you may have just read the definition incorrectly (granted article could also have been more clear).

In my line of work, there are actually a bunch of Vietnamese guys making Western level quant trader type salaries, living in small castles in their home country.

The thing is, you can't suppress the wages unilaterally for someone who knows how to do things. There's always going to be some other firm offering them a similar deal, with the same capital (equipment, IP, support, trading capital etc) for them to use. So even if you know they only need a tenth of what a Western quant needs to live well, you can't just offer them that, they will end up taking an offer very similar to what they'd get if they moved to NYC or London.

The $300 people are victims of supply and demand. Often it's cookie-cutter type contract work that many people know how to do, and the real problem they have as a supplier of that knowledge is how to get in the front of the queue to be the guy to help a western small-time entrepreneur build his website. When this is the case, the organiser, basically the owner of the outsourcing company, has all the negotiating leverage and sets the price accordingly.

The difference is that the firm with very specifically exploitable capital needs specific knowledge to operate that capital. You need devs with certain skills, and there's only so many of them, especially as your process gives a lot of false negatives. As such devs are rarely identified, you are wasting a lot of money not splitting the pie generously when you find one. I was talking to someone the other day and the agent told me there were 40 candidates interviewed for three roles, which is a huge amount as I had 5 one-on-ones plus a takehome.

Firms that don't really have anything special will not pay anything special, in relation to where the employee is based.

Winning a competition means beating people at the top of a range, not the dregs.

Implicit here in benchmarking globally is that you want the kind of devs that can move around globally. The engineers working at Vietnamese companies for $300/month aren't that.

Niiiice calling people from poor countries “the dregs”

The dregs, as in the bottom of the barrel, of the global developer salary band. There’s no need to jump to the conclusion that it’s a judgement on the country itself and look for something to be offended by.

Due to current events someone could say the dregs of reproductive rights include the USA. They’re not making a value judgement on the entire country.

The competition is among companies (and the salary they are willing to pay to attract devs), so "the dregs" are the companies paying those salaries, not the devs.

This is a VERY charitable reading of the GP’s post. They mention beating “people” not companies and talk about “the kind of devs that can move around.”

I know we all want to believe we're the next Carmack but if there's a ton of solid engineers willing to work for a lot less money than you & at the same time global barriers drop that means downwards pressure from lower cost countries and upwards pressure from higher cost countries. I think the last decade or so was an anomaly due to the asset bubble inflating how much money (and how cheap that money was) tech companies had to spend.

You'd think that outsourcing would be all companies would be doing by now if there were indeed legions of capable software engineers willing to do just as good a job for a fraction of the price. That still appears to not be the case, despite remote (and so international) work becoming more commonplace with COVID.

Looking at the explosive growth of companies like Deel that worries me greatly

Exactly. And it not just a generic hiring question. If you want engineers experienced in building leading edge compute systems - one may need to consider what it takes hiring those that have built them in highly compensated areas.

If you think a dev is a code monkey then yes, it doesn’t matter if you hire someone from vietnam or seattle for your US business. If you’re actually looking for a software engineer then i have bad news for you: professional software development is all about communication (with customers, requirements engineers, other developers and so on). That’s why you are paying them ten times more, so they have a chance to understand your business domain and can consult you on technical decisions. Otherwise every manager and business owner on earth, including me, would hire just the Vietnamese dev instead of the 10 times more expensive US dev.

So you’re saying the Dutch in the article shouldn’t complain that they earn less than Americans then?

The dutch isn’t earning ten times less than the average US developer. At best two times less, but that’s it (and FAANG salaries in US tech hubs are in no way representative for average US dev salaries)

But it’s exactly the same type of complaint “salaries in SFBA are higher for the same job in Amsterdam”, why shouldn’t a Pakistani dev level the same complain about developers in Amsterdam?

For the same reason i outlined above: communication. Different time zones, language barriers, cultural barriers and so on. The communication between the SFBA and amsterdam team may still be easier due to more similiar cultures than between SFBA and pakistan.

Even local subcontracting is quite difficult due to communication lines.

I’ve worked with very talented offshore developers. They had good English, good CS knowledge, and good work ethics. Results were always crap anyway. And their number one complaint was always “they don’t tell us enough, and we have to guess things”.

> what is the advantage of the European engineer that is worth paying >=10x as much?

It is very simple - cost of insurance. It is much easier to persuade a worker making $300 a month to leak company secrets than someone making $20k a month.

Plus workers in such countries may be incentivised (or have no choice but to do it) to spy on behalf of their government.

If your company is doing something remotely serious, you can be almost certain someone you don't want will get hold of your IP.

This makes no sense. If you want to pay to keep secrecy, why not just raise their salary by 9x to keep them quiet?

> If your company is doing something remotely serious [..]

(Sorry I have to ask this) but what types of companies are you talking about?

Uber? Netflix? Spotify?

