Nepotism - It would be naive of me to think there is no nepotism in hiring.
Hiring abroad can be a nightmare - Let's say the $50K employee is in another country. You now need to: A) Become familiar with the legal and tax implications of hiring someone from that country B) Establishing a company in that country in order to hire that person C) Finding out how to manage your new company in the new country. Paying taxes etc The reason employers of record services like https://deel.com/ have become so popular is because hiring that $50K employee will now probably take a lot of time and money.
Larger Talent Pool + Competition - The company still competes with other remote first companies that pay $200k for the same role. Therefore, simply paying less will cause candidates to seek out other companies that pay more. In addition, offering $200K to anyone anywhere in the world means that you have a LOT more applicants, which could allow you to choose the best when money is no object.
But if India was called out, perhaps leadership is behind. That’s not the only low cost geo. Far from it. It can even be spendy, relatively speaking! You can save a lot by spending a little, bootstrapping a LCG even. Hopefully no other companies try to pilfer your cogs, but maybe you can pilfer theirs.
“Low cost geo” = “cheaper cogs” = only upper management are people.
There are valid reasons to spread a workforce across time zones. Coverage, availability, reasons that respect human existence rather than put a price on it.
But so often the reason is “this saves me money, the end.” Upper management seems to gravitate to the delusion that they personally are mental giants that can move mountains, and the cogs are interchangeable - and those over there are cheap!
Is upper management responsible for not adequately forecasting and planning for the cost of paying existing employees, if not hiring new ones? No, it’s the high maintenance cogs that are wrong.
Or maybe the economy, or covid, please understand layoffs are brutal on leadership, so stressful. Better schedule an exec retreat!
Without any context for your comment I don't find it surprising or problematic that a company is paying 200k instead of 50k
You're simply not going to find good, consistent, loyal talent for $50K USD.
That said, you should be able to find it at a higher price point under $200K.
The simple fact is that most companies aren't paying this much for either in-person or remote work. The average salary for an IT professional is still under $100K in the US, and well under that in many other countries.
As far as why a company may pay $200K for talent, some employees are simply worth that much (or a lot more).
I am trying to get a perspective on the trend of remote here. I mean how is this going to affect Silicon Valley since this is different than the dot-com boom/bust? The story for the bay area (or tech hubs) in the past was that the VCs, executives, and talent all were here and innovation/creativity required being in the room together. All that seems to have changed post-COVID, especially for Silicon Valley.
It's hard for an organization to justify paying 4x to Person A when Person B has the same background.
So, it comes down to whether the final salaries for both employees merge closer at the former or the latter.
Given cost of living expenses in the Bay area and the benefit of having some in person employees, my suspicion is that pay will likely remain relatively high for organizations that can afford it.
Now, here's the caveat. Most employers aren't paying their software engineers 200K. The organizations that are paying 200K+ for talent have the resources to do so. Only a relatively small number of companies can sustain and justify these employee burn rates over a long period of time.
All together, given that the actual median nation-wide salary for software engineers is closer to what you would reasonably expect to see for an educated, highly trained professional. In other words, the salary floor for remote employees is likely higher than what most people expect, but lower than what most people exposed to Bay area salaries are used to.
> And yes that's 200 vs 50 for the same level, say a Senior Software Engineer, one in San Francisco, the other in say Brazil.
This isn't an apples to apples comparison. Salaries are set by market influences. As long as there is sufficient friction to push American companies to favor US-trained talent, the floor for remote work salaries will be the expected salary range for a software engineer in the US.
Some companies can, have, and will continue to exploit salary differences. Many (most?) don't have the expertise or willingness to do so. So could I see remote work having some negative drag on salaries in the Bay area? Sure, but the floor is still going to be at or around six figures.
Don’t forget to mention avocado toast. Those employees expecting more than $50k are just spoiled, aren’t they.