How can developers improve their paycheck.
As a software developer, what is the most lucrative opportunity you could be working on? This is a very relevant question to ask. Software skills are generally scarce and good developers are highly coveted. Furthermore, developers are mobile, in the sense that the nature of their trade allows them to work from remote locations quite easily and marketplaces for their services are well established. So which project should you pick?
There are many reasons why someone might prefer one job over another, but let’s be honest: developers deserve to get paid well, given their important position in the global value chain. For the first time in 12 editions, we asked developers in our survey how much they earn in salaries or contractor fees. The results are in and from the data we learn several insights that can help developers improve their paycheck, and conversely, provide opportunities for organisations to find talent.
First, there are enormous differences in how much developers in each region and software sector earn. The best earning developers in our survey – those in the top ten percent – often earn tens and sometimes hundreds of times as much as the least well-off, i.e. the bottom decile. Part of this gap is location-driven. We’ll come back to that shortly. This said, we can only conclude that a developer’s skill, knowledge, and reputation do matter. Investing in them will pay off.
Developers working in areas with a higher technical complexity generally earn more.
Talking of skills, developers who work in areas with a higher technical complexity – and therefore higher barriers to entry and ultimately fewer developers doing it – generally earn more. Developers that work on cloud computing and other backend services report higher salaries than those working on front-end web apps. Machine learning specialists make even more than the backend folks. In Western Europe, for example, the median web developer has a yearly gross salary of $35,400 USD, the median backend developer earns $39,500 and a machine learning developer makes $45,200. This relationship is seen across regions and also at higher wage levels. Web and mobile development are the most commoditised; there is a fairly low barrier to start making simple apps or websites, and these tasks are relatively easily outsourced to other regions.
Scarcity of skills drives up the price for developer services.
Scarcity of skills drives up the price for developer services. This is also true for new, emerging areas of development, like Augmented and Virtual Reality, or the Internet of Things, but only at the top end of the scale.The best developers in emerging areas earn top dollar, while the bottom half of the developer population makes less than their counterparts in more established sectors. Let’s compare Augmented Reality (AR) with backend developers in North America as an example. The median wage for an AR developer in that region is $71,000 USD, a good bit less than the $79,200 that the median backend developer makes. At the top end, however, AR development is more lucrative. At the 75th percentile, the AR developer is paid $132,300 and the backend developer $122,800. At the very top (90th percentile), the difference is even more pronounced: $219,000 for AR, $169,000 for backend. The reason for this wide range of salaries is that markets like AR/VR or IoT are still commercially underdeveloped. Companies that are early adopters pay large sums for skilled developers, who are scarce. At the same time, less experienced developers are attracted by the hype. Their compensation suffers both from a lack of relevant skill and from a lack of companies that are hiring in the early market.
Again this pattern repeats across regions. The exception is South Asia. The outsourcing model that drives software development in that region seems to be built on maintaining legacy code and developers there are less involved in emerging innovations (a conclusion that’s also supported by our developer population sizing research).
We’re still a long way off a global market for developers!
We started this chapter by saying that developers can market their services location-independently if they choose to. However, it’s clear from the data that we’re still a long way off a global market for developers! The median web developer in North America for instance earns $73,600 USD per year. A Western European web developer earns half of that – $35,400 USD – although recent exchange rate shenanigans due to Brexit and the Euro-crisis will have affected that comparison. Web developers in other regions earn again half of that: between $11,700 in South Asia and $20,800 in Eastern Europe. Not just the region of the world you live in matters, but also the country and even the city you call home.
This opens up opportunities for organisations who will accept remote workers. You can hire a top 10% Eastern European backend developer for less money than the median North American wage in that sector. For developers, it means that brushing up your English skills and looking for opportunities beyond your backyard can be very interesting indeed. Developers who take that leap and seek opportunities that pay to international standards are in the minority. This explains why top wages in emerging regions (Asia, the Middle East, Africa) are so exuberantly high compared to local standards. A Western developer in the top decile earns about three times as much as the median wage in his sector and region. In the emerging world, top wages are seven to ten times the median. The best developers in those regions work for multinationals or sell their services on international marketplaces, while most stay employed locally, at much lower remuneration levels.
So what’s a developer to do if you want to move up in the world, financially? Invest in your skills. Do difficult work. Improve your English. Look for opportunities internationally. Go for it. You deserve it!