Well the question is: why don't they replace the $370k/yr american employees by the $60k/yr indian ones? Why do they pay the premium for US employees? Except for defense projects, it doesn't matter where the code is made, US or India. The German software industry outsources heavily and tech wages don't reach the US levels. Why doesn't Google?
The answer would be: 1) they do, and 2) they can't
1) Google clearly hires plenty of people in India. Here's their new office in India, with allegedly ~10k employees: https://careers.google.com/locations/hyderabad/. The assumption that Google is only hiring "expensive american employees" vs "cheap indian employees" does not hold
2) Talking about "american" and "indian" employees is misleading. Your question could just as well be "Why not hire for $100k from <midwest> instead of $370k in CA?" At that level of salary, you're talking about attracting top talent from around the world, who are often happy to migrate. The salary is a reflection of an arms race between tech companies - the same person isn't going to opt for $60k to stay in India - they will either take a $350k job in Facebook, a $300k job in Amazon, or at worst, a $100k+ remote job to stay at home(numbers are illustrative). You simply cannot attract the same talent due to how global(and competitive) the top-end of the programming marketplace is.
> Why not hire for $100k from <midwest> instead of $370k in CA?
That's not a realistic comparison. That's a comparison of an average-ish salary in the midwest to a far above average salary in CA. Realistically, it's more like $100k in the midwest vs $130k in CA or $370k in CA vs not being able to hire anyone in the midwest because there isn't enough volume to be able to find someone who's that much of an outlier.
> The German software industry outsources heavily and tech wages don't reach the US levels.
German SWE work doesn't pay well domestically. It's also struggling to attract talent. Probably a reason why Germany isn't known for its many profitable software companies.
> Well the question is: why don't they replace the $370k/yr american employees by the $60k/yr indian ones?
In the case of an engineer making $400k in the US, I suggest this is a fairly exceptional individual, with a level of skills and abilities that are rare in _any_ country.
Since that individual produces large profits for their employers, employers struggle to hire them at any price that is lower than their productive yield.
Strong SWEs can make companies like Google and Facebook millions of dollars per year. So these companies will gladly pay any six figure salary for these individuals.
Of course, if they can get away with only paying them $60k in India, they will. It's not their goal to pay well; it's a necessity.
They try to but it's not always that easy. When you outsource you often need a lot more people to do the same work since there is more overhead. So the total cost may not be that much lower and the output is less.
Not saying this is always the case but it has been like that at my company several times. IMO IT and business need to work close together to efficiently produce quality stuff that the customers want. This is way harder if you are separated by a sucky phone line.
Additionally, businesses learn after being burned a few times that throwing distant resources at software problems tends to make a bigger mess than they started with (no matter how good their PM may be). Often one good developer embedded within a domain in a company is worth more than an entire outsourced team.
I'm sure there are exceptions, but it's what I've anecdotally observed over my career to date.
Google would have to become a remote management company for that to happen. But Google makes so much money that they're not really under pressure to do that.
Outsourcing is a strategy employed by companies who need software engineers on the cheap and are less concerned about the non-zero difficulty of remote work/management.
I wonder if lack of competition has made them lazy when it comes to driving down costs. Each of the FAANGS is a monopoly or near monopoly in its niche and American regulators seem reluctant to deal with that.
