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by sfaf
3501 days ago
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Well the revenue of US based businesses is at a significantly higher scale than most European technology companies. Specifically companies like Apple, Google, Microsoft, Amazon, Intel all make over $500K per employee (Apple is at $2m!). With such a high revenue to employee ratio, these companies can afford to pay developers at rates immensely above what we see anywhere else. And they should, since smart engineers who can move the needle even 0.01% are worth it. Since these companies hire such a high # of engineers, they tend to set the market rates of salaries in the cities they are based in. When you move out of the major cities, U.S. salaries drop significantly. If Europe can build a few companies that churn out revenue at the scale of Google / Intel/ MSFT, European developer salaries will skyrocket. US companies with offices in Europe have helped salary increases, but really the continent needs a few Googles to really skyrocket salaries. |
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Let's take a case study here. Rackspace, a company that was just taken private, and Google.
They have almost identical P/E ratios, and the market cap for Google is 125 times that of Rackspace.
From what I can search around for, Rackspace has 6200 employees. Google has 53,600. Google makes roughly 15 times per employee in profit (not revenue) than Rackspace does. If Google's headcount to profits were the same as Rackspace's, the market cap of Google would be about 35 billion.
That being the case, heck yeah Google will kick down an extra 40k a year to an engineer. Makes perfect sense for them.