Ask HN: Why are London devs paid so much less than SF/NY?
London is supposed to be the next best market outside the US, yet from recent salary threads, developers are paid half or less of US salaries.
For example, with 5 years experience, I am on £75k ($110k) in a startup as a Senior Dev, and that is considered pretty good. I could get maybe another 10-20% if I had 10 years experience or was really exceptional. A Team Lead with 7-10 years experience can expect around £100k ($150k).
But my salary is only comparable to a fresh graduate at Google in SF. A Google dev with 1 year experience in SF will earn as much as a Team Lead in London with 10 years experience!
92 comments
[ 0.21 ms ] story [ 159 ms ] threadI talked to my friends at FB and Google in London and they all said they were paid less than if they were working in SV.
Of course, we may be too old, and earn less than those with 5 years' experience who have better knowledge of this week's single-page JS framework...
(my sample group includes some pretty dedicated, smart people as well as barely-adequate slackers like myself)
But we do all get decent holidays and sick days, which is a definite bonus.
Cloud plus Agile still seems to be the flavour of the month. There are always opportunities in serious back office/infrastructure programming (Java, C#, C++) in fields like banking, too, but those positions often require relevant experience of their field as well as the programming skills, or at least say they do in the ads.
Whether a 15-year vet would do a better job picking up this week's buzzwords on the go than a 3-year newbie who has never known anything else is a different question, of course.
I'm on ~£60k in London as a development lead with about 6 years experience. Mostly PHP though and php roles seem consistently lower paid than other languages, even though it shouldn't matter.
In the valley, you can have a so-so idea, land a huge investment, sell the product to other businesses for crazy money, and pay staff high wages.
In the UK, technology is this weird nerdy flash in the pan that "serious businesspeople" want nothing to do with, and investment and customers who value tech are in similarly short supply.
I write this as the employer of 50 people who'd love to pay everyone more but can't because our end customers undervalue our product, and investors are non-existent.
We saw this first hand when one of our clients sold our "worthless technology" for over $100m - yet in the UK £10k was the best valuation we could find at the time.
I sit in meetings with prospective customers who honest to God think that this system they'll be using to drive their entire £50m business through should be free because "it's just software". Simultaneously they'll happily pay a lawyer £200k to argue about the contract they're going to spend £20k with you through, because lawyers are real actual people, and we nerds are just soulless computer child-people. SEO agencies need paying well too because they have a marketing background, and marketing is also real.
Tech is seen as a utility like water over here. The people who provide it are viewed like sewer technicians.
So - it's not that employers are stingier, it's rather more that there's a lot less money in the ecosystem.
Finally, you're comparing to Google, who are a company who think nothing of putting a liberal arts grad with no experience on $600k to lead the spin fight against taxation in the UK - they pay crazy money, particularly to well connected people.
Oh, and fwiw, I'm cto/co-founder and I earn considerably less than you, so count your blessings.
I might have a small chip on my shoulder regarding this.
I quoted them a 900 quid (solution is about 10 hours work, 10 hours testing).
"Why should we pay, we paid already?".
Lovely people, haven't got a clue.
As it stands they have 6 staff members using a scheduling system all day that has a couple of screens that take 10 seconds to load, one of which is the primary dash... For the sake of 900 quid.
I wrote a system for the constraints they supplied and it turned out what they asked for wasn't what they ended up doing, instead of 30-40 jobs unscheduled at any one time they have 4 to 6 thousand. Given that the original system was designed for 40 and I assumed a worst case of 250 they blew through that limit, also since you know nothing about the system I find your comment hilarious, there is a lot of difference between 6 users posting a tweet and 6 users using a system them polls out to dozens of services and has to do a large amount of processing for each task.
It's another thing entirely from "I built something which worked perfectly for the given spec, they are using it outside that spec, and want me to make the necessary changes for free".
They paid and used it for 3 years, I think at that point it would be safe to assume that the system was in spec (well unless I'm Oracle, which I'm not).
I've often tried to explain the utility vs strategically important nature of IT - it scares the shit out of some business people as they've been happily blundering along thinking IT is just a cost centre and serially underinvesting and seriously damaging their company's bottom line. </rant>
Eventually you won't need a recruiter
Congrats you are now making ~£90k or $130k / year!
(This is where it starts. £400/day is aiming low)
Compared to market prices in metropolitan regions in Germany that's on the lower end of the range and by and large those though prosperous are much less affluent than London.
To get higher rates for contracting you need to have the right contacts, by the time it ends up at a recruiter you need to end up paying their cut which can be substantial (10% - 35%, it's not bad for just sending a few emails :D).
That's what it comes down to regardless of location. If you're willing to share some of your London / UK contacts, that'd be much appreciated (contact info's in my profile).
It doesn't really make sense to work for an employer anymore, contracts pay better and if you can build your own business it's better again.
Perm: 30k-80k depending on experience for Java/C# & good Javascript devs Contract: 50-80 EUR / hour depending on experience.
