Supply, demand, and IT salaries in Japan and elsewhere...

Replies to This Discussion

Permalink Reply by Mika Leuck on June 17, 2008 at 3:34pm

For some reason I think hardware people are valued more than software people in Japan. Software engineers are not as respected as they are in the US. I think that is why Japan doesn't have very many famous software companies.

Permalink Reply by Scott Murphy on June 17, 2008 at 3:51pm

This Japanese article outlines the IT industry salary in Japan. Data supports what Mika said about hardware people being valued more in Japan.

Permalink Reply by Daniel Leuck on June 18, 2008 at 12:09am

The last time I looked at average salaries in the area was about five years ago, but at that time software developer salaries in Japan seemed comparable to other first world countries in the area such as Australia, New Zealand and Singapore. The company I worked for in Tokyo employed quite a few Aussies and Kiwis. In most cases their salaries were comparable or better after moving to Tokyo.

Salaries in places like New York, San Francisco and London are an anomaly. Even within the US and Japan salaries vary wildly. A software developer that makes $75K a year in Des Moines can often fetch $120K a year in New York. The same is true for a developer in Naha versus Tokyo.

That being said I have to agree with Mika and Scott. I don't know why, but for some reason software developers don't seem to be as highly valued in Japan as they are in the US and Europe.

Permalink Reply by Brooke Fujita on June 18, 2008 at 5:43am

@Scott:
Good article(s), I will have to delve deeper into the links when I have the time. The main article appears to be from just over 12 months ago, but I have a rather sinking feeling that with all of the recent price increases in oil and the floundering Fukuda cabinet, the situation is most likely dipping further downwards.

@Mika & Dan:
Yes, hardware seems to be where the action is at in Japan, especially consumer gadgets. Gotta love them electronic gadgets! But for software people, most aspire to become "systems engineers", which is broad-ranging leader-type position. I would not call them architects or designers, however, since "SE" are more like sales engineers, account managers and project managers all mangled into one sorry job description.

My present employer is par for the course: their tag line is "we are architects" but from my humble point of view, its mostly sales engineers and wanna-be PM's, with this really disturbing trend to outsource all development to Shenyang in China (not even Beijing or Shenzen!). So in the end, there will be no coding done in-house and in-country, if the Sapporo municipal government have their druthers. If all of that money goes overseas, and demand for "local" software writing talent dives even further, then I am afraid that even less people will want to get a software engineering degree or write software for a living. Sorry for ranting on, but this is sort of like a continuation of my ruminations after reading that Paul Graham article I posted about elsewhere.

Permalink Reply by Daniel Leuck on June 18, 2008 at 10:31am

I'm always curious about how companies pick their outsourcing location and company. How did your company decide on Shenyang? What criteria was used?

re: Outsourcing

Its true that many types of software jobs will continue to be outsourced, but there will always be a demand for top programming talent, especially in places like Tokyo, New York, San Fran and London. I don't know any unemployed star programmers in these cities. They are still making good money and employers fight over them. I think the key is to find a niche and become a master of your craft. Even if you aren't in one of these cities you will find remote work if you become a world class developer in a hot area like Flex or the popular mobile platforms.

Permalink Reply by Brooke Fujita on June 18, 2008 at 3:05pm

@Dan:

>...How did your company decide on Shenyang? What criteria was used?
Go-o-o-d question...

The fair city of Sapporo, where I live and work, has a sister city relation with the city of Shenyang. In an effort to promote goodwill and stimulate the flagging Hokkaido economy, the local municipal government has launched an initiative to link up local Sapporo/Hokkaido IT businesses with partners in Shenyang. I expect that there are probably incentives for local Sapporo/Hokkaido businesses that participate in this program.

As for criteria on which Shenyang company to partner with? Well, I think that the biggest criteria is "Can anyone there speak Japanese?"

It is unfortunate, but my experiences so far have been negative, both on the communication front and with regards to expectations on technical prowess. There aren't many IT people in Shenyang that speak business-level Japanese, much less have background in dealing with global software development. But this is a double-edged sword: there aren't many in Sapporo who can claim they have the same, either. I expect that there are better business opportunities in Shenzen or Beijing, the present IT and business centers of China.

One of the biggest obstacles I found was that not only is communication in Japanese a problem, but so was comprehension of English. Especially for the IT world, English continues to be the lingua franca. Googling for information, most of the valid hits returned for queries on coding, etc., will be in English. Python, Ruby, Lua, Erlang... all technologies developed outside of anglophone-centric countries, and yet most documentation will be in English. I suppose that being able to at least habla inglés no matter where you hail from is key in the IT world.

Then again, Googling from inside of China produces some *skewed* results...

Permalink Reply by Daniel Leuck on June 18, 2008 at 3:42pm

Interesting. So the city or the prefecture are providing incentives. I expected it was purely a cost issue.

It is unfortunate, but my experiences so far have been negative, both on the communication front and with regards to expectations on technical prowess. There aren't many IT people in Shenyang that speak business-level Japanese, much less have background in dealing with global software development.

