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The UK could pitch itself as a place rich US tech companies can buy top talent at low price. I have seen some (not many, to be honest) US tech companies open of

The UK could pitch itself as a place rich US tech companies can buy top talent at low price. I have seen some (not many, to be honest) US tech companies open offices in the UK so they can pay half or less for staff, compared to what they'd pay at home. If Brexit goes as badly as it might, the pound could be even cheaper.

ForHackernews 8y ago
Why are UK tech salaries so low compared to the US?
- cyberpunk0 8y ago
  Because when tech companies come to places in the us they become gentrified and everything becomes expensive. In most cases tech companies coming to an area has a devastating effect as people who had lived in an area forever are forced out due to the insane spike in cost of living.
  - ryanx435 8y ago
    No. You are putting effect before cause. It's the high salaries that cause gentrification, not gentrification that causes high salaries.
  - Balero 8y ago
    When high paying companies come to London/Oxford/Cambridge/Bristol the effect is just the same, it's not a US only phenomenon.
  - walshemj 8y ago
    Cambridge and Oxford have been gentrified for a very long time
- justincormack 8y ago
  Because outside of financial services, there aren't that many highly profitable companies, Google or Facebook profitability levels are not common in Europe. Salaries have been rising though, and London salaries are twice or more than much of Europe.
  - sievebrain 8y ago
    They aren't common in America either!
- petercooper 8y ago
  I think there are lots of reasons, both sociological and economical, but my hunch is that demand for the most productive tech employees is lower since it's so easy to lean on American-produced innovations and services rather than build our own in the UK. Consider that Azure, AWS, Google Cloud Platform, etc. are all huge in the UK, yet most of the work on them is taking place in the US. Ditto for Oracle, Office 365, the Google Suite and even consumer stuff like Craigslist, Reddit or Apple's services (that the UK never home produced something like Reddit continues to boggle my mind). Why pay for the best people in the industry to work in the UK when we can just stand on the shoulders of work being done in the US? If you look at industries where the UK does take an innovative role like finance or bioinformatics, the salaries seem a lot more competitive, though are still not at US levels due to the UK's lower cost of living I guess.
  - Balero 8y ago
    The UK has a higher cost of living, with London pretty much equal to NY or SF and other high cost cities. The other equivalents are cheaper in the US.
    - petercooper 8y ago
      ¯\_(ツ)_/¯ That's not my experience of both places, and I've not found any data that supports London being as expensive as SF including https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+Kingdom&city1=London&country2=United+States&city2=San+Francisco%2C+CA https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... - I've found it much easier to live in London on a budget than SF where you'd throw your personal safety and comfort into jeopardy by cutting too many corners.
      - chrisper 8y ago
        In the US you also need to put aside much more every month.
      - dood 8y ago
        Those numbers look quite wrong, I don't think they're comparing like-for-like. For consumer goods it seems they're comparing a cheap UK supermarket to Whole Foods in SF, and for rents they must be ignoring square footage and/or using different definitions of city center to get those comparisons. I checked out rental prices in SF on a recent visit and found SF pretty good value compared to London.
- Balero 8y ago
  There are a number of reasons. Probably the biggest is that the UK doesn't have the number of large tech companies in one place needed to push up wages. ARM is in Cambridge, Rockstar is in Newcastle, Dyson near Bristol. The only exception is in Banking where the salaries are much higher than the UK average (but still lower, as tech is views as second to other roles, not as the primary focus). Other reasons are that the UK has a better social safety net. That to many people in many places in the uk there is no such thing as an engineer, if you work with computers you work in IT (and can you fix my laptop please?). There is in many places (especially older companies with non-tech middle managers), also a management problem. You can't pay an engineer more than a (non-technical) middle manager, because the manager is (obviously) more important, as they can tell then engineers what to do. And all the engineers do is what management tells them to, so they're replaceable. This is obviously not a good environment for productive engineering, but explains why some companies see engineers as a cost centre rather than a revenue generating centre.