I'm a Tech Lead / Architect so can demand more as a contractor, although for the higher paid (perm) jobs I have to travel.
At the higher end you need to be really good: i.e. know more than just web development - being able to knock together CRUD apps with Rails/PHP won't cut it.
Pay and rates for PHP/Ruby are much lower - the talent pool is also less capable. Strangely enough C++ has the same issue - it has been explained to me that the best C++ devs have jumped ship already so what's left isn't that good. Whilst that can be the case it's more likely to be a question of demand: Europe doesn't build systems-level software in the way America does..
I wonder what's the cost of the extra bureaucracy around contracting more or less
40 work weeks are workable 15% fee for agency 200 eur / month insurances 8k/year pension Slightly more favorable tax
The 40 weeks is 6 weeks holiday, 6 weeks downtime/sick. Insurance covers longer-term sickness (thus the cost).
When you consider that the best developers tend to go contracting the rates actually start to look low.
So if you earn 4k EUR / month you will actually pocket 4k after tax. Compared to a dutch native who pockets ~2.5k. You can rent a nice place in or close to Amsterdam for 1.5k / month.
Your employer must arrange this (mine refused too so I never benefited from this) and then it lasts for ~5 years.
It's a nice place to live (lots of pretty girls for the guys, lots of tall blond guys for the girls).
People in the Valley could probably walk into Uber or Message Bird and get a job in Amsterdam for a few years, they both have a big presence there (and work on interesting problems, I guess).
I'll be switching to contracting soon because it lets me double my salary & have a chance on actually working on something difficult again :)
I'm a bit of an outlier of course, there are very few people who can match both my depth and breadth in development as the best tend to bail at 30 for management positions (which I very nearly did).
Someone earning £75k will take home £51k after tax (which includes healthcare and social security tax).
You can stick numbers into http://listentotaxman.com/ if you'd like to experiment. "National Insurance" means healthcare and social security.
Software developers in sf/sv are considered highly talented respectable people which companies will fight over.
In SV, software guys were disrespected, considered replaceable until they became the company breadwinners. Good finance guys are in the same situation in other places, like London perhaps.
The respect follows the money, not the other way around.
Silicon valley has a demand for talented developers and a limited supply, so developer wages are high.
This is also the generation that is least likely to be willing to move for work, here in the Western world. This makes imbalances in wages between cities worse.
London's supply better meets it's demand, and so wages are lower. Companies like Google will pay more in London than usual for the city because employees at different offices will compare salaries- but I'll bet you they still pay less in London than they do in California.
This is also a key point in the American immigration debate- you can indeed hire as many people as you need in SF, but only if you'll pay enough money. Immigration increases supply, lowering the price.
Also, UK is a part of European Union, which makes London based developers compete with immigrants from countries like Poland, Hungary, Romania, who will be happy with much lower salaries.
You'd think that but you'd be wrong. It's true that fresh immigrants might have a low salary ask, but folks wise up pretty quickly to their worth in the UK - which is just as well, as otherwise it'd lead to exploitation and would drag overall salaries down.
No, the supply and demand bit doesn't hold true - it's cultural. We undervalue technical skill here, severely, and have for several generations. It's seen as somehow dirty.
The British class society has inbuilt superiority for some, regardless of economic contribution. It is a monarchy after all, what should we expect.
Reminds me of facepalm moments in Bracknell a while back. Maybe things have improved since then, I wouldn't know: I left that country.
Toronto (where I am) is similar to London. There are some jobs that pay well, but the average and median are far lower than I could get if I had stayed out west.
Good software developers are probably already employed in good positions so you need to raise the price to get them to apply.
http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
For the last 5 years or so I've been fully employed in devops roles, primarily containerization and deployment. I have been thinking a lot about turning to contracting, but have zero idea how I would start.
Job security is another thing. I'd want better pay if I could be fired on the spot. UK is more flexible than Scandinavia (which in the case of Sweden is basically last-in-first-out even for high tech workers, with exceptions allowed after expensive negotiations, think a years salary in severance for ditching the underperformer with longer tenure). This is not the case in the UK, and obviously not at all the situation in the US.
Same thing with holidays: If I had to take an unpaid leave holiday to get a month of continuous holiday, then that's a cost I'd want reflected in my salary.
So to do my Scandinavian math which might partly apply to London (living expenses, supply/demand differs): I make $80k. If I had to pay anything of that for healthcare or daycare for kids, I'd want that money on top. If I didn't have 5-6w paid holiday I'd want that money on top. If I didn't have practically unlimited sick days and paid leave to care for sick kids, I'd want that money on top. It doesn't matter that none of that is paid by the employer, it still affects my salary requirement. If my total effective income tax rate was 20% instead of 35%, I'd need less. And so on.
If you're at a VC backed startup in London, then you should compare your compensation to other VC backed startup devs in SF/SV. I'm not familiar with NYC salaries, but $110k base is definitely much more than "half" of what your typical startup senior dev is making in SF.
