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Software engineering salaries come from one of three budgets

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Re: Software engineering salaries come from one of three budgets

#251

Post by PeterisP »

vanderZwan wrote: post #33
w4tty wrote: post #12

Earlier quoted context omitted.

No. Because COBOL maintenance is outsourced to the third world.

Do you seriously suggest that banks outsource the maintenance of the mainframes that process their money transfers? If so I'd like to see a source, because the only articles I have read about on this topic (e.g. [0]) tell me the exact opposite: it's all in-house the risks are too high. For larger banks it's practically a national security risk. Maybe the software they use is from abroad (usually ancient IBM shit), bu…

Yes, they do; I won't name names because it's from personal experience, but I've seen all maintenance of the core banking system outsourced (e.g. to IBM), I've seen the development/maintenance of the core banking system (which many banks buy from outside vendors, most banks do some customization but many have a commercial system as the base, not some unique fully home-grown solution) go to heck because the vendor moved most of their maintenance from the existing (presumably expensive) teams to cheap overseas engineers which weren't very effective for various reasons; I've also seen banks doing offshoring without outsourcing (i.e. make up an IT department in a 'cheap' country where they don't really do banking) and outsourcing without offshoring.

It's definitely not the case where it's all in-house. Some organizations do, some don't, and there are so many banks (and so many different types&sizes of banks) in the world that every option is represented.

Re: Software engineering salaries come from one of three budgets

#252

Post by PeterisP »

vanderZwan wrote: post #110
nijave wrote: post #64

Earlier quoted context omitted.

They don't "out source", they in-source by opening technology hubs in cheaper locations.

Again, I would like to see a source. I'm not saying you're wrong. Maybe you're talking about small banks in the US or something, of which I know basically nothing. I am thinking of examples like Nordea, the bank in the article I linked, which has a market share of around 20% in Sweden[0] and handles the government's bank accounts. Especially that last part makes me extremely skeptical that the Swedish government woul…

The link in your earlier post seems dead, but if we're talking about Nordea specifically (coincidentally, I have worked there many years ago), partial IT outsourcing has always been an option, it has had thousands of external IT consultants, it has used a number of core systems from external vendors in its many banks (in such multinational organizations it's often not that simple to draw boundaries where a department or region or acquisition is often doing things differently with different systems or processes), it had a very large strategic outsourcing deal to IBM in 2017-2019ish, etc.

If you're extremely skeptical that the Swedish government would be OK with handing over the keys to their economic kingdom to cheap digital labor abroad so a company might save some money, then you need to re-evaluate your mental model, because that is definitely happening in reality. They may impose some legal limitations - the exact same limitations as towards any other bank - but they generally act as a normal minority shareholder, demanding the company to be cost-efficient and maximizing profit even if it means outsourcing and offshoring.

Re: Software engineering salaries come from one of three budgets

#253

Post by PeterisP »

lotsofpulp wrote: post #183
count wrote: post #148

Earlier quoted context omitted.

The CapEx -> OpEx push is also heavily tax based. I can write off (generally) 100% of an OpEx expense today (or, as I spend the money). CapEx expenses become Assets, which are tracked and taxed , and the business doesn't get to write off that spend immediately - it turns into a 'depreciation' write off, spread over the useful life of the item (sometimes 5, 10, or more years). Real estate, vehicles, large equipment, e…

> CapEx expenses become Assets, which are tracked and taxed, > Real estate, vehicles, large equipment, etc. is generally all done this way - a CapEx gets you an asset or property, which is then taxed and depreciated. What tax(es) are you referring to? Property taxes?

The general income taxes. Opex is close to cash flow, capex is not.

For a simplified example, let's assume that this year you bring in $100 of cash and spend $50 of it on opex and $50 of it on capex.

In this case, your revenue this year is $100, but your expenses this year are all $50 of opex plus some percentage (depends on over how many years you capitalize the investment, as set by your policies but limited by tax law) of capex, if it's a 5-year depreciation then it would be $10 of those opex $50, so for your $100 of outgoing cash $60 are expenses this year and $40 is treated as accumulated assets for future. So the accounting says that you have $40 of profit this year - and, crucially, it could have been as low as $0 or as high as $80 (this year! The total profit doesn't change, but it can get moved around in time to a different year) if your accountants can make the case that those activities were 100% opex or 100% capex.

And while there are various reasons why the company might prefer these numbers to look higher or lower, the main practical impacts are twofold - one is taxes, where saying that some expense is opex means you pay less taxes today, deferring them for a few years and improving your cash flow, but the other is stock market, where saying that some expense is capex means that your quarterly profit is higher and thus it helps your stock price and any employee benefits linked to stock price.

And because of that your management often will have KPIs with a very strong motivation to push things towards opex or capex depending on the company.

Re: Software engineering salaries come from one of three budgets

#254

Post by osigurdson »

__turbobrew__ wrote: post #215
osigurdson wrote: post #128

As an aside, it seems that the $500K/year jobs have dried up - at least I don't see much of that on the "Who's hiring". Salary ranges seem to be more in the $100K - $200K range.

I think the ceiling is still there where if you have special hard to find skills (ML and distributed systems at my company) you can still command that salary but if you are just writing crud apps nobody is going to pay you half a mil per year anymore.

