How are these guys still in business?

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#3208602 20-Mar-2024 14:04

Lias: I know it's not the heady days of 2022 when if you could spell Cisco you could name your price, but that still seems very low to me (and my peers) for a certified, experienced, multi discipline engineer.

I assume if no-one fits perfectly or applies then the advertiser has complied with the requirement and can then employ non-residents and bring in from overseas? I'm not sure what the criteria is these days. Maybe three months of NZ advertising or something like that?

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#3208640 20-Mar-2024 15:36

Seems low for Auckland but is probably about right in Christchurch.

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#3209604 22-Mar-2024 14:58

Lias:

Dynamic:

@Lias, I have a couple of questions and I am genuinely interested in your answers. These are questions that tech companies ask themselves all the time and in my experience everyone has different answers, which may account for different pay rates.

I've been exposed to environments where engineers are responsible to nobody for their number of billed hours, and to environments where engineers were only permitted to go home after they had billed 8 hours. If this theoretical employee was charged out at $150/hour, what should a reasonable employer expect their minimum number of charged out hours be per day or week?

Training and upskilling. Should the employee do this on their own time to further their career, or should this be on company time? If on company time, what is a reasonable number of hours per month or year to allocate?

With the giant caveat that I while I've done a few management papers I have not been an employer in the IT space. I am merely an engineer who at times (depending on the role) been heavily involved in technical leadership, team mentoring and interview panels etc, but here's my 2 cents.

I think expecting 8 hours billable per day is nuts. Employees, no matter if they are are being charged out or inhouse, need time for admin, meetings, shoulder taps, professional development etc. In my experience, employers could reasonably expect 75% productive/billable time (6 of 8 hours/day, 30 of 80 hours/week). Expecting 8 hours a day billable is going to lead to employee burnout, staff turnover, more human error and customers being overcharged, none of which I suggest are actually good for a business.

I appreciate the thought you put behind that response, Lias.

I agree that expecting 8 billable hours a day for most tech people working across multiple clients in an average workday is unreasonable. One of my team a number of years ago thought the grass would be greener until he was advised early on with the new employer of the 8 hour requirement. After 3-4 months of what he described as very long days on a fixed salary, his GP put him on stress leave. He left that company not long after.

Using my hypothetical employee above who I shall name "Bob", and assuming I've got my math right.

The minimum leave entitlements by law are 20 days annual leave, 10 days sick leave, and 12 public holidays for a total of 42 days leave out of 260 days in 52 5 day weeks. Assuming Bob utilizes all 10 sick days, and with annual leave and public holidays, he's working for 218 days/year. If he achieves a billable/productive rate of 6 hours a day, he will generate approximately 192k income for the organisation. Every business obviously has overheads, and desires to turn a profit, but on a salary of 104k, Bob is contributing 88k above his salary. If the business is not profitable with Bob providing that level of contribution, I'd humbly suggest there is something horribly wrong with the senior leadership team, not with Bob's contribution.

We subscribe to some industry benchmarking supplied by Service Leadership as a part of our management team learning and development. I wish I could find some public figures on this, but it's all subscriber-only and under NDA. Several thousand IT companies (including ourselves) submit quite detailed financial data on a quarterly basis. One aspect of the resulting report surprised me to start with, though digging deeper and working with others in industry peer groups I am surprised no more.

On average, an IT company who's income is 2x it's engineers wages/salary is likely to be barely breaking even or even losing money. For example, a company with a revenue of $4,000,000 and a front line engineer (level 1 through level 3, project engineers, etc) wage bill of $2,000,000 is most likely to be barely breaking even. Running a company is actually pretty expensive undertaking, with office costs, support staff, infrastructure, insurance, write offs, etc etc.

With a business in this state, the management team are likely to be getting a good salary but getting no return on their investment. If they were unable to improve the situation, the management team would arguably be better off closing the doors and getting a job working for someone else. They would likely get the same income, have less stress (payroll and cashflow are someone else's problem), and carry no risk if something significant in the business goes sour.

Solution Provider Industry Profitability Report© | Service Leadership (service-leadership.com)

In the book Great Game Of Business they talk about employee assumption around company profitability. In the absence of other information, employees typically guess company profits of 6-10x greater than they actually are.