  - olavgg 8y ago
    This is typical european business culture. Times are changing, though, more and more engineers start their own company.
  - geebee 8y ago
    What's so interesting is that the same companies that do this will tell you that there is a very serious shortage of software developers. And they'll say this, with a straight face, with absolutely no mention of the pay, as if supply exists completely independently of demand.
- shanghaiaway 8y ago
  UK companies do not produce as much value, hence they are not able to pay as much as FANG.
  - tinktank 8y ago
    LOL. I'm sure all the investors up to their eyeballs in the loss-making, ever hyped unicorns would beg to differ.
    - shanghaiaway 8y ago
      Which UK company makes the same profit per employee as FANG? None.
      - tinktank 8y ago
        Which one of your so-called value-adding unicorns are actually making a profit?
      - sievebrain 8y ago
        Isn't N in FANG Netflix? I thought Netflix was loss making. And Amazon has spent years being break even or making losses (albeit for good reasons).
- adav 8y ago
  Anecdotally, and when compared to America, it could be due to a combination of many factors including: - More regulation around employee protection - Excellent talent drawn from less wealthy EU states who may be willing to accept a slightly lower wage than locals - Lots of STEM graduates from UK universities - A different work life balance - Tech skills are not seen as valuable as law/banking/medicine - A more profit-first rather than growth-first startup mindset
  - adventured 8y ago
    It's not STEM supply pushing down the salaries. Japan has fewer per capita stem graduates than the US, with a highly developed technical economy, and dramatically lower engineer salaries than the US (with a GDP per capita roughly the same as the UK).
    - meheleventyone 8y ago
      This makes me think the question is better phrased the other way around. Why is SV compensation so high compared with the rest of the world?
      - barry-cotter 8y ago
        A virtuous circle of people who make a fortune investing in other people hoping to make a fortune in the hope of making their fortune bigger. Silicon Valley is the place where agglomeration economics kicked in for information technology. That’s not really surprising. It had to be somewhere. Film has Hollywood, Finance has New York and London, Chemistry has the Rhineland, high fashion has Milan, Paris, New York and London. What’s special about Silicon Valley is that nowhere else comes close, that the minimum efficient scale for a great many software ideas is small, that it’s new, the addressable market is close to the entire global economy, and most importantly, they’re talent constrained, not capital constrained.
        meheleventyone 8y ago
        Thanks, to me that is definitely the simple and obvious answer. It’s the one I come to as well viewing things from the outside. I do wonder if it’s too simplistic and appealing because it is so neat though.
- pjc50 8y ago
  Aren't the high US salaries themselves extremely location-specific? It's more like CA/NY vs rest of world in terms of salaries.
  - fgrep 8y ago
    would be interesting to know, people talk about SF only, but how salaries look in places like Phoenix or in states like Wyoming, Montana and Vermont ? are there any sw jobs there ?
- jinder 8y ago
  I think what most people are missing in these comparisons is that London's tech market is hugely contractor oriented, and so it makes more sense to compare day rates. Finance in London pays typically £500-600 per day for average level frontend and backend work. There's the potential to earn much higher if you're good at what you do.
  - commandlinefan 8y ago
    > London's tech market is hugely contractor oriented Is that because of labor regulations there?
    - timellis-smith 8y ago
      Not in my experience. Most companies I know much rather have permies than contractors. Pay tends to be quite a bit higher for contractors but without all the perks like pension contributions and leave that a permanent position has. However, as a contractor, you have more control over your life. As a contractor, it's also easier to get exposure to different tech, rather than be stuck doing the same thing day in and out.
