Marred by Scandals, Big Tech Is Having to Shell Out Big Bucks for Top Recruits

October 24, 2019

As the demand for engineers across industries hits an all-time high, names like Facebook, Amazon, and Google aren't carrying the same cachet with new recruits as they once did due to several years of negative headlines about data collection, political manipulation, and labor practices, as well as the competitive marketplace, according to recruitment firms.

To get them to sign on the dotted line, the big tech giants are offering substantial salaries, signing bonuses, and stock options to sweeten the deal. Facebook is reportedly offering $1 million packages to recruit senior-level engineers for technical roles, according to several recruiters who work with the company. One recruiting firm said they've seen signing bonuses as high as $250,000 from the company. The firms spoke on the condition that they remain anonymous because many of the contracts are under non-disclosure agreements.

For comparison, the median salary for a senior engineer is $120,000, according to ZipRecruiter. San Francisco or Palo Alto senior engineers in particular make about $145,000, while New York is at $125,000. Typically these positions have extra compensation above their base pay in the form of company stock or bonuses.

Facebook isn't even the top dog in all situations, according to CareerArc CEO Robin Richards. In terms of companies that are most likely to pay a signing bonus, Facebook comes in after Amazon, Snapchat, and Apple, he said.

In fact, packages from the big tech companies — especially those that have faced harsh scrutiny over data privacy and election interference — have increased significantly over the past three years, the recruiters said. They've also observed other similar-sized firms offering comparable employment packages to Facebook.

"If you're located in New York or San Francisco, you need to compete for top talent," said ZipRecruiter labor economist Julia Pollak. "The other thing is, when such a large part of [other startups'] packages is equity, you have to use cash compensation to attract top talent because they are excited about the possibility they can be turned into millionaires with an IPO."

The Competitive Tech Landscape

Engineering job listings have increased 20 percent over the last two years, according to ZipRecruiter and Indeed. Meanwhile only 3.7 percent of college graduates graduate with computer science degrees, rising only slightly from 3 percent over the same two years, ZipRecruiter reports.

Facebook, Google, and others have created programs to attract potential talent, especially at historically black colleges and Hispanic-serving universities. But engineers with relevant experience remain rare and in demand, especially those who specialize in in-demand fields like cybersecurity.

Further squeezing the small engineering marketplace is uncertainty about the future of visas that allow international workers to hold jobs in the U.S., like the H-1B. Concerns over visa restrictions with the current administration has also made more companies opt for people who are already legally allowed to work in the U.S. and will not require sponsorship, Ingenium CEO and president Rick Dionisio said. While President Donald Trump has said he wants to "encourage talented and highly skilled people to pursue career options in the U.S," the approval rate for H-1B visas has declined from 92 percent in the fourth quarter of 2016 to 75 percent in the fourth quarter of 2018.

"With the recent tightening of the immigration laws and H-1B transfers, it eliminates a fair amount of candidates that come from Indian or APAC," Dionisio said. "People come here to get a master's degree at Columbia University or Carnegie Mellon, but it's tough for them to find a job because the companies can't handle the visa transfer."

Negative stories in the press about Facebook, Amazon and Google have created a black eye on their reputations. Election interference scandals, data breaches and other privacy concern has taken a toll, and reports over the past year of unfair labor practices among Facebook contract workers, conditions and pay for Amazon workers, and accusations of Google prioritizing profit over employee rights haven't helped. Some candidates are questioning if they want the stress of these highly scrutinized companies, Dionisio said. A Facebook recruiter told CNBC software engineer acceptance rates have dropped from almost 90 percent in late 2016 to almost 50 percent in early 2019. Facebook disputed the statistics at the time.

"Depending on the specialized talent you're after, everything is supply and demand," CareerArc's Richards explained. "If you're looking for a very specialized type of engineer, you'll pay what you have to pay if you think you have to overcome your company's negative image."

Google did not respond to requests for comment.

"Engineers that come to Facebook don't come for compensation," a Facebook spokesperson said. "They come to solve big problems at scale, [including] data structures, algorithms, and AI."

"Amazon is where smart, passionate people come, and stay, because of the high levels of ownership they have over their work and the innovation happening around every corner," an Amazon spokesperson said. "Each year we receive millions of job inquiries and over the past three years we have grown by more than 300,000 employees. We are proud to offer competitive compensation and industry leading benefits and that the company is consistently among the most attractive places to work according to LinkedIn."

The perks that used to set these larger firms apart, like the ability to work in different offices, free food and educational reimbursement, have become standard. About one-third of all technology companies list perks in their job listings, according to ZipRecruiter.

Many new engineers over the last five to 10 years have been more interested in the company's mission statement, added Rishon Blumberg, co-founder of employment negotiation firm 10x Ascend. Younger engineers are now emphasizing taking a job that can create impact for social good.

While smaller startups may not be as stable, billion-dollar valuations leave upside for potential payouts if the company goes public or is acquired. Considering the average engineer stays at one company for 2.5 to 3 years according to CareerArc, going with a smaller company is a risk many are willing to take, especially if it is more aligned with their beliefs.

"It's not just Facebook," Blumberg said. "These larger tech companies with the deep pockets and the ones that have these ethical implications attached to them now are definitely going to have to spend more money to get the talent they want."

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