With regards to training and upskilling, both but with some caveats. IMHO a good employer should always provide time for professional development and keeping abreast of relevant developments. An employee should be able to gradually advance their career without sacrificing their personal time, but the flip side of that is employees who are actively trying to progress should expect to spend some of their own time to do so. One of my personal giant ticks in interviews, is when a candidate starts enthusiastically telling me what they are working on in their home lab / spare time. To me that shows not only drive and initiative, but that they are someone who embraces life long learning and is passionate about technology. As for a set number of hours, I think that's very hard to define, and is going to vary depending on the role and the employee. If I had to pull some numbers out of my head, somewhere between 40-80 hours/year (1-2 hours/week) is a good baseline, but more senior employees or those with a broader technical mandate could well need more.

An employee should be able to gradually advance their career without sacrificing their personal time, but the flip side of that is employees who are actively trying to progress should expect to spend some of their own time to do so.

I love the way you put that, Lias. Your home lab comment also made me smile.

I don't claim to be an expert on the above by any means. I'm just learning as I go.

“Don't believe anything you read on the net. Except this. Well, including this, I suppose.” Douglas Adams

Lias

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#3209617 22-Mar-2024 16:25

Dynamic:

I appreciate the thought you put behind that response, Lias.

You're welcome.

Dynamic:

On average, an IT company who's income is 2x it's engineers wages/salary is likely to be barely breaking even or even losing money. For example, a company with a revenue of $4,000,000 and a front line engineer (level 1 through level 3, project engineers, etc) wage bill of $2,000,000 is most likely to be barely breaking even. Running a company is actually pretty expensive undertaking, with office costs, support staff, infrastructure, insurance, write offs, etc etc.

I'd love to know what the numbers are like for big companies versus small and if economies of scale start kicking in. NZ's often called "a nation of small businesses" and I wonder if that's half the problem, maybe there needs to be fewer small MSP's and more consolidation.

Dynamic:

I don't claim to be an expert on the above by any means. I'm just learning as I go.

We're all just learning as we go.. that's what Home Lab's are for :-P

I'm a geek, a gamer, a dad, a Quic user, and an IT Professional. I have a full rack home lab, size 15 feet, an epic beard and Asperger's. I'm a bit of a Cypherpunk, who believes information wants to be free and the Net interprets censorship as damage and routes around it. If you use my Quic signup you can also use the code R570394EKGIZ8 for free setup. Opinions are my own and not the views of my employer.

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#3209625 22-Mar-2024 17:29

Advertise low pay, noone applies or just people having to apply to keep benefits,

"No one wants to work anymore"

Outsource to overseas.

Profit.

Richard rich.ms

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#3209628 22-Mar-2024 17:48

I am amazed at some of the low hourly wage rates advertised on job sites for my trade. $2 to $5 above minimum wage for a fully qualified tradesman.

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#3209633 22-Mar-2024 18:45

richms:

Advertise low pay, noone applies or just people having to apply to keep benefits,

"No one wants to work anymore"

Outsource to overseas.

Profit.

Immigration is used to 'grow' [ugh] the economy, but it leads to a low wage economy that puts pressure on infrastructure and housing costs.

Is that the economy we want?

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

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#3209645 22-Mar-2024 20:12

Lias:

I think expecting 8 hours billable per day is nuts. Employees, no matter if they are are being charged out or inhouse, need time for admin, meetings, shoulder taps, professional development etc. In my experience, employers could reasonably expect 75% productive/billable time (6 of 8 hours/day, 30 of 80 hours/week). Expecting 8 hours a day billable is going to lead to employee burnout, staff turnover, more human error and customers being overcharged, none of which I suggest are actually good for a business.

It's a different industry but I always used 1564 hours a year as the recoverable rate. That's 46 weeks available (4 weeks annual leave, 2 weeks sick leave) @ 85% utilised. The other 15% was for training, admin, meetings etc.

It usually worked out about right.

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#3209646 22-Mar-2024 20:18

Lias:

Dynamic:

On average, an IT company who's income is 2x it's engineers wages/salary is likely to be barely breaking even or even losing money. For example, a company with a revenue of $4,000,000 and a front line engineer (level 1 through level 3, project engineers, etc) wage bill of $2,000,000 is most likely to be barely breaking even. Running a company is actually pretty expensive undertaking, with office costs, support staff, infrastructure, insurance, write offs, etc etc.

I'd love to know what the numbers are like for big companies versus small and if economies of scale start kicking in. NZ's often called "a nation of small businesses" and I wonder if that's half the problem, maybe there needs to be fewer small MSP's and more consolidation.

Different industries but IME with large corporates they have very different cost structures and make money in a different way to SMEs. For large corporates you often only do services to pull through product. You have bigger overhead due to a whole range of costs SMEs don't have, from reporting, compliance, marketing, R&D down to overpaid unproductive execs.