a_imho 8y ago
Mainland Europe has even lower salaries in a similar timezone.
- chrisper 8y ago
  Switzerland is doing just fine.
  - a_imho 8y ago
    It is an obvious outlier though.
- MrBuddyCasino 8y ago
  Err no, certainly not. German salaries are at least on par with London, and ~twice as high than the rest of the UK.
  - tigershark 8y ago
    Not from what I know.
    - MrBuddyCasino 8y ago
      Maybe my numbers are off, but at least in Munich startups are ~80k, automotive ~100k. What are you seeing?
      - collyw 8y ago
        Isn't Munich the German equivalent of London? The expensive but well paid part?
        MrBuddyCasino 8y ago
        You can get similar salaries in other Tier 1 cities like Hamburg, Frankfurt, Düsseldorf or Berlin. Of course its different in small cities (except Walldorf or Wolfsburg), but you also have lower expenses. Its not as centralized as UK.
slivym 8y ago
Lot's of companies do that, but the UK is kind of a strange place to choose to do that. If you want cheap, go hire a team of 10,000 engineers in Penang (I'm looking at you Intel). If you want expensive, choose silicon valley. If you want 2nd tier, take a look at Canada. You can choose the UK, but why? Their time zone means you'll never be able to meet with them at the same time as your Malaysian and Californian offices. They're cheap - but no where near as cheap as the far east. And they've got a metric shit tonne of employment rights, which most US companies not only don't want the cost of, but also disagree with ideologically.
- Balero 8y ago
  The timezone, whilst often being a negative, can also be a positive. If you need a service that is always up and supported, having three teams (GMT-8, GMT, GMT+8) is one of the best ways to do this. This puts the UK in the perfect place for a company needing this based in California. Also there is a good overlap for companies based on the east coast to do hand over, which I believe is common in finance.
- deleted 8y ago
  [deleted]
- justincormack 8y ago
  The employment rights in the UK are minor compared to most of the rest of Europe, and while you cant fire at will, it is easy to get get people out if you want to.
- noir_lord 8y ago
  Tech multinationals are almost by definition 24/7 operations. The UK for an American tech company is a large stable country within 1-2 hours of the timezone of the largest single market in the world and has a shared language and culture. If you want to sell into Europe then Britain made sense...until the fuckwits voted for leave (yeah I'm bitter, they fucked over everyone my age and under).
  - samdoidge 8y ago
curiousgal 8y ago
That is exactly what every multinational has been doing in the Third World for decades! Software developers in Tunisia, for instance, get paid 5k per year. If the salaries are enough to cover the cost of living then workers will be happy. 100k in SF is the same as 70k in London which is the same as 5k in Tunis.
- smnscu 8y ago
  Have been to our offices in Tunis, can confirm. Shit's grim, apparently their currency devalued 3-4x in the recent years, making everything absolutely dirt cheap, and their salaries worthless. Friendliest people I've ever seen, though.
- supergarfield 8y ago
  > 100k in SF is the same as 70k in London which is the same as 5k in Tunis. Not really. Only some things are significantly affected by the local cost of living: rent, food, nights out for instance. Sure, they probably make up the majority of your spending, but CoL is almost irrelevant for - Buying luxuries: a Porsche or an iPhone are nearly the same price everywhere in the world - Going on vacation - Savings, if you don't intend to stay where you currently live forever Depending on your lifestyle, these categories could easily make up most of your income, in which case $5k per year is terrible even if it covers the CoL in Tunis.
  - pertymcpert 8y ago
    iPhones same price everywhere? Lol. When the GBP was a bit stronger you could fund a trip to NY and buy an iPhoneX/Macbook instead of buying in the UK.
    - supergarfield 8y ago
      Sure, maybe occasionally there are anomalies, with extreme price hikes for specific things in specific places. Right now iPhone X prices seem to be reasonably close everywhere (not-so-great-source: http://www.businessinsider.com/apple-iphone-x-prices-around-the-world-2017-9 http://www.businessinsider.com/apple-iphone-x-prices-around-...). I think this doesn't affect my point though, which is mainly that iPhones are just as expensive in generally cheap places.