I suspect most startups are doing more than crud for the most part. Of course, good on you if you have a great startup idea that just requires a simple crud app!

Re: Software engineering salaries come from one of three budgets

#255

Post by mooreds »

mooreds wrote: post #249
tessierashpool wrote: post #211

Earlier quoted context omitted.

flat fees fail for dev. as soon as you encounter an unexpected problem, your margin suffers. since unexpected problems can radically alter dev time, your margin can be obliterated.

I love this post about the topic: http://web.archive.org/web/20220507182508/https://rickmaneli... (Lost on the current site, as far as I can tell.)

Actually, reached out and he republished it: https://www.rickmanelius.com/p/the-website-rfp-and-the-impos...

Re: Software engineering salaries come from one of three budgets

#256

Post by verinus »

rprospero wrote: post #182
resonious wrote: post #57

Earlier quoted context omitted.

I actually had a pretty good time at a third-category place. When you're writing software for a non-tech company, it means your customers are very close - often in the same building, working at the same time. You can watch them use the software, hear complaints in real time, and push solutions very fast. In my case, I might've been lucky, though. One of the co-founders had a CS degree and deeply valued the productivi…

Along those lines, one of the most toxic places I've ever encountered for developers was at a company that sold b2b software. You would think that developers would be valued for creating the product, but they were fully treated as a cost centre. The profit centre was the sales team who went out and got companies to send money. The developers merely existed because legal said that, for compliance reasons, the firm was…

interesting that this company could stay in business.

over the long term I would think that two things will happen: good devs will leave the company while the remaining fight an uphill battle maintaining code until the customers leave.

but ofc sales and incentives in general are a whole different area of problems.

Re: Software engineering salaries come from one of three budgets

#257

Post by rprospero »

verinus wrote: post #256
rprospero wrote: post #182

Earlier quoted context omitted.

Along those lines, one of the most toxic places I've ever encountered for developers was at a company that sold b2b software. You would think that developers would be valued for creating the product, but they were fully treated as a cost centre. The profit centre was the sales team who went out and got companies to send money. The developers merely existed because legal said that, for compliance reasons, the firm was…

interesting that this company could stay in business. over the long term I would think that two things will happen: good devs will leave the company while the remaining fight an uphill battle maintaining code until the customers leave. but ofc sales and incentives in general are a whole different area of problems.

It's interesting that you mentioned the good devs leaving, because they never got the chance. The owner had a policy of only hiring average devs and 10x devs were fired with extreme prejudice. His hiring theory was similar to modern server management: Cattle, not pets. It should be possible to fire a dev on Monday and have their replacement closing tickets by Friday. Good devs were harder to replace than average devs, so every good dev was a liability.

This policy was also useful for retention. Other firms in the area knew that he fired all of the good devs, so they never tried to poach his employees. In fact, if you got tired of the toxic environment and quit, the firm's name on your resume meant that you probably weren't going to get another dev job without leaving town. When a dev sees their former colleagues making sandwiches at Subway, another weekend of unpaid overtime doesn't sound as bleak.

Re: Software engineering salaries come from one of three budgets

#258

Post by count »

lotsofpulp wrote: post #205
count wrote: post #187

Earlier quoted context omitted.

In some cases (e.g. a building or expensive equipment purchase, probably yes, property taxes in most jurisdictions, at least in the US). The depreciation is deducted from income for income taxes over time, rather than all at time of purchase as an opex expense is. This implies a higher income tax bill 'now', with a smaller deduction smeared over time.

> This implies a higher income tax bill 'now', with a smaller deduction smeared over time. I would not characterize a lower deduction for a business expense as taxing something. I would have assumed it meant a buyer has to pay an additional tax as a result of purchasing something.

A business pays no tax on an OpEx. The specific tax on a CapEx depends on the jurisdiction.

Re: Software engineering salaries come from one of three budgets

#259

Post by vanderZwan »

PeterisP wrote: post #251
vanderZwan wrote: post #33

Earlier quoted context omitted.

Do you seriously suggest that banks outsource the maintenance of the mainframes that process their money transfers? If so I'd like to see a source, because the only articles I have read about on this topic (e.g. [0]) tell me the exact opposite: it's all in-house the risks are too high. For larger banks it's practically a national security risk. Maybe the software they use is from abroad (usually ancient IBM shit), bu…

Yes, they do; I won't name names because it's from personal experience, but I've seen all maintenance of the core banking system outsourced (e.g. to IBM), I've seen the development/maintenance of the core banking system (which many banks buy from outside vendors, most banks do some customization but many have a commercial system as the base, not some unique fully home-grown solution) go to heck because the vendor mov…

I should have been more specific: When I wrote "maintenance" I was thinking more of "the people in charge of keeping things running on a daily basis and who solve crisis situations". Of course I don't believe that banks build all of their computer systems from the ground up themselves.

But even after narrowing it down to that your stories make me think I had too much faith in the banking system.

Re: Software engineering salaries come from one of three budgets

#260

Post by CRConrad »

alephnerd wrote: post #147
irrational wrote: post #141

Earlier quoted context omitted.

But, my company does employ thousands of software people. We just don't sell consulting, sell software to other people, or sell products that use software.

I'm guessing GAP.

Zara, Zalando...?
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