IBM Lags Google, Amazon, Microsoft in Engineer Compensation

Earlier this month, IBM announced that it would spin off its legacy technology services into a separate company, in order to focus exclusively on the cloud. In theory, a streamlined, cloud-centric IBM will have an easier time competing with Amazon, Microsoft, and other tech giants that have made the cloud a priority in recent years.

But IBM has a hard road ahead. Amazon Web Services (AWS) and Microsoft’s Azure dominate the business-cloud market, with Google in third place but willing to devote enormous resources to its own offerings. Meanwhile, Oracle is doing the best it can to catch up, having wrangled high-profile deals with TikTok and Zoom

Can IBM win? Big Blue has managed to survive for more than a century in a fast-evolving industry, but past results aren’t a guarantee of future success. For starters, the company will need to convince businesses that its own cloud offerings are cost-effective and superior to what some of the biggest names in tech can offer.

Second, IBM needs the engineers and developers who can actually build those reliable, cutting-edge products that corporate customers want. And therein might lie the rub: According to levels.fyi, which crowdsources salary data from across the tech industry, IBM falls behind its cloud competitors when it comes to software engineer compensation. Check out the chart:

Whenever we’ve used levels.fyi in the past, we’ve generally focused on either entry-level or senior software engineering positions. This time around, we stuck with a slightly more experienced tier (i.e., those with a few years of experience at their respective companies, but who haven’t ascended into the upper levels of team leadership or management). These are the engineers who do much of the coding work behind some of the world’s most popular cloud products, and securing their services is critical if these companies want to succeed in the face of some fierce competition.

What this data shows is that IBM lags well behind its competitors when it comes to salary, bonus, and stock payouts. Even if you disagree with levels.fyi’s bottom-line conclusions (and to be fair, crowdsourcing isn’t the most scientific way of collecting reliable data), its numbers roughly align with what other sites offer, including Glassdoor (which also crowdsources its data). That could put IBM at something of a disadvantage in the war for talent.

In our previous levels.fyi analysis, we also saw that IBM’s senior software engineers don’t make very much in stock and bonuses compared to their biggest rivals. When it comes to some very senior and highly specialized talent (such as A.I. and machine-learning engineers), Big Blue has a history of paying extremely generous salaries—perhaps even millions of dollars—but for many engineers at all experience levels, it seems, rival firms might have more to offer. 

Of course, IBM can still make solid gains in the cloud—but when it comes to this particular battle, it’s the underdog. What it chooses to pay software engineers could make a huge difference in what it brings to the market. Let’s see if this compensation data shifts in the years ahead.

3 Responses to “IBM Lags Google, Amazon, Microsoft in Engineer Compensation”

  1. IBM is an H1-B consulting shop therefore their wages will be lower. The others hire H1-B’s, but also need to deliver actual products and use H1-B to restrict the prevailing wage. I read the general consensus here as recognizing that H1-B’s have harmed your job prospects and income. But I must ask the question: How many of you will be voting for Trump vs Biden ? Trump is the only president in 30 years to recognize that H1-B’s are destroying one of the few success areas of the US economy since the 90’s. (In 2016 I was making less than I made in 1998). Biden hugged the factory workers of the mid-west, then returned to DC to ship their jobs overseas. Biden tried to do that unsuccessfully with the 90’s IT off-shoring attempts — they failed (youngsters are too young to remember). That is how we got the H1-B program. Biden has received millions from India corporations — using his family as the money launderers — that means he will undo Trump’s reduction of H1-B imports and undo Trump’s increases of H1-B salaries. Because of Trump’s temporary H1-B shutdown, even in the midst of this pandemic, I am fielding multiple offers for IT work. My graduating son will even have a job if Trump is re-elected. This is only because Trump disrupted the H1-B program – I would prefer to see it eliminated, but that requires congress and no Democrat will vote to reduce foreign workers taking American jobs. Please remember who is looking out for you on November 3rd and vote for yourself by voting against Biden.

    • Michael Howard

      Yes, Trump is looking out for our country in general and this H-1B fiasco in particular. But mainstream media only wants to report bad things about him (fake news) and blame the economy on him (how can he be responsible for a down economy when it’s the states that shut everything down). Gotta keep Sleepy.Creepy Joe out of the White House!

  2. Michael Howard

    Surely we can find something ELSE to write about? Every time I get the Dice Advisor, there is at least one article about the H-1B program and one about this company vs. that company concerning salaries. For God’s sake, can we not talk about a different topic for a change? Working remote is another dead horse that continues to get beat on. I think Dice has forgotten how to think outside of its own box…