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I learned this a few years ago. I can make great arguments but it doesn't matter. The boss has his mind made up and he'll say anything, even blatant BS, to justify it.
It's in part the cost of living (which is a very valid argument) and in part basic supply/demand. If there is an oversupply of qualified people in your country willing to work for lower wages, that is what you are competing with, not people in the EU/US.
Anyway, the way I negotiated was very simple. Basically a version of ”I understand that this is a good salary relative to my local market, but I am not even looking for jobs in my local market. I am comparing your offer to offers from other US-based companies that I received for remote work.”
That was it. The part of other offers was true of course (even if for companies that I wasn’t too excited to work for). No need to even reply to their arguments of “company policy”, “cost of living”, whatever. I only have to state my point of view.
There is also the topic of me not receiving benefits like health care and 401k and other stuff that American employees get. I didn’t use this argument (didn’t occur to me), but I have the impression that this was considered in their calculation in how much to raise their offer.
There's no real winning these on a point by point basis because the entire system of wage labor is set up to separate you from the value you create for owners as much as the market will bear. Employers agree with this openly every time they talk about how this is a market, though they avoid the charged language and obfuscate it by drawing focus to other ideas. These kind of logical points from employers are not rules…
It is simple economics and markets in action. It appears you are probably employed somewhere in Asia and you are comparing with similarly titled roles within your company/outside your company in other geographies like US/EU. Salaries are generally local labor market and demand-driven. Think of it this way. If you leave the company, chances are the company backfills your position with someone having the same job skill…
The contracter route seems feasible and actionable. I'll give this a serious shot. Thanks for bringing this up.
There's no real winning these on a point by point basis because the entire system of wage labor is set up to separate you from the value you create for owners as much as the market will bear. Employers agree with this openly every time they talk about how this is a market, though they avoid the charged language and obfuscate it by drawing focus to other ideas. These kind of logical points from employers are not rules…
Or they could switch jobs to a company that pays more rather than spending potentially years organizing which may not even work in the end.
Their secret is negotiation. Many US-based large companies and well-funded startups that pay in those top ranges know very well that there are engineers in low cost-of-living countries who are just as productive for their company, so they will compete for those engineers.
The deciding factor in whether each of those individuals actually makes a regional salary or a top level salary (or anywhere in between) is purely based on whether they are willing to refuse lower offers and only accept the same pay the locals in top-paying areas like SF/NY do. Some employers will never budge, but many will, because you're still worth just as much as the locals they pay the same rate.
TL;DR If you've got the skill, only accept the top range of pay and that is what you will make.
Switch jobs to one that pays better or move
Honestly, I'm very conflicted about this. My issue is not directly with my salary. It's more with the fact the I'm being payed less when compared to my peers in other locations while I'm doing the same/more work. Location doesn't influence output, why should it influence the pay scale?
You might also try building some reputation on Open Source projects with a strong community, the type that's regularly being hired for. Get referrals from your colleagues in that project for people looking for employees or contractors. Cite the rates your colleagues make, and don't accept location-based reductions.
(Also, make sure you have a job or contract lined up before you leave, unless you're really confident you can get one at the rate you want.)