That is unfortunate. With ValueCommerce in Moscow we went on location and interviewed each developer in English. Getting through an English interview was a prerequisite for working on the team.

I wonder why more Japanese companies don't outsource to less expensive places in Japan such as Okinawa where wages are much lower, everyone speaks Japanese and the government provides good tax incentives.

Permalink Reply by Brooke Fujita on June 18, 2008 at 5:47pm

@Dan:

> I wonder why more Japanese companies don't outsource to less expensive places in Japan such as Okinawa...
Spot on as usual, Dan...

There is (or is it now "was"?) a trend to "near-shore" and send out software development work to Okinawa and Hokkaido, the literal ends of this country. And, as you understand correctly, the advantages are lower cost and better communication.

But in the IT sphere here in Japan, there is way more demand for coders then there are coders. At least, that is my gut feeling. This situation is probably due in part to the lack of respect for coders in this country, as Mika and Scott indicate. The declining birthrate only exacerbates the likewise faltering numbers of IT graduates coming out of Japanese universities.

But the going rate for hiring developers in Shenyang may look too enticing to the people holding the pursestrings. I recall seeing an unofficial quote that had junior developers at 400 yen/hour, with a senior developer at 800 yen/hour. Unofficial quotes, mind you, so please take that with a grain of salt. Judging from what I found drilling deeper into the link Scott provided above, I would say that the present going rate for a Japanese developer even out here in the great white North of Japan exceeds 800 yen/hour. So, I can sort of see why some of the systems integration companies in Japan are interested in off-shoring.

I sure hope, however, that management out here have at least heard of Fred Brooks and the Mythical Man Month. Most times, simply throwing lots of warm bodies at a project will not result in any semblance of success.

Permalink Reply by Mika Leuck on June 18, 2008 at 5:56pm

I wonder why more Japanese companies don't outsource to less expensive places in Japan such as Okinawa where wages are much lower, everyone speaks Japanese and the government provides good tax incentives.

Okinawa doesn't have a lot of really good engineers. They move to bigger cities for better salaries and to meet good engineers to improve their skills. Japanese companies don't outsource programming jobs to Okinawa but they do often outsource call centers.

Permalink Reply by Daniel Leuck on June 18, 2008 at 8:19pm

Brooke: I recall seeing an unofficial quote that had junior developers at 400 yen/hour, with a senior developer at 800 yen/hour. Unofficial quotes, mind you, so please take that with a grain of salt.

That is just below the numbers we were looking at in Nanjing, which is a city of six million people with several good universities.

Brooke: I sure hope, however, that management out here have at least heard of Fred Brooks and the Mythical Man Month. Most times, simply throwing lots of warm bodies at a project will not result in any semblance of success.

Absolutely. In my experience a really good developer can be as productive as 3-5 average ones and, as we all know, a bad developer can actually result in negative productivity due to the babysitting required.

Mika: Okinawa doesn't have a lot of really good engineers. They move to bigger cities for better salaries and to meet good engineers to improve their skills.

Ah. That is often true of top programmers in smaller cities in the US as well, but usually there are some that stay put for family reasons or simply because they don't like the big cities. I'm not very familiar with Okinawa, so I could be talking out my backside :-)

Permalink Reply by Victor Vorski on July 1, 2008 at 1:55pm

Mind you considering how low quality the output of software engineers in Japan in general is likely the software engineers here are being payed how much they are worth.

Perhaps at some point Japan got stuck in a negative feedback loop with low salaries in development leading to low quality of candidates entering the field, leading to lousy output, leading to low value placed on software developers leading to...

Btw. Dan, VC (and other foreign-IT companies) are an exception - they try to attract foreign talent and thus have to pay foreign wages. Talking to my Japanese engineer friends they work twice as much and earn half as much as VC engineers. (Though perhaps their performance per wage-dollar might be comparable, not sure).

Permalink Reply by Daniel Leuck on July 1, 2008 at 7:03pm

Victor: Mind you considering how low quality the output of software engineers in Japan in general is likely the software engineers here are being payed how much they are worth.

Its hard to generalize, and I am not aware of any metrics that could be used to back up such an assertion. Its certainly true that Japan doesn't have many software companies that are successful on a global scale, but that doesn't necessarily reflect on the quality of their software developers. It reflects more on areas of concentration, the level of entrepreneurial activity, etc. Some of the best developers I know are Japanese nationals. Japan has also produced a number of very successful open source projects.

Victor: Btw. Dan, VC (and other foreign-IT companies) are an exception - they try to attract foreign talent and thus have to pay foreign wages.

As the person that was paying their salaries out of my budget I am painfully aware of this :-) I was talking about the average salary of software developers in Japan (not VC) vs. other first world countries in the area. The national average for Java developers is around $40K. An experienced Java developer in Tokyo can easily make US$65K or more. This is competitive with places like Singapore and Australia.

Victor: Talking to my Japanese engineer friends they work twice as much and earn half as much as VC engineers.

This doesn't surprise me. VC is, as you said, an anomaly.