For those maybe, just maybe, the secret sauce isn't actually secret any more, it was simply cheap VC money subsidising all our rides/viewing/listening.[0][1][2][3]

[0] https://slate.com/business/2022/05/uber-subsidy-lyft-cheap-r... [1] https://financialpost.com/investing/investing-pro/investors-... [2] https://www.nytimes.com/2021/06/08/technology/farewell-mille... [3] https://www.latimes.com/business/technology/la-fi-tn-uber-ip...

> what is the advantage of the European engineer that is worth paying >=10x as much?

They produce better product.

Maybe they do, maybe not? I mean that is exactly the same argument SFBA-based engineers can also claim. I believe it is mostly untrue.

When I studied in Vienna a fellow student of mine returned to Poland after uni because his wife wanted to & we both started our first jobs as juniors at the same time with comparable positions, me in Vienna and him in Gdansk. His salary was almost exactly 1/3 of mine & I don't believe there was any performance component to that, I was simply earning according to Viennese standards and he according to Gdansk standards.

In more recent times (especially post COVID), by the time both of you are competent enough be independent he will be earning as much as you for 1/3 cost of living.

Cost of living in Poland is not actually 1/3 of Austria, the difference in cost is much smaller than in salary. But it's true that the more senior you are the less geography affects your wage.

Austria != Vienna, similar to how London != UK.

Equating for standard of living (eg upper middle class) you'll likely be 3x in Vienna. Although I'm just guestinating on Gdansk, maybe it's a really expensive place.

Austria is a lot less variable than the UK, and Vienna is not really the most expensive city there at all (generally the further west you go the more expensive it gets). I'm pretty sure a lot of the smaller cities like Salzburg and Innsbruck are actually more expensive than Vienna and not at all certain Vienna is much or at all above the Austrian average (or at least urban average).

With the risk of sounding rude i am not even sure why austria is part of this debate as its totally irrelevant on the tech scene.

It’s simply a Westen European country I lived in, sorry I never lived and went to Uni + worked in the Netherlands to give a more topical example. My point was that borders are unfair in terms of compensation not just to Western Europeans but to a lot(most?) other people in the world outside [west coast/big city) Americans. And that true globalization will equalize things not only upward.

Well austria is firmly central european.

Dont worry, old tech will always tend to become cheaper. Once countries such as austria take the lead on new tech pay will follow. The us and uk have invested massively in modern technologies. Actually the uk started the trend with its industrial revolution and the us overtook it thanks to its size and dna engraved appetite for risk and innovation.

To increase your pay, austria would have to be less rigid and more open to risk. That will lead to the creation of more modern startups and more demand for your skills. Dont give into anti globalisation conspiracy theories as globalisation is benefiting austria by giving it access to vast markets. But since austria is mainly relying on old tech its now losing ground as it hasnt got much to sell.

I haven’t lived in Austria in almost a decade, I simply used it as an example than salaries in Europe aren’t just lower than in the US but also higher than other places. Equitable pay means equalizing with everyone not just those above you.

I don't believe the difference is anywhere near 300%. Maybe 20 years ago.

Let's keep Vienna for comparison, but benchmark it against Warsaw (also substantially more expensive than the rest of the country). According to the data on Numbeo, "you would need around 2,562.64€ (12,036.56zł) in Warsaw to maintain the same standard of life that you can have with 4,000.00€ in Vienna". Making Warsaw only 1.5x cheaper.

Gdańsk is probably in the top 5 most expensive ones (meaning cheaper than Warsaw), more or less at a level you'd expect from a city of that relative size (at roughly 450k inhabitants it's the 6th most populous in the country).

OK - so roughly 2x. 1/3 was an exaggeration in reply to his 1/3 salary, but I actually did these calculations a couple of years ago and it wasn't that far off, I'm from Croatia and before settling down I considered moving to Western Europe. Turns out when I started freelancing and took advantage of low corporate income tax here (10% below 1M EUR/year and 10% gains tax) - the math for moving abroad never checked out - I made more money than my friends who moved to Germany/Ireland even before COVID, and it's just been getting easier with the move to remote working (that's commenting purely on cost of living/lifestyle I can afford - there are other factors to consider in these decisions).

You can compare cost of living to an extent - assuming, for instance, that the worker won't go on holiday anywhere nice.

Checked at one of known tour operators, for the same hotel and destination in the Caribbean, same duration and dates you will pay ~£2900 when going out from London and £4900 when going out from Cracow.

Things like tech products will also cost broadly the same.

Also engineers these days don't live like upper middle class (unless they come from such background). It's more like upper working class. Progressive taxation prevents workers from amassing capital and climbing the class ladder.

People from upper middle classes get paid in ways out of scope of progressive taxes designed to keep working class in check.

>You can compare cost of living to an extent - assuming, for instance, that the worker won't go on holiday anywhere nice.

But that's my point - as you get more experienced your net salary levels by remoting and you have lower cost of living - you actually have larger discretionary budget for vacations.

>Also engineers these days don't live like upper middle class (unless they come from such background). It's more like upper working class. Progressive taxation prevents workers from amassing capital and climbing the class ladder.

