Perhaps this should go into a different thread as it is a bit of a side discussion. While I agree that the economic value added by a given employee (such as a sw engineer) correlates to how much a company can afford to pay that employee, I think it's also important to keep in mind that supply matters a lot as well. If supply of such talent exceeds a certain point, they're not going to be as special. Yes, the work output adds a lot of value for the company, but if companies have enough choice of people to do this work, that compensation gets bidded down.
Imagine a world where hot-shot level programmers were everywhere. At $1M in value per engineer, they'll hire as many as they can get. Pay them 500K, reap 1M, and profit. But eventually, the marginal value of hiring another thousand engineers goes down, and pay will drop. Given enough supply of labor, the price of labor will go down. SW is pretty much the polar opposite of a mature industry. Someday, it will mature. Someday could be 20 years down the line, or it could be 100 years in the future.
Now that it's getting to be well known (through levels.fyi) that it's lucrative to be working for the top tier of companies, I'd expect the supply of SWEs to increase over time. The problem is that, like other areas of engineering, it is hard. Many can learn the basics, but relatively few get really good and are highly productive. Few companies want to hire the bottom 50% of talent. The bidding wars are over the (perceived) top 10%, though talent evaluation is also pretty primitive.
In EE and CS, we've seen flat-out that, even though hundreds of thousands of engineers minted annually in India and China, the quality of talent is generally poor and only a tiny fraction are top-tier. This suggests to me that it's going to take a long time before we have "too many" good/great SWEs.
This is also a problem for growing domestic talent. Yes, while there are coding boot camps that can pump out lower-level SW talent, in many cases by stealing top talent from adjacent fields (engineers, mathematicians, physicists etc), the prospects for your average/below-average CS grad from a generic state school are not going to be so rosy. In some respects, they are
competing against the low-cost talent from India and China. Your top-quartile CMU/MIT/Berkeley/etc CS talent is probably going to do quite well for a long time.
(Note, I'm not saying that great talent is only at elite schools, only that they're over-represented there and recruiters like to go where the pickings are good. Exceptional talent does show up at non-prestigious state schools, but there's a lot of average talent to sort through)
ARoseByAnyOtherName wrote: ↑Sat Jan 25, 2020 10:11 pm
What's the catalyst that will cause these companies to stop offering these huge comp packages?"
SW has historically been cyclical. Growing companies also tend to defer trimming the deadwood. When the next recession comes, there will be an adjustment, and if nothing else, all the equity-based comp will naturally modulate downwards. That would likely be a bump in the road.
My bet is that it'll be related to Moore's law. Now that Moore's law is coming to an end economically, if not physically, that is going to dramatically reshape this industry and push the industry towards some maturing. Even so, that could be 20 years away.