Where Should You Open Your Next Engineering Office?
Update: This article was picked up by USA Today
For half a century, Silicon Valley has dwarfed nearly every other place in tech innovation. Consider:
- Venture investment in Silicon Valley is 21.5X the national average
- The average US metro has 4,000 active startups. Silicon Valley: 14,000
What is it about Silicon Valley that makes it an innovation hub? One pillar upon which Silicon Valley stands is its immigrants. Last year, 37 percent of Silicon Valley’s population were immigrants. And that’s just the general public. When you zero in on people between the ages of 25 - 44 who have “Computer and Mathematical” jobs, the percentage skyrockets to 74 percent.
But even Silicon Valley is so desperate for talent, it’s a breeding ground for poaching wars.
Today, the Trump Administration is aiming to tighten the belt on immigration. Regardless of where you stand on these policies, companies need to plan ahead for global engineering growth.
Introducing an Interactive Engineering Team Growth Map
Choose your preferences for 9 factors, including salary, taxes, talent pool and more to find out which locations are best for your next engineering office.
The following study looks at which countries are best positioned to build an international engineering office.
Where should you expand your engineering teams?
Most would assume it’s India. It’s gained a reputation as the ‘IT capital of the world’ because of its massive IT population, and even seeped its way into American pop culture.
A deeper analysis tells a different story.
We dug into 9 factors related to communication, corruption perception, competition for talent from other tech companies, taxes, average salary, rent, Internet speed, STEM grads, and skill. The skill level and corruption carried the most weight in our rankings to best identify places for enterprises to build distributed teams.
At HackerRank, we regularly post new coding challenges for companies to better evaluate developers’ skills. Hundreds of thousands of developers from all over the world come to participate in thousands of challenges in a variety of languages and knowledge domains.
According to our data, Singapore, Poland, and Taiwan are among the top three places to expand your software team.
Singapore is quickly becoming Asia’s newest technology darling. It outranks any other place when it comes to business taxes and Internet speed. Unlike sprawling cities of Bangalore and London, its tech scene hasn’t blossomed enough to start fierce poaching wars just yet. Not to mention that its developers have above average tech skills.
Poland is also worthy of a second glance. its developers are extremely skilled with the third best ranking worldwide. And the cost to open up a developer team is very low in Poland compared with other developed countries.
Top 10 Countries to Expand Your Engineering Team
To begin our analysis, we honed in on 28 major global tech hubs based on the Thomson Reuters report, corroborated with the global startup ecosystem report, both of which were published within the last two years. We fleshed out each country's details across nine factors from various sources.
- Average Sr. Software Developer Salary
- % Tax on Profits
- Cost of Rent
- Annual STEM grads
- HackerRank Skill Index
- Corruption Index
- Internet speed
- English Index
- Competition for talent
To rank countries, we standardized the scores for each criteria using this calculation:
We then converted these z-scores into a 1-100 scale for easy interpretation. Of course, every company has its deal breakers. Large companies like Google or Facebook might care less about cost than a startup. Smaller, more agile companies may prioritize cost-effectiveness and skill level to hire developers who can start coding on day one. If you’re anticipating overseas collaboration, then low corruption levels and language barriers could take priority.
Here’s a full color coded snapshot of each country’s ranking by criteria. For an easier interpretation of this data, try our interactive map that allows you to choose weightage for each factor.
Quick Take #1: Singapore Has the Lowest Taxes, Fastest Internet & Exceptional Talent
Singapore is having a tech moment. It not only topped our list but also this year’s list of the best places for tech talent by the Startup Institute. It seems the Singaporean government’s $19B R&D investment to build its local engineering ecosystem may pay off. Some of these reasons could also be why all of the top tech companies (Twitter, LinkedIn & Facebook) all have regional offices in Singapore. And, although King Google is everywhere, it just expanded its Singapore office to 1,000 engineers late last year.
Quick Take #2: Eastern Europe is an Untapped Talent Hub
Poland, the birthland of Marie Curie and Copernicus, is no stranger to pioneering innovation. And now it’s well-positioned to grow a sprawling incubator for software, especially for forward-thinking financial services companies. In a post-Brexit world, both Goldman Sachs and JPMorgan Chase, for instance, are considering moving hundreds to thousands of jobs to Poland this year. For candidates, these majestic European cities enjoy a lower cost of living than many traditional major tech hubs.
Dr. Heraldo Memelli, who was born in Albania and manages all HackerRank technical challenges in Palo Alto, says: “Many Eastern European countries have a convoluted past, but there’s a young generation of talented people eager to innovate transformative technology.”
