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Companies worry more about access to software developers than capital

193 points| ScottWRobinson | 7 years ago |cnbc.com

276 comments

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[+] _m96l|7 years ago|reply
Curious how articles like these almost never give the most obvious advice to businesses, which is: pay developers more.

Instead, this article for instance advises employers to "increase developer productivity" and "outsource":

> If developers are your company's most constraining resource, the key question is how to increase their productivity.

"Increasing productivity" typically puts pressure on developers. This is quite surprising: developers are seen as a scarce valuable resource, and in a free market that means they should be rewarded for their rare and hard-won skillset. Instead, the universal advice is to pressure them to be more productive, outsource them, etc.

[+] jlebar|7 years ago|reply
>> If developers are your company's most constraining resource, the key question is how to increase their productivity.

> "Increasing productivity" typically puts pressure on developers.

I agree frequently -- perhaps typically -- when managers put pressure on developers, they often explain their behavior as, they are trying to increase productivity. And indeed, this is probably genuine.

I'd also agree to the converse: That applying pressure in one form or another may be the most common thing that managers try to do to increase developer productivity.

Finally, I agree that applying pressure to developers is not a good way to increase their productivity.

Nonetheless, I'd respectfully disagree that attempting to increase developers' productivity is a fool's errand. Indeed, we often talk about the giant variance in individual developer productivity. If we agree that it's naive and ultimately self-defeating to pressure developers into increasing their productivity, I'd hope we could also agree that it's naive and ultimately self-defeating for managers to make no serious attempt to increase developer productivity.

There are lots of things that can be done to this end that reduce pressure on individual developers. Establishing good processes and tools, both hardware and software. Having quiet workspaces. Ensuring that managers don't suck the souls out of their reports. Establishing protocols that allow developers to work on a maker's schedule. Establishing coaching processes. Building a respectful work environment, where people aren't constantly worried about backstabbing, harassment, or being called an idiot. You get the idea.

[+] speby|7 years ago|reply
It is not just about paying more (although that is one tactic). There are so many other factors though that affect hiring and attracting developers to the work you have at your company:

  * Company size
  * Is it green-field or mostly legacy?
  * Is it new tech / new platforms or more conventional (Java and C#)?
  * Will the company allow you to work remotely, maybe even on your own terms?
  * Benefits, time off, usual suspects apply. Are they crappy or really good?
It's safe to say that a lot of developers who might already have some of these things in place really don't care to move or change jobs for an extra $10K, $15K, or even $20K a year more. For most developers earning over $100K as it is, an extra 10% or even 20% isn't going to change where they eat, what car they drive, where they live, their house, their clothes, or even necessarily what kind of vacation(s) they go on every year. So ... shrug.
[+] southerndrift|7 years ago|reply
The downside to paying more is that bad programmers don't leave because they will never find a better-paying job. People will stay even if they don't feel comfortable with either their job or their colleagues. You have to fire them for vague reasons. That's a kind of stress that not every manager can bear so you have to prepare your management layer accordingly.
[+] alexpetralia|7 years ago|reply
To be honest, compensation is already _extremely_ high in the U.S. relative to the rest of the world (at least 2x, often 3 to 10x). That is a huge multiple for the simple privilege of being a local developer - it is not due to U.S. developers being better.

Said otherwise, developers in China and Russia and Central Europe - often who speak very good English - are now increasingly competing with U.S. developers as the world embraces more remote work. I suspect that before salaries increase more in the U.S., we'll see it first increase in these developer-rich emerging markets.

[+] crunchlibrarian|7 years ago|reply
It's consistent with the wage trends in the economy at large: if you're at the director level you can expect stratospheric wage increases year over year.

Everyone else, well real wages have been flat or declining, with some recent shorter term gains. Real income has increased by a whopping 5.1% in 12 years. [1] If you shift the timeframe back to 1978, real wages are unchanged. [2]

Supply and demand has become fundamentally broken in the labor market. It doesn't work anymore.

[1] https://www.forbes.com/sites/eriksherman/2018/09/09/as-some-...

[2] http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...

[+] cwp|7 years ago|reply
One the one hand, yes. Supply and demand being what they are, we should expect developer salaries to go up. And in some places they have. A lot. Yay, because I write software and this is good for me.

But on the other hand, no. Paying more just ensures that the scarce and valuable resource is allocated to the companies that can make the most profits from it. That's good, as far as it goes, because that loosely corresponds to providing the most value for society. But it doesn't make more engineers.

Maybe it will in the long run. Big salaries will cause lots of kids who are in high school now to choose to study computer science in a few years and 20-25 years after that we'll have a lot more experienced software developers than we do today. Great, I hope that happens.