The big US tech companies now have an increased presence here and are raising salaries across the city. Your estimates of the max you can earn are pessimistic: I work at one of these companies at the level below Senior and make about the same as you do as a base salary and about 1.5x the amount in total comp. Finance also pays developers well in London.
Many of my colleagues have been hired out of startups, who have to pay more to find replacements than before. My friends at companies trying to offer £40-50k to experienced developers simply can't hire anyone with the skills they want, whereas a few years ago they used to have no problem finding people who would take £35-40k.
There are plenty of companies that treat development as an "IT" cost; the stereotype of the awful British version of Initrode and Initech. I have worked at one of these before and it is horrible working at a place that everyone is desperately trying to leave. It is up to you to try and politely avoid these places, and if you have to take one of these jobs, work incredibly hard (https://blog.stackoverflow.com/2015/09/how-to-be-awesome/) to expand the options available to you.
Given that you apparently don't get resonable time off when earning the big bucks on SV, my Ltd would gross around $300,000 p/a if I billed for all 253 business days and I only work 9-5.
Basically, if you're actually good, become a contractor and move into a niche paying the higher rates.
Edit: Plus it's not really just about headline rates, it's what you're left with at the end. Let me break that down for you.
£700 p/d x 253 x 1.2 (vat) = £212520
- subtract 14.5% flat vat rate = 181704.6
- subtract 8k tax free income = 173704.6
- subtract 20% copr tax = 138963.68
- subtract 32k tax free divs = 106963.68
- subtract 6k expenses (laptop, travel, phone etc) = 10000.00
You now have paid yourself £40,000 to live on (and don't have to pay for travel yourself) and you have £100,000 ($144710) saved in your company to invest, etc. I'd be suprised to see a single male in SF living that lifestyle, but it's not uncommon in London.
£700k/day is not uncommon? For experienced specialists in the right niches, it's certainly possible, but "average developers" aren't going to command that kind of rate even in London.
Basically we're talking about being a semi good and modern Java, Node or Python developer. Alternativly a system administrator who's not afraid of automation.
You'll probably need to work in Government or Finance, but like I said, it's not uncommon.
That's the kicker, and what I meant by "the right niches" before.
I know plenty of people doing contract software work in and around London who aren't getting close to that, and surely would be if the general market was that high. These are pretty well qualified (often PhD) and experienced (10+ years) people who know what they're doing and have decent track records, they just don't enjoy working in intense environments like trading.
I'm curious about where you think the Government gigs at that rate are found, if all they need is being semi-good with one of the popular languages. I can think of quite a few people who'd be interested in that kind of opportunity, but if any of my close network are doing it right now then they've not mentioned it.
Either way, places that'll pay this in Government are The Home Office, DWP, DVLA, MOJ & GDS. Pretty much every arm of central Government pays decent rates.
But rather than me just talk crap, why don't you just look:-
https://www.jobserve.com/gb/en/JobSearch.aspx?shid=E3A30197F... https://www.jobserve.com/gb/en/JobSearch.aspx?shid=E3A30197F... https://www.jobserve.com/gb/en/JobSearch.aspx?shid=6E57F8DA8...
In any case, based on people in my network, it doesn't appear to be guaranteed that people working for civil service departments such as those you mentioned will routinely attract the kind of rate you're talking about even at high levels.
Anyways those rates aren't guaranteed but the money is out there. However, you won't get them by not asking for them. Why would you? :)
However, I'm half interested on behalf of various friends and former colleagues who are still 100% contract/freelance, and half interested from the point of view of not giving an overly optimistic view to anyone reading this who isn't familiar with the contracting market.
As it happens, I did check several sites including the one you mentioned when I first posted, and based on that it looks like it's still fair to say that £700+/day rates are achievable particularly in London and in the right niches, but they aren't (yet?) the norm even for quite good developers.
Be resonably competent, pass a technical interview that's mainly talking based, get your foot in the door at £600 a day, ask for more after you establish yourself.
If you actually deliver your network will be completely different and you'll be able to command those higher rates for quite some time.
More importantly, don't bottle negotiations. Your competition isn't amazing, they're just guys who know the framework de jure and make sure they're buzzword compliant.
You don't, that's your retirement/rainy day fund.
> The only option is dissolving the company and claiming entrepreneurs relief, but then you are back to FTE or umbrella (or phoenix).
You'd only really do this if you don't intend on contracting anymore. Hopefully by that time it's enough to not work anymore. Alternativly, just keep paying yourself a small salary and dividens.
> Also my understanding of investing company profits was that you are taxed twice on profits, and it could change your company status if you want to claim ER in future.
You won't get taxed twice but if you investing starts bringing in a lot more than contracting then you company could be reclassified. That said, you can also roll up an investment entity and pay that tax there. You'd be paying 28% on profits but you'd have more money in the pot making money.
Obviously you can also pay yourself more and pay the high rates of tax, or you can put it into a pension, a SIPP is arguably the best long term option.
Having a Ltd also allows you to defer paying higher rates of taxes, avoid paying NIC (both employers and employees), and I'd say it's simpler being two entities.