Some time ago, a chart comparing the salaries of software developers went viral within that select group that are Sri Lankan software developers. In great indignation, they pointed out that Swiss software developers earn a whopping $104,200 (median) every year. Far more, in fact, than the Sri Lankan developer, who earn a mere $6,700 a year.
To put that in perspective, the Swiss developer earns around Rs 13,689,800 a year. Divide by 12. That’s a million rupees a month.
That’s a lot of money.
Why don’t Sri Lankan developers earn as much? To understand the reasons, we explored the source of the data (Bloomberg.com) and cast the numbers into local perspective.
What the numbers show
We’re (relatively) well off
If a Lankan software developer earns peanuts compared to the Swiss, then the average Lankan earns…half a peanut. The median pay for Sri Lankan developers is 1.98 times that of the average worker. Richness (wealth as a social contrast) being a relative factor, this plays very well in society.
In Switzerland, everybody earns a lot more money. The national average income is $86,145 – software developers make about 1.21 times that. You can still lord it over your neighbour, but not by a whole lot.
It’s not as bad as Qatar, or as good as Pakistan
Or Kuwait, or the UAE, where software developers earn a whole lot less than the average. Contrast this with Pakistan, where the median pay ($7,200) is almost 6 times that of the average annual income. Which means a developer earning the median salary in Pakistan is approximately five times richer than the guy next door.
What the numbers don’t show
The costs of living
According to Numbeo, the crowdsourced global database, Switzerland is expensive – at least by Sri Lankan standards. A 0.3 liter bottle of water is $4. A loaf of bread? Anywhere between $2.8 to $3.4. Water, heating, electricity and garbage collection for a small apartment costs an average of $223. A pair of Nikes cost around $150. A one-bedroom apartment in a city centre can cost over $1,600. Only Internet can be considered cheap: unlimited, 6 Mbps ADSL for just under $40, and even that varies.
Contrast this with Sri Lanka, where everything’s cheaper except the Internet. It’s safe to say that the Swiss salary doesn’t magically transform itself into a sports car – rather, you end up paying for shoes. After all, this is a place that was once called the EU’s most expensive country.
The cost of living significantly impacts the relative wealth of an individual – while a developer on a Swiss salary would theoretically be rich here in Sri Lanka, that does not translate to the environment in which that salary is earned.
The Sri Lankan software industry exists precisely because it’s cheap
Sri Lanka is often billed as one of the world’s best places to outsource your code. It’s not billed as a product economy (yet), nor is it Silicon Valley. At the end of the day, cost is what makes outsourcing competitive, and if Sri Lanka wasn’t affordable, the majority of those contracts would go elsewhere.
To make a huge generalization, there is no demand in Sri Lanka large enough to sustain a software industry of this size – the money has to come from overseas.For these jobs to exist in the first place, Sri Lanka has to be what it is now – talented and cheap.
To make another generalization, Sri Lankan developers are not going to earn top dollar simply because that destroys the foundation of most of Sri Lanka’s software companies – value for money. Efforts are being made to change this, but as long as Sri Lankans can do what foreign developers can do, and for cheaper, there’s no real reason for the status quo to change.
Note: article amended – corrections were made for the original article using the term “Swede” to refer to someone of Swiss origin. We apologize to anyone offended by this incorrect usage of the term.