In the meantime, there are not enough developers around to write all the software that we need. There is a lot of stuff that just doesn't get done because the software isn't there. Projects cancelled, startups failed, services not performed. Sometimes, you can't hire the developers you need regardless of what you're willing to pay. That's what the article is talking about.

[+] galaxyLogic|7 years ago|reply
> Curious how articles like these almost never give the most obvious advice to businesses, which is: pay developers more.

Isn't that like saying, Hey there's an oil crisis, what are you taking about, just pay more for oil.

The SW development crisis is that companies have to pay more for high-octane developers and they don't want to, or can not afford to pay ludicrous prices.

[+] cortesoft|7 years ago|reply
That would work for a single company, but not necessarily the market as a whole... paying developers more wont suddenly add a bunch of skilled developers into the market.
[+] dragonwriter|7 years ago|reply
> Curious how articles like these almost never give the most obvious advice to businesses, which is: pay developers more.

“access to” includes, and really is largely a way of saying, “cost of”. Paying more isn't the solution to their complaint, it is the problem they are complaining about.

> > If developers are your company's most constraining resource, the key question is how to increase their productivity.

> This is quite surprising: developers are seen as a scarce valuable resource, and in a free market that means they should be rewarded for their rare and hard-won skillset.

Yes, they are. That makes them expensive, leading naturally to people seeking efficiencies in their utilization.

> Instead, the universal advice is to pressure them to be more productive, outsource them, etc.

That's not instead of them being expensive in the market, that is a consequence of them being expensive in the market: if a company is constrained by a scarce resource—one which it is expensive to get more of—then either (a) finding ways to get more output per unit of the scarce resource or (b) finding substitutes fornor untapped supplies of the scarce resource are obvious ways of addressing the complaint. The cost of acquiring more of the scarce resource from existing (e.g., not untapped) supplies is the problem you are trying to mitigate.

[+] jakobegger|7 years ago|reply
I dunno. Developers already earn ridiculous salaries compared to pretty much any other profession. At some point businesses just can't afford to pay any more, no matter how much they would like to offer their employees.
[+] closeparen|7 years ago|reply
Companies can load-balance menial tasks arbitrarily across undifferentiated labor, so much so that low-skilled workers have a hard time getting enough hours from the same gig.

The harder and more expensive it is to hire a specialist, the more important it is that the company utilize him fully. High salaries and long hours usually go together.

[+] mlinksva|7 years ago|reply
Story is a writeup of https://stripe.com/reports/developer-coefficient-2018 discussed at https://news.ycombinator.com/item?id=17928067

There's actually very little difference in the surveyed % saying https://stripe.com/files/reports/the-developer-coefficient.p... access to talent (55%), software engineers (53%), and capital (52%). Note immigration requirements (47%) is lowest of the constraints on company growth asked about. I'd say the headline is questionable at best.

[+] closeparen|7 years ago|reply
Developers as a community are currently screaming about a number of things companies can do to steal us away, even for less money:

- Go full remote

- Locate offices in reasonable COL US markets (my company has overwhelmingly rejected this one and skipped from NY/SF/Seattle to the developing world).

- Provide private offices, cubes, team rooms... any kind of workspace other than the in-vogue open floorplan barn.

Companies are not in their wildest dreams going to touch any of those things with a 10-foot pole at scale. Do they not know? Do they think we're lying? Or would they just rather complain than actually solve the problem?

[+] kaycebasques|7 years ago|reply
I saw this headline earlier. My immediate thought was that this doesn’t necessarily mean that companies understand the importance of developers. It’s just that developers are currently more scarce than capital. Which isn’t saying much, because companies have been able to get loans with low interest for many years now, thanks to our central banks.
[+] jihoon796|7 years ago|reply
If what the article says is true, it's great that executives are starting to understand the opportunity cost of technical debt.

Too many companies see software development as a menial "cost center" while hypocritically relying on it on a fundamental level for operations.

While I see where they're coming from - the ROI from software developers can be rather opaque for many industries - these companies are often hellbent on hiring as cheaply as possible (in-house junior developers with no experience) and cutting as many corners as they can get away with, all the while accruing massive amounts of technical debt.

[+] dunpeal|7 years ago|reply
> If what the article says is true, it's great that executives are starting to understand the opportunity cost of technical debt.

Nothing in the article implies tat "executives" (or anyone) has gained a better understanding of the cost of technical debt.

This is the main paragraph talking about technical debt:

> And yet, despite being many corporations' most precious resource, developer talents are all too often squandered. Collectively, companies today lose upward of $300 billion a year paying down "technical debt," as developers pour time into maintaining legacy systems or dealing with the ramifications of bad software.

