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Comment by guiambros | Hacker News Reader

> Increasing the supply of workers will ALWAYS drive down cost.

Not necessarily. This is only true for companies where minimizing the cost is the best (sometimes only) strategy to increase profits. Tata, EDS, Accenture, and the many IT body shops are all in this camp.

For the so-called "SV tech companies", they need a steady supply of talents to continue creating products that in turn generate new revenue streams. This is much more valuable than saving 30% off in an individual's compensation -- at the expense of high turnover, when said worker realizes he/she is being underpaid.

Artificially reducing an already dwindling supply of talents in the top tech hubs won't make salaries go up; it will simply shift the jobs elsewhere. That is already happening for many companies.

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> This is only true for companies where minimizing the cost is the best (sometimes only) strategy to increase profits. Tata, EDS, Accenture, and the many IT body shops are all in this camp.

It's true for any company. Did we forget about the Silicon Valley wage fixing already?

> This is much more valuable than saving 30% off in an individual's compensation -- at the expense of high turnover, when said worker realizes he/she is being underpaid.

That's the entire point, if you underpay, you get high turnover. But what is considered underpaying is relative to the market rates. And if you get more supply, market rates drop.

As an example, interns at Google in the US earn about $7000 a month, while in London they get about £2000. That's because of market rates in London are far lower than in the US. Ideally, tech companies in Silicon Valley would really love it if they could have the same employees as they do now for half the price.

> As an example, interns at Google in the US earn about $7000 a month, while in London they get about £2000. That's because of market rates in London are far lower than in the US. Ideally, tech companies in Silicon Valley would really love it if they could have the same employees as they do now for half the price.

Just speculating, but I imagine for Google the real estate cost of moving their headquarters to London would far outweigh the small amount they'd save on labor.

I seriously doubt it. Is London even more expensive than Mountain View? They could also move to a different european city, wages are low everywhere in Europe. Ironically, the largest engineering site of Google in Europe is Zurich, where employees are as expensive as in Silicon Valley.

Google has about 40000 engineers. If they paid $70k less per year per engineer (median total compensation for a Google engineer is probably around $200k), that's a saving of about $3 bilion a year.

I cannot understand why so few US companies open engineering sites in Europe, and when they do, they are much smaller than in the US. It's really easy to get good engineers in Europe.

I too have wondered this. If all else is equal, why wouldn't Google and Microsoft and the other tech giants get founded in Europe for less money and more profit? What is the secret sauce that makes SV work?

I think companies in Europe pay a lot in compensation that doesn't show up as salary. E.g. pension contributions, longer vacation, higher payroll taxes.

So while there appears to be a large salary gap, the total cost to employ someone isn't quite as divergent.

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