If the market functions well, wages should be approximately equal for the best developers worldwide, at approximately the value they add to companies.

Given that top engineers in SV only make $200k or so, there are still inefficiencies to be exploited. smiles

Costs of living are different across the world, so people can live on the same level with smaller wages in less wealthy countries.

Costs of living matter to salary like costs of goods matter to software, which is "not at all".

Could you explain why?

For me it seems I'd prefer to work for 1000$/month in Poland, than in USA.

I live in India.

While food, rent, etc. are much cheaper here than in the U.S., there are a few things software developers need that cost the same, or even more, if you are living in India.

* Paper books are cheaper (local low-price editions).

* eBooks cost the same.

* Hardware is more expensive because of levies on imports. For example, the 15" MacBook Pro costs almost USD 1660. (In the U.S. it is $1200.)

* Software licenses purchased over the Internet cost the same. (Examples: TextMate, UltraEdit, etc.)

* Software licenses purchased through local resellers, subsidiaries, etc. are more expensive. (Examples: Delphi, and probably others).

* Web hosting (if you decide to host with a reputed service provider in a 1st-world country) costs the same.

So, even if the basic cost of living in country B is X% lower than in country A, the difference in the cost of living for a software developer will be significantly less than X%.

In a competitive labor market, a dev should be paid close to the marginal value they generate. And I should generate close to the same value wherever I'm working. (with, maybe, a 20-30% premium for working local do to increased efficiencies).

That's not how the real world works, though. People (usually) get paid the minimum they'll accept, as long as that value is less than or equal to what they're worth.

If a Polish developer has a choice between working for a company in his own country for $x, or for a foreign company for $2x, he'll take the second offer, even if that same company is paying American developers $8x.

If you were right, then someone else will realize there's cheap/good labor available, and poach him at $3x. Then, someone else will steal him at $4x. And so on, until he's making close to what the American dev makes.

Tech hiring is extremely competitive. If there were easy-access to a large, skilled labor force for one quarter the money of the currently available labor market, don't you think tech firms would jump on the opportunity for cheap labor? I know when I was hiring I would have.

Sure, to some extent. However you have to remember the following points:

- Not all employers want remotely based staff

- If the wages are significantly better than local jobs, the developers may compete with each other by offering lower wages

- It may be harder to find remote staff than local staff

- While it's easy to say "pay him more and he'll move to us", it's worth remembering that workers in any industry don't always chose jobs based on salary alone.

- If companies continue raising salaries to poach staff, what happens when the cost becomes equal to that of local workers? They chose local workers. So while the salary may not be as low as it might be, it won't reach the same levels as local staff.

But would you be happy knowing you're working as a cheep code monkey? Working for a company abroad, I'd expect salary to be close to their local level. I don't think serious developers would work for 1k/mo in the US and even if that would be "ok" salary in PL, I would expect more from the employer.

If you pay the minimum, then that's what you get in return. (or as smanek put it - you generate the same value - why should you be paid less)

I think what you are describing is employees market, where I am used to employers market.

Why should employer pay more, when they would find students wanting first job so hard, that they would work for 800$ a month?

Are in states salaries in every city the same? In Poland we have 100% differences between Warsaw and Lublin.

That's true, but if I'm working for $1000/mth in Poland and my colleague is working for $8000/mth, I probably wouldn't stand for it.

There is no shortage of good devs. THERE IS a shortage of good devs at whatever price you are willing to pay, which is obviously not attractive enough.

This strikes me as the same rhetoric Microsoft uses to demand each year more visas for foreign talent, pretending there are no engineers to be hired in the US. There aren't at the price they want.

BTW, I'm a foreigner anyway.

"This strikes me as the same rhetoric Microsoft uses to demand each year more visas for foreign talent,"

whoa there! I didn't mean to spout any "rhetoric", least of all anything to deprive any devs (I am one myself, and have worked in the USA, before choosing to come back to Bangalore) of a decent wage. Just reporting on what I see here,because I thought it might add some value to the discussion. Feel free to add the word "perceived" before "shortage" if that makes you more comfortable.

I'll put it this way, If as a startup founder if you want to hire m very high quality developers with n $ ( I make no judgement as to what the "right" value of n should be) it may make sense to also consider assembling a remote team. Nowhere did I make the argument that you would save money by doing this.

My points are orthogonal to whatever MS's lobbyists say to your senators. And the people I were talking about (really good devs who choose to live in India. All of them have worked in the USA/Europe and could work there again any time they choose) are making from 60 k$ (Java enterprise dev) to 100k$ (embedded/kernel/hardware dev) so I am not sure how much money their employers save (though I am sure they do save some)

Do note that this is not about "hiring devs whevever they are". The article is about co-founding startups, not just about "outsourcing your development". This is a much closer relationship.