So the article author says that despite the skyrocketing value of developers, companies generally waste this scarce resource on technical debt and related mismanagement inefficiencies.

[+] sokoloff|7 years ago|reply
The world is awash in usable money.

The world is not awash in usable software engineers.

[+] teddyh|7 years ago|reply
As is common, Joel said it all back in 2000:

Whaddaya Mean, You Can't Find Programmers? https://www.joelonsoftware.com/2000/06/15/whaddaya-mean-you-...

(Repost from five years ago: https://news.ycombinator.com/item?id=6454140#6455545)

[+] stevenwoo|7 years ago|reply
I went through a few interviews earlier this year and no one met the standards for environment Joel listed almost 20 years ago. Unless one works from home, that requirement listed is pretty much a lost cause AFAIK.
[+] pleasecalllater|7 years ago|reply
I'm afraid I don't agree. I'm more worrying about my job than the companies about anything.

If lose it, I will spend months for finding a new one.

I will send emails with no response.

I will be offered to spend enormous time for multilevel recruitment process, just to be rejected at the end.

I will spend hours making shitty take-home tasks, just to be rejected. Some companies even don't check them when I upload it on a server.

I will be asked terribly complicated white-board questions about forgotten algorithms used in no place. All that just to be offered a job about coding ETLs or adding some Javascript to a website.

All just to get a simple job. It doesn't look like companies are afraid. It rather looks like companies have endless stream of candidates and want to crawl them first, so they could not hire them later.

My last job hunt: 55 resumes sent (I was a perfect fit for 15 positions, not 100% for the rest). 10 companies responded. 5 were interested only about the salary, 4 of them didn't respond, 1 responded with "you wanted too much, we are not negotiating salaries". 2 terribly complicated take-home things (one company didn't event check it before rejecting me). Just 1 job offer, I took it, as I didn't get any other option after 3 months of searching.

It was 2 years ago. I'm looking for a job again... I've sent 20 resumes. Got no answer.

All 55 companies were posting the same job ads for the next months. About 5 of them are doing all the time, and the web is full of opinions how great the companies are.

So generally I feel like I'm rather useless than needed for the companies.

Writing anonymously here is cool :)

[+] hn_throwaway_99|7 years ago|reply
If this is actually true, it is easily provable: if companies have more access to capital than developers, then they should pay more to hire better developers, and you should see developer salaries rise. If this does not happen, it just means they are bullshitting: they can't get developers at the current price they are willing to pay.
[+] MichaelApproved|7 years ago|reply
That's not necessarily how the reasoning has to work.

It's possible companies have access to capital based on current profitability. If they raise employment costs, their profitability changes and their capital access can change as well.

It sounds like capital markets are saying, we like this cost structure. Continue it and take more money.

Companies are responding saying we can't scale because developers at current costs are rare. They will need to increase costs to hire more.

[+] chopete|7 years ago|reply
This is provable more easily places in hub cities like Bangalore, Bay Area and Seattle. The benefits are trickling down to other cities slowly.

Most people who are smart enough to jump ships now have 2-3 offers. In cities like Bangalore, a jump can fetch anywhere from 20-200%. 20% is minimum irrespective of the current salary.

Perfect time for anybody who hasn't tried checking this in a couple of years.

[+] baxtr|7 years ago|reply
That’s what the good ones are doing. For the rest it should probably read like: ”Companies worry more about access to cheap software developers than cheap capital” (because it's already cheap right now)
[+] fipple|7 years ago|reply
That’s exactly what’s happened... software engineer salaries at the top end have grown like crazy.
[+] austenallred|7 years ago|reply
I know engineers at Facebook and Netflix making $500-750k/yr. Does that count?
[+] frisco|7 years ago|reply
This is not the case. The large amounts of liquidity available means that startups are easier to fund at a given price, but does not automatically have a big impact on that equilibrium price, which is driven by venture economics. Thus just raising more / paying more is not an automatically good answer if the venture loss / return rates haven’t changed, which they haven’t.
[+] joe_the_user|7 years ago|reply
You gotta read this stuff carefully. "Access to capital" means people who will loan you money. Most reasonably size companies with a cash flow aren't at a point where no one will loan them more money, even if they are at a point where borrowing more money isn't that good an idea. Basically, it's like saying "Is it easier to max out your credit cards or hire skilled people?" Well, sure it's easier to max out your credit cards, that's easier than a lot of things.

Which is to say it's one of those journalist framing of a situation that means nothing.

[+] stale2002|7 years ago|reply
Well, we are seeing this happen, though.

I am not sure if you have noticed, but over the last 10 years, software engineering as a career, has grown extremely quickly. Both in number of people joining the careers and also in salaries.

