How much should you pay for an engineer / developer in #Bangalore? Winter 2013 edition

Many entrepreneurs from outside Bangalore and larger company VP’s of Engineering from the US, who wish to relocate often ask me this question – How much should I pay developers / engineers in Bangalore?

That is a very tough question to answer overall, but I have noticed some patterns based on working with many startups here and also have the information on the salary bands for several large technology companies here in Bangalore.

The best way to think about how much to pay is by giving salary bands and considering the parameters.

There are 3 primary parameters I have seen used when people hire folks to determine their salary.

1. Experience – usually measured in # of years working on relevant and related technologies. A rule of thumb I have seen is 1.2 to 1.5 times the number of years of experience + starting salary of a fresh graduate at 2L ($3K) per year to 6L ($10K) per year. For example, if you are looking to hire a developer with 5 years of experience, then you will pay 5 years times 1.2 plus 2L per year if you are a startup that’s not funded.

2. Type of technology – The more arcane the technology the more you can expect to pay for it. For example, you can expect to pay much less for a person who knows PHP and more for someone who knows Android app dev or Ruby on Rails. Some common technologies and your base times multiple is below. I am assuming php developer is the base at Rs. 1. All others are multiple of what you’d pay the php developer. I dont mean this to think of php developers as bottom of the pool, but that’s the most prevalent skill, so the supply of engineers is more than the demand, making it a skill that’s easiest to hire and least expensive as well.

a) php developer = 1

b) Javascript + HTML (front end) = 0.9 – 1.2

c) Ruby = 1.2 – 1.5

d) Python = 1.4 – 1.7

e) Android = 1.3 – 1.8

f) iOS = 1.4 – 1.9

3. Stage of company. Generally a company, which is bootstrapped pays less and one that is funded pays more. Larger the company, the more you are likely to pay, If the unfunded company pays INR 1, then I have seen number of upto 2.3 times that being paid by larger technology companies.

So, if you are looking to hire a developer or a team, how do you decide how much to pay?

Step 1: Start with fresh graduates at 2L ($3K) per year if you are a new startup and go up to INR 6L ($10K) if you are a larger established company in the US for the same fresh graduate.

Step 2: For people with experience, expect to pay 1.2 times their # of years of experience added to their salary. So someone with 2 years experience would get 2.4 (1.2 times 2) + 2L to 10K depending on your company size.

Step 3: Finally depending on your technology stack add the multiplier above. So if you are looking to hire a Ruby on Rails developer with 2 years experience for a startup, then:

(2L (fresh grad at an unfunded startup) + 2.4L (for 2 years experience) ) * 1.2 (for Ruby) = ~5 to 6L per year or about $9K to $10K.

Two other points, that are VERY important.

1. To determine if the person is *good* I’d recommend you get them on board for a week to a month before you hire. Don’t use this formula blindly and pay a person who is not good a boatload of money to get disappointed.

2. Most people use salary at the previous job plus a 20-50% uplift (or raise). I think that works for most, but if you have a superstar candidate I’d go back to this formula.

P.S. There’s no good way to determine a good candidate except working with them. I dont take reference checks in India seriously – more on that for another post. I prefer recommended candidates from people I know very well.

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9 thoughts on “How much should you pay for an engineer / developer in #Bangalore? Winter 2013 edition”

  1. Seriously. An RoR dev with 2 years of experience cost $10K in India while a SE w/ Masters (and no experience) costs >$50K in US. Does such differential still exist between US and India? More so, how can this be true when you consider a city like Bangalore?

    Based on another article http://www.haaretz.com/business/1.567238, the cost differential is closing between US and Israel. Based on various conversation with folks in India, this observation is also true in India. So, what am I missing in this recommendation to calculate pay for engineers in India?

    1. Venkatesh. Having worked with Israel for years (over 15+) I can confidently tell you that they have always been more expensive. A combination of demand and supply again. They have positioned themselves as high end engineers and there are so few of them. In Bangalore you can EASILY get good engineering talent (not great) at these prices. That’s the bottom line. Paying more makes no sense.

  2. Mukund,
    on your point of ” getting the person to work with you for a week/month before you hire. How will this work if this person is already working full-time in another firm?

    Also, I seem to have make this mistake. I am disappointed with my last hire. How do I tackle this situation of a sub-par team member?

  3. I guess its obvious that you’re talking about people who have x years of experience and perform like they’ve x years of experience. In India, I’ve seen in many companies irrespective of their size where people of x years of experience work like x/2.

  4. Hi Mukund,

    It depends on person where he works , if it is a product company its different but again if it is services your formulas might hold good ,

    Thanks,
    Ajay

  5. There’s no good way to determine a good candidate except working with them. I prefer recommended candidates from people I know very well.

  6. Really useful inputs Mukund. These are useful metrics to come up with a rough figure.
    Cheers
    Abhi

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