Tech companies perform unnatural acts to recruit software developers from competitors. Some companies pursue “talent hoarding” where devs are given generous compensation and prime assignments to dissuade them from joining competitors. Where will this end?
Demand for software programmers has never been higher. Entry level engineers can earn $120,000 per year not including stock grants. Alphabet, Google’s parent company, issued around $5.3bn in stock-based compensation in 2015, equivalent to a fifth of its gross profits. That amounts to an average of $85,000 in stock-based compensation per full-time employee. As much as we say that the tech industry is about innovation, it’s really about recruiting.
The stakes are high for technology companies. Digital transformation has created trillions of dollars of market value since 2000, often at the expense of legacy industries such as film cameras, bookstores and taxicab companies. Companies need great software programmers if they want to win.
Unlike the best lawyers or doctors, who can see only a limited number of people each day, developers can transform a company because they are capable of creating products that are many times more attractive and thus a lot more lucrative.
That’s why nearly all aspects of a technology company’s operations take recruiting into consideration. Marketing, real estate, community relations and other disciplines build a web, social media and office building presence that appeals to developers. Apple’s spaceship or Amazon’s spheres aren’t for current employees as much as for future employees. The Amazon drones or Google self driving cars are carrots for geeked out candidates.
The value of software developers may rise inexorably. But there are risks. Stock-based compensation could deflate under a correction. Or consolidation of technologies among the big 5 (Apple, Amazon, Facebook, Google, Microsoft) might squeeze startups.
Until then compensation will rise and 23 year old Tesla driving developers are the norm.