I really don't think 150K salaries for new grads, and 100K salaries for recent bootcampers was normal, 10 years ago. Even in San Francisco. And yet in SF, that isn't too uncommon these days.

[+] ubernostrum|7 years ago|reply
You probably want to spend some time reading everything Dan Luu has ever written about hiring and compensation in tech, and then get back to us on whether you still believe this.
[+] xapata|7 years ago|reply
Salaries have been rising in some markets.
[+] panic|7 years ago|reply
If the premise of this article is true, we're doing a terrible job organizing ourselves. Individual offices, remote work, ownership of things we make in our free time -- we could have all of this if we used our power effectively.
[+] jorblumesea|7 years ago|reply
Companies that complain about lack of talent are generally the ones that refuse to pay competitive salaries. These are also the same ones that want the government to increase visa limitations and import cheaper engineers from overseas.

If there was a true talent shortage you'd see increases in salaries and other methods of compensation.

[+] salawat|7 years ago|reply
Not surprising.

Software developers are one of the ultimate forms of throughput multipliers. Get the pixies in the box dancing right, and BOOM! Personnel load decreased!

In a world being driven toward hyperoptimization as fast as she'll go, your developer is your growth source.

If only you could get them to do what you want...

Which is why they like pulling developers from countries where the cultural norm is to shut up and do what you're told as I understand it.

It's also part of the bias towards preferring younger devs. Younger devs tend to be more pliable and "flexible" and don't ask inconvenient questions in emails that can be subpoena'd later.

Always ask questions. YOU have to be the conscience of the industry, if you don"t, no one else will. And even if they do have "another guy" lined up. Be vocal. Make sure your view can't be buried. If it smells, ASK and DIG. Someone very well may not be telling you something.

[+] village-idiot|7 years ago|reply
I mean, all those companies buying back stock could just re-issue it if they need more capital. Creating developers is a significantly slower process.
[+] expertentipp|7 years ago|reply
> Collectively, companies today lose upward of $300 billion a year paying down "technical debt," as developers pour time into maintaining legacy systems or dealing with the ramifications of bad software.

As a person who had looked intensively for a job in Central Europe in the recent months I can confirm this. Plenty of awful software and stacks. Decade old monoliths in ASP .NET, Visual Basic, pyramidal monstrosities in JAVA, fucking COBOL transactional and registering systems. The only reason they „maintain” these projects is some legal obligation, once the obligation expires the project will be shut down and people will have to look for a job in the year 2020 having experience with Visual Basic. You will have „standups” with „American colleagues” at 7pm your time. It’s literally working on carcasses. Good portion of German and Swiss businesses pushing out their rotten carasses over here as well.

[+] jt2190|7 years ago|reply
There was a discussion about the Stripe report itself a few days ago: https://stripe.com/reports/developer-coefficient-2018
[+] AdamM12|7 years ago|reply
OP's post and this seem to be telling executives to avoid fixing technical debt. Am I the only one who's reading it that way? Having worked at a company that completely eschewed even fixing basic formatting of legacy code for ten+ years I've seen how this mindset can completely hinder the development process.
[+] fogetti|7 years ago|reply
As a software engineer with more than a decade of experience I have seen all kind of appalling "management" strategies in a variety of industries. And not so surprisingly the common denominator was that managers in every industry simply cultivate "speed over everything else" culture. Which directly translates into technical debt.

I stopped counting how many "rockstar developers" I have seen rising in their shiny armors, outputting some crap extremely quickly just to see them sailing away with a friendly manager pat on their back, so that half year later a whole team would clean up the mess after them.

[+] jondubois|7 years ago|reply
What usually happens though is that the wrong kind of developers get promoted. They get promoted based on their social skills and ability to sound smart instead of actual technical ability and actual intelligence.
[+] torgian|7 years ago|reply
I currently make about 24k a year as a part time engineer (which should go up to around 40k if I go full time for this company).

I stay because of other benefits (good health care in Japan, remote work with bimonthly meetings, and most importantly I am doing good work with data that helps people in some way).

I honestly don’t think high pay is out there for what I want from a company. This one I work in checks all the boxes, for me. But if I pursue more money, I’d probably be stuck working in some crappy conpany where I’m a number.

[+] dunpeal|7 years ago|reply
> But if I pursue more money, I’d probably be stuck working in some crappy conpany where I’m a number.

Why the false dichotomy?

You might be able to find an employer who will pay you better and satisfy you in other ways too. Stranger things have happened...

[+] artsyxxx|7 years ago|reply
You said it torgian; I'm looking for a company with Emotional Agility operating according to The Startup Way where people treat each other humanely and perks don't masquerade as strategy. I'd care to know more about your job in Japan if you would be willing to share