Quick Take #3: Philippines has Low Cost, Low Skilled Talent
Philippines stands out for having among the lowest cost for talent, though the skill level is also low. Given that its substantial talent pool of over 130,000 IT grads annually (compared to roughly 200,000 in India), there is a big opportunity for the Philippines to invest in its tech talent through better training and education.
In fact, this is exactly what Google is doing. It just announced a grant for a digital literacy program in late March 2017. The Philippines may have a long way to go, but it’s worth keeping a pulse on its potential to become a strong tech hub.
Quick Take #4: Finland, Ireland & Netherlands Outrank UK, Germany and France in Western Europe
The UK stands out with the most number of startups competing for talent. London has long been the go-to place for opening up a tech hub, given the sheer size of startups and talent pool.
But Finland, Ireland and Netherlands outrank UK because of lower salaries, taxes, rent and higher skill index. Both Ireland and Netherlands’ proximity to UK talent is a plus as well.
Finland is home of multi-billion dollar fashion company Zalando’s second international office, for instance. Likewise, Facebook recently announced a new office in Ireland as the newest partner centre outside of Menlo Park. Uber also made an interesting choice by choosing Amsterdam in the Netherlands as its International engineering HQ back at the end of 2014.
Its department head Jelle Prins told Startup Juncture that a lot of talented developers find it really hard to get a Visa in the U.S. “In contrast developers from across Europe can decide to work in Amsterdam without any formalities.” It must be going well --- they’re doubling down from 400 to 1,000 people this year.
What are the Top 5 & Bottom 5 Listed Countries?
What if you only care about the talent pool, ease of team collaboration or cost? Here’s a closer look at the best and worst countries (from our list of 28 hubs):
- China stands out with its massive skilled, talent pool. But it ranks among the lowest when it comes to ease of collaboration (slow Internet, high corruption perception and low English proficiency). If Shenzhen or Shanghahi boosted its ease of collaboration, it’s quite possible that China would simply dominate every other place!
- The UK has a very crowded tech scene, with high competition from tech companies for a big talent pool (though the skill level is not very high).
- India is cost-effective, but ranks low for both skill and collaboration. Like China, its Internet speed is weak, English is limited and corruption level very high.
- Israel is unusual in that it’s very expensive, the skill level is average, and yet the competition for talent is very high. It could have something to do with its great tax benefits for businesses. Plus, the Israeli government invests more on technology per capita than any other country in the world.
- Canada has a relatively smaller talent pool, ranks average for skill….but shoots up in rankings because of its high ease of collaboration.
Where Should Silicon Valley Expand its Engineering Team?
Factoring in PST Time Zone & Visa Requirement
Now, let’s spin our globe to the right, and zoom into the original tech mecca: Silicon Valley. We took our rankings and added two additional key factors: time zone (to minimize 6 AM wake up calls!) and ability to travel without a Visa from the US.
This helps us determine: If you’re on the West Coast and looking to build out a new office globally, where should you expand?
New Zealand may be 19 hours ahead, but your Kiwi coworkers can have breakfast while you have lunch...technically. Canada’s time zone is smooth sailing for California. Mexico climbs up for the same reason. Even with the added time difference and Visa restrictions, many Eastern European countries cling to the top 10 spots.
Folks experienced with expanding engineering teams have seen a shift in perception when it comes to the best locations. Jens Brinksten, CEO of KMD Poland, has launched companies in 16 countries worldwide and seen many companies who started in India, but moved their development to East and Central Europe:
“The argument is [in India], there’s lower productivity, too much time spent on knowledge transfer, high travel costs, difficult communication, etc.,” he says. “Even if the cost for one “productive quality hour” means that you need to pay for 4 hours development, then the advantage of price is gone.”
Most news reports highlight thriving, large metros like London, Tel Aviv and Berlin as the next big tech capital. While this is true, such vibrante cities are not the end-all, be-all for enterprises looking to expand.
For European expansion, if you’re looking for a more affordable, high-quality and quantity of talent, you’d do well expanding in places like Poland, Finland and Netherlands. These countries have the benefit of lower taxes, more affordable living and, the latter two countries, are extremely close to the large talent pools in the UK.
In Asia, when all things considered, Singapore, Taiwan and Hong Kong could pay more dividends than the long-standing Bangalore and Shenzhen hubs.
Above all, one thing's for certain: Technology hubs are popping up all over the world. Our hope is this resource helps you find them.
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If you were to expand your engineering office worldwide, where would you go?