ForHackernews 8y ago

Why are UK tech salaries so low compared to the US?

cyberpunk0 8y ago
Because when tech companies come to places in the us they become gentrified and everything becomes expensive. In most cases tech companies coming to an area has a devastating effect as people who had lived in an area forever are forced out due to the insane spike in cost of living.
- ryanx435 8y ago
  No. You are putting effect before cause. It's the high salaries that cause gentrification, not gentrification that causes high salaries.
- Balero 8y ago
  When high paying companies come to London/Oxford/Cambridge/Bristol the effect is just the same, it's not a US only phenomenon.
- walshemj 8y ago
  Cambridge and Oxford have been gentrified for a very long time
justincormack 8y ago
Because outside of financial services, there aren't that many highly profitable companies, Google or Facebook profitability levels are not common in Europe. Salaries have been rising though, and London salaries are twice or more than much of Europe.
- sievebrain 8y ago
  They aren't common in America either!
petercooper 8y ago
I think there are lots of reasons, both sociological and economical, but my hunch is that demand for the most productive tech employees is lower since it's so easy to lean on American-produced innovations and services rather than build our own in the UK. Consider that Azure, AWS, Google Cloud Platform, etc. are all huge in the UK, yet most of the work on them is taking place in the US. Ditto for Oracle, Office 365, the Google Suite and even consumer stuff like Craigslist, Reddit or Apple's services (that the UK never home produced something like Reddit continues to boggle my mind). Why pay for the best people in the industry to work in the UK when we can just stand on the shoulders of work being done in the US? If you look at industries where the UK does take an innovative role like finance or bioinformatics, the salaries seem a lot more competitive, though are still not at US levels due to the UK's lower cost of living I guess.
- Balero 8y ago
  The UK has a higher cost of living, with London pretty much equal to NY or SF and other high cost cities. The other equivalents are cheaper in the US.
  - petercooper 8y ago
    ¯\_(ツ)_/¯ That's not my experience of both places, and I've not found any data that supports London being as expensive as SF including https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+Kingdom&city1=London&country2=United+States&city2=San+Francisco%2C+CA https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... - I've found it much easier to live in London on a budget than SF where you'd throw your personal safety and comfort into jeopardy by cutting too many corners.
    - chrisper 8y ago
      In the US you also need to put aside much more every month.
    - dood 8y ago
      Those numbers look quite wrong, I don't think they're comparing like-for-like. For consumer goods it seems they're comparing a cheap UK supermarket to Whole Foods in SF, and for rents they must be ignoring square footage and/or using different definitions of city center to get those comparisons. I checked out rental prices in SF on a recent visit and found SF pretty good value compared to London.
Balero 8y ago
There are a number of reasons. Probably the biggest is that the UK doesn't have the number of large tech companies in one place needed to push up wages. ARM is in Cambridge, Rockstar is in Newcastle, Dyson near Bristol. The only exception is in Banking where the salaries are much higher than the UK average (but still lower, as tech is views as second to other roles, not as the primary focus). Other reasons are that the UK has a better social safety net. That to many people in many places in the uk there is no such thing as an engineer, if you work with computers you work in IT (and can you fix my laptop please?). There is in many places (especially older companies with non-tech middle managers), also a management problem. You can't pay an engineer more than a (non-technical) middle manager, because the manager is (obviously) more important, as they can tell then engineers what to do. And all the engineers do is what management tells them to, so they're replaceable. This is obviously not a good environment for productive engineering, but explains why some companies see engineers as a cost centre rather than a revenue generating centre.
- olavgg 8y ago
  This is typical european business culture. Times are changing, though, more and more engineers start their own company.
- geebee 8y ago
  What's so interesting is that the same companies that do this will tell you that there is a very serious shortage of software developers. And they'll say this, with a straight face, with absolutely no mention of the pay, as if supply exists completely independently of demand.
shanghaiaway 8y ago
UK companies do not produce as much value, hence they are not able to pay as much as FANG.
- tinktank 8y ago
  LOL. I'm sure all the investors up to their eyeballs in the loss-making, ever hyped unicorns would beg to differ.
  - shanghaiaway 8y ago
    Which UK company makes the same profit per employee as FANG? None.
    - tinktank 8y ago
      Which one of your so-called value-adding unicorns are actually making a profit?
    - sievebrain 8y ago
      Isn't N in FANG Netflix? I thought Netflix was loss making. And Amazon has spent years being break even or making losses (albeit for good reasons).
adav 8y ago
Anecdotally, and when compared to America, it could be due to a combination of many factors including: - More regulation around employee protection - Excellent talent drawn from less wealthy EU states who may be willing to accept a slightly lower wage than locals - Lots of STEM graduates from UK universities - A different work life balance - Tech skills are not seen as valuable as law/banking/medicine - A more profit-first rather than growth-first startup mindset
- adventured 8y ago
  It's not STEM supply pushing down the salaries. Japan has fewer per capita stem graduates than the US, with a highly developed technical economy, and dramatically lower engineer salaries than the US (with a GDP per capita roughly the same as the UK).
  - meheleventyone 8y ago
    This makes me think the question is better phrased the other way around. Why is SV compensation so high compared with the rest of the world?
    - barry-cotter 8y ago
      A virtuous circle of people who make a fortune investing in other people hoping to make a fortune in the hope of making their fortune bigger. Silicon Valley is the place where agglomeration economics kicked in for information technology. That’s not really surprising. It had to be somewhere. Film has Hollywood, Finance has New York and London, Chemistry has the Rhineland, high fashion has Milan, Paris, New York and London. What’s special about Silicon Valley is that nowhere else comes close, that the minimum efficient scale for a great many software ideas is small, that it’s new, the addressable market is close to the entire global economy, and most importantly, they’re talent constrained, not capital constrained.
      - meheleventyone 8y ago
        Thanks, to me that is definitely the simple and obvious answer. It’s the one I come to as well viewing things from the outside. I do wonder if it’s too simplistic and appealing because it is so neat though.
pjc50 8y ago
Aren't the high US salaries themselves extremely location-specific? It's more like CA/NY vs rest of world in terms of salaries.
- fgrep 8y ago
  would be interesting to know, people talk about SF only, but how salaries look in places like Phoenix or in states like Wyoming, Montana and Vermont ? are there any sw jobs there ?
jinder 8y ago
I think what most people are missing in these comparisons is that London's tech market is hugely contractor oriented, and so it makes more sense to compare day rates. Finance in London pays typically £500-600 per day for average level frontend and backend work. There's the potential to earn much higher if you're good at what you do.
- commandlinefan 8y ago
  > London's tech market is hugely contractor oriented Is that because of labor regulations there?
  - timellis-smith 8y ago
    Not in my experience. Most companies I know much rather have permies than contractors. Pay tends to be quite a bit higher for contractors but without all the perks like pension contributions and leave that a permanent position has. However, as a contractor, you have more control over your life. As a contractor, it's also easier to get exposure to different tech, rather than be stuck doing the same thing day in and out.