SMEs can actually make money from services if they are efficient.

gzt

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#3209647 22-Mar-2024 20:19

elpenguino:, but it leads to a low wage economy that puts pressure on infrastructure and housing costs.

That not true at all. Looking back at New Zealand's long history - almost every social infrastructure and housing project has been worthwhile and looks cheap in retrospect. It just happens that relatively recent governments have been politically reluctant to invest.

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#3209648 22-Mar-2024 20:20

elpenguino:

richms:

Advertise low pay, noone applies or just people having to apply to keep benefits,

"No one wants to work anymore"

Outsource to overseas.

Profit.

Immigration is used to 'grow' [ugh] the economy, but it leads to a low wage economy that puts pressure on infrastructure and housing costs.

Is that the economy we want?

The New Zealand birth rate is about 1.6 per woman. You need immigration in significant numbers otherwise the economy collapses under the weight of the health and welfare systems. Anyway it's a topic best for the politics section.

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MichaelNZ

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#3212152 29-Mar-2024 19:42

Looking at that advert I could tick several of those boxes and may even have been tempted to apply except for one thing - the advert appears to have been written by someone who wants everything including the kitchen sink.

I have a lot more then 2 years in the ISP industry and can do Linux and OSPF/BGP and IP and all that great stuff :-) But I can't tick everything on their extensive list.

Furthermore, while I have Cisco Networking Academy so can tick the academic box... I don't get why they require this and only 2 years experience. For example BGP was not part of the CCNA level Cisco course at the time I did it and I doubt that has changed.

Also this pointer:

"In-depth knowledge of and experience with major internet routing protocols; specifically"

The only "major internet routing protocol" is BGP and they already mentioned that further up.

All in all it begs the question - is this a realistic job description or an HR produced wish list?

Job applications take a lot of work to go through and my experience has been engaging with HR sorts never turns out well. Every good job I have had in this industry has just come to me. I have worked at 7 ISP's in 27 years - 1 role in sales/support and 6 in technical - and I don't recall ever submitting a CV. Everything pretty much came by chance encounter or referral.

So while I could be interested in a new role I don't have to get one now.

WFH Linux Systems and Networks Engineer in the Internet industry | Specialising in Mikrotik | APNIC member | Open to job offers | ZL2NET

MichaelNZ

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#3212280 30-Mar-2024 13:40

johno1234:

Would have thought that was good money for someone with only 2 years experience.

But their required skills list contradict the 2-year requirement. Its more like 5+ years.

xpd:

Seen a lot worse...... one local company a few years ago, near me wanted someone with every cert under the sun, to work in their store, be on call, able to work at their 2nd store at no notice, and more, all for the great salary of.... $40k.

There is a business school of thought out there which says the first and only reason for a business to exist is to pay its owner. Often these are accompanied by inflated claims about how great their business is. Except, watch them for awhile and the facade slips. Employees turn over quickly, clients get fed up... there is just something about the business which isn't quite right. Most often the only thing which looks the part is the owners lifestyle.

WFH Linux Systems and Networks Engineer in the Internet industry | Specialising in Mikrotik | APNIC member | Open to job offers | ZL2NET

Dynamic

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#3212293 30-Mar-2024 15:00

MichaelNZ:

There is a business school of thought out there which says the first and only reason for a business to exist is to pay its owner. Often these are accompanied by inflated claims about how great their business is. Except, watch them for awhile and the facade slips. Employees turn over quickly, clients get fed up... there is just something about the business which isn't quite right. Most often the only thing which looks the part is the owners lifestyle.

That does not sound like a business that will last. I'm have no doubt some business owners are like that, but I hope it would be a minority.

“Don't believe anything you read on the net. Except this. Well, including this, I suppose.” Douglas Adams

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#3212343 30-Mar-2024 15:20

Dynamic:
MichaelNZ:

There is a business school of thought out there which says the first and only reason for a business to exist is to pay its owner. Often these are accompanied by inflated claims about how great their business is. Except, watch them for awhile and the facade slips. Employees turn over quickly, clients get fed up... there is just something about the business which isn't quite right. Most often the only thing which looks the part is the owners lifestyle.

That does not sound like a business that will last. I'm have no doubt some business owners are like that, but I hope it would be a minority.

A French friend uses the analogy of a stool for the French lifestyle. In France the three legs are wine, baguette and cheese. If one is out of balance the stool falls over.

In business the stool is shareholders, customers and staff. If you don’t keep the balance between them it all goes tits up.

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