>People from upper middle classes get paid in ways out of scope of progressive taxes designed to keep working class in check.

True as well, which is why moving to Western Europe never made sense to me - as a freelancer I get to claim most of my income as company profits - taxed ~20% locally - vs. ~50% if it was income tax. And I can afford private health care/kindergarten/schools so the shit public care isn't an issue either.

Your example is anectodal, hence basically worthless.

There is a lot of inefficieny in the market, some of it inherent, some of it due to artifical constraints like location, but over time those tend to naturally get normalized. What I'm trying to say is that if it really were better for software to be built in Vietnam for 10% of the cost, that would just happen.

It may be that companies have not figured out this neat trick or it might be that there are some inherent issues with developing software based purely on the cost.

My point was that this applies exactly the same for why European salaries are lower than American salaries. It makes no sense but it equally doesn't make sense that Europeans earn more than Asians or Africans. If you want equality it doesn't just mean you get to equalize with the top end, it also means the bottom gets to equalize with you.

lmao the free market does not exist.

How long ago was that? Are you guys still in touch? Because it seems to me that recently developer salaries in Poland matched or even surpassed those in Austria :)

It was maybe 15 years ago, but today instead of Poland it would be some poor Asian country. My point is that it's not just that Europeans earn less than Americans, they also earn more than other regions. If you want fairness that also applies to people under you, not just people above you.

I don't think this is likely to be true at a population level; Austria is a much richer country than Poland; has a much higher standard of education and in other sectors salaries are usually higher in Austria than Poland.

Agree that this isn't likely to be true at population level - I was talking about Software Developers specifically.

Disagree on "much higher standard of education" - even if Austria comes on top, it's just barely, not by a lot.

I dont know where op gets their stats but pay in austria is by no means competitive. I know of a romanian dude who interviewed for a company there. Pompous session, ties, suit and the stench of a rigid hierarchy. Once they made their offer he laughed and told them he’d earn twice as much for the same (tech) job in romania. Perhaps an isolated case but DACH countries have an inflated sense of superiority not matching reality, at least in software tech. Interestingly i see many of them crapping on east europeans on this forum. Perhaps due to a sense of insecurity, but would be interesting if someone pulled some stats on how often they pull the east european “poverty” or “corruption” card out of their behind.

>Once they made their offer he laughed and told them he’d earn twice as much for the same (tech) job in romania. Perhaps an isolated case

Definitely not an isolated case. Austrian tech companies generally pay shit and are usually pretty backwards and burocratic due to the management heavy culture from the 20th century factories (WFH is frowned upon and your time in the office is tracked instead of looking at employee output) and highly conservative culture in general (everyone still uses cash). Also they put far too much value in having advanced degrees from their local universities rather than looking at experience and practical skills, so you end up in credential inflation town with colleagues who scuff at your code or technical opinions, because they "have a PhD from TU Sturmfart, and you don't".

That explains why they have virtually no internationally successful local SW companies (unlike other small EU companies like Netherlands or Finland, or even poorer Estonia), and instead have just a bunch of mom and pop webshops, crusty ERP boyshops for local factories, and their outdated banking industry that can't even get stock trading and banking apps right and instead need to rely on the German Flatex and N26. Their only unicorn, Bitpanda, recently fired half the workforce, which they easily could because Austrian employees have virtually no protection against termination, so your employer can fire you without any reason with the 1-3 month notice period. The cherry on top is that non-competes are legal here and employers can choose to enforce them, which, as we know, is what made SV the cradle of innovation. /s I rest my case.

QOL is generally good there and you can live well there, provided you do anything but tech, ideally work for the state or government enterprises and coast till retirement on your inherited real estate.

This matches my experience, and also consider: I'm paying less than 8% income tax and health and social insurance combined on my income in the CEE country where I live. What's the tax and insurance in DE and A?

If you look at https://en.wikipedia.org/wiki/List_of_European_countries_by_... it's pretty clear that the average monthly salary in Austria (adjusted for purchasing power parity) is roughly 2x that in Poland.

From my experience, it's more the culture rather than education that forms "suboptimal" engineers. After all, engineers mostly learn from online resources in English anyways, so the quality of formal education doesn't come to play that much (and for the record, I don't really believe that the top tech uni in Vienna is leaps and bounds better than the top tech uni in Krakow).

It's the work culture in smaller cities that'll probably make the population differences.

What exactly implies Austria has a "much higher standard of education" than Poland?

For example in the most recent PISA rating the average score of mathematics, science and reading is 513 for Poland (11th in the world) and 491 for Austria (28th place).

Sorry, perhaps I should have said, people in Austria are less over educated (i.e. at the same education level Austrians earn more than Poles).

This isn't really directly true. A global company manager is not allowed to balance salary accounts and is usually given rules where US/Canada/western Europe are the same one head count and other countries are multiples according to typical comparative cost.

The end result is that many jobs don't get opened at all in Europe but the ones that do tend closer toward US rates as this is what they were planning to pay but could not find the one high cost head the manager wanted.

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