a_imho 8y ago

Mainland Europe has even lower salaries in a similar timezone.

chrisper 8y ago
Switzerland is doing just fine.
- a_imho 8y ago
  It is an obvious outlier though.
MrBuddyCasino 8y ago
Err no, certainly not. German salaries are at least on par with London, and ~twice as high than the rest of the UK.
- tigershark 8y ago
  Not from what I know.
  - MrBuddyCasino 8y ago
    Maybe my numbers are off, but at least in Munich startups are ~80k, automotive ~100k. What are you seeing?
    - collyw 8y ago
      Isn't Munich the German equivalent of London? The expensive but well paid part?
      - MrBuddyCasino 8y ago
        You can get similar salaries in other Tier 1 cities like Hamburg, Frankfurt, Düsseldorf or Berlin. Of course its different in small cities (except Walldorf or Wolfsburg), but you also have lower expenses. Its not as centralized as UK.

slivym 8y ago

Lot's of companies do that, but the UK is kind of a strange place to choose to do that. If you want cheap, go hire a team of 10,000 engineers in Penang (I'm looking at you Intel). If you want expensive, choose silicon valley. If you want 2nd tier, take a look at Canada. You can choose the UK, but why? Their time zone means you'll never be able to meet with them at the same time as your Malaysian and Californian offices. They're cheap - but no where near as cheap as the far east. And they've got a metric shit tonne of employment rights, which most US companies not only don't want the cost of, but also disagree with ideologically.

Balero 8y ago
The timezone, whilst often being a negative, can also be a positive. If you need a service that is always up and supported, having three teams (GMT-8, GMT, GMT+8) is one of the best ways to do this. This puts the UK in the perfect place for a company needing this based in California. Also there is a good overlap for companies based on the east coast to do hand over, which I believe is common in finance.
deleted 8y ago
[deleted]
justincormack 8y ago
The employment rights in the UK are minor compared to most of the rest of Europe, and while you cant fire at will, it is easy to get get people out if you want to.
noir_lord 8y ago
Tech multinationals are almost by definition 24/7 operations. The UK for an American tech company is a large stable country within 1-2 hours of the timezone of the largest single market in the world and has a shared language and culture. If you want to sell into Europe then Britain made sense...until the fuckwits voted for leave (yeah I'm bitter, they fucked over everyone my age and under).
- samdoidge 8y ago

curiousgal 8y ago

That is exactly what every multinational has been doing in the Third World for decades! Software developers in Tunisia, for instance, get paid 5k per year. If the salaries are enough to cover the cost of living then workers will be happy. 100k in SF is the same as 70k in London which is the same as 5k in Tunis.

smnscu 8y ago
Have been to our offices in Tunis, can confirm. Shit's grim, apparently their currency devalued 3-4x in the recent years, making everything absolutely dirt cheap, and their salaries worthless. Friendliest people I've ever seen, though.
supergarfield 8y ago
> 100k in SF is the same as 70k in London which is the same as 5k in Tunis. Not really. Only some things are significantly affected by the local cost of living: rent, food, nights out for instance. Sure, they probably make up the majority of your spending, but CoL is almost irrelevant for - Buying luxuries: a Porsche or an iPhone are nearly the same price everywhere in the world - Going on vacation - Savings, if you don't intend to stay where you currently live forever Depending on your lifestyle, these categories could easily make up most of your income, in which case $5k per year is terrible even if it covers the CoL in Tunis.
- pertymcpert 8y ago
  iPhones same price everywhere? Lol. When the GBP was a bit stronger you could fund a trip to NY and buy an iPhoneX/Macbook instead of buying in the UK.
  - supergarfield 8y ago
    Sure, maybe occasionally there are anomalies, with extreme price hikes for specific things in specific places. Right now iPhone X prices seem to be reasonably close everywhere (not-so-great-source: http://www.businessinsider.com/apple-iphone-x-prices-around-the-world-2017-9 http://www.businessinsider.com/apple-iphone-x-prices-around-...). I think this doesn't affect my point though, which is mainly that iPhones are just as expensive in generally cheap places.