Microsoft Software Engineer Salary Per Month In Usa – FAANG (Facebook, Amazon, Apple, Netflix and Google) and Tier 1 technology companies are known for paying high salaries to software engineers.
But how high are the salaries in these companies? How much do engineering salaries vary by level and industry? How do they compare to the US national average? Why do FAANG companies pay so much? How can people earn these wages?
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If you are wondering, we will answer all these questions and more in this article. Here’s what we’ll cover:
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Before we get into the details, let’s understand the different salary components. The compensation plan in FAANG and Tier-1 companies usually includes three main components:
The figure below shows an industry-wise comparison of salaries for entry-level software engineers. Let’s look at the difference between FAANG companies like Google, Facebook, Apple and Amazon vs. Tier-1 companies Oracle and Microsoft vs. Tier-2 companies Cisco and IBM. The compensation figures shown below include salary, stock and bonus.
As you can see, salaries across FAANG and Tier-1 companies are in line with each other for entry-level positions, but those in Tier-2 companies are much lower. For example, the average total compensation at Oracle and Apple is $176,000 and $172,000, respectively—almost the same. But if you compare the salary at Google (Tier 1) with IBM (Tier 2), the difference is huge – $188,000 versus $98,000.
While it’s obvious at entry-level positions, the pay gap between FAANG and non-FAANG companies really starts to show as you move up the ranks.
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Here, we see that the average compensation for a Senior Software Engineer at Facebook ($380,000) is more than double that at Microsoft ($182,000).
At the higher levels, we see that there is a big difference even between FAANG and Tier-1 companies like Microsoft and Oracle.
The difference in pay scale between FAANG and non-FAANG companies continues to widen with each stage. For example, an Associate Professor at Microsoft earns $500k (top of the group), while Google pays around $1.2 million – almost 140% more for the same level.
To put things into perspective, here are the average annual salaries of software engineers at different levels working at Google, Facebook, Apple, Amazon and Microsoft.
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Salaries in FAANG companies increase with increasing seniority or level. Read the 10 Highest Paying Engineering Jobs in FAANG Companies to learn more about the highest paying jobs and companies for software engineers.
Also, read Top Paying Tech Jobs and Skills in 2022 to learn about the hottest areas in tech to earn lucrative salaries.
Google and Facebook are the two companies that pay the highest average salaries to software engineers in the United States. There is little difference between the two, especially at higher levels.
For example, Microsoft, currently investing in gaming, is likely to pay a much higher salary to game developers than other companies. Likewise, the salaries offered by Oracle to engineers with Cloud Computing skills are not only comparable but sometimes higher than the salaries offered by Google and Facebook for similar skills.
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Not all companies work on the same technology. So, compensation also depends on what kind of talent the company needs and how competitive it wants to be.
According to the US Bureau of Labor Statistics, the median salary for Software Developers and Software Quality Analysts and Testers in 2019 was $111,620. Earnings for the 90th percentile were $164,590.
At $181,000 and $188,000, Google and Facebook, respectively, offer entry-level salaries that are higher than the 90th percentile of salaries across the United States.
We found that FAANG companies such as Facebook, Apple, Amazon and Google are the highest paying companies for software engineers. But why do they pay such high wages?
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Twenty years ago, there was a clear difference between what large companies provided to software professionals and what small startups provided.
Large companies, such as GE and Boeing, are known for providing employees with job stability. Most people join these companies with the intention of working there until retirement, regardless of productivity and speed of innovation.
Smaller companies offer faster innovation, faster career growth, and the possibility of creating wealth quickly enough for early retirement. The downside, however, is that there is not much job security, because the survival of these companies themselves is not guaranteed. Startups are always risky propositions.
In the United States, buying a home is difficult, especially as an employee of a large company. Most homeowners spend up to 50% of their income on mortgages. Financially, small companies offering faster job growth and higher earning potential become more attractive.
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As a result, large companies began to lose top talent to smaller companies. To level the playing field, large companies are forced to grow faster than their board market and deliver disproportionate returns. However, this is not possible without the right talent. To stay competitive and attract talent, large companies offer higher salaries. This was successful and is a strategy that is used even today.
With the right talent, large companies can improve better and grow faster, making them as attractive as smaller companies. Faster growth and innovation lead to better products and revenues, allowing large companies to keep pay scales competitive.
Tech startups offer ESOPs (Employee Stock Options) to transfer ownership among employees. This serves as a great draw for top technical talent. However, the costs of technology companies have grown rapidly, making the stock part of one’s salary a rapidly growing asset.
Top tech stocks have averaged 20% CAGR over the past decade, effectively doubling the equity component of someone’s compensation in less than four years. Major technology companies are also publicly listed, making these stocks liquid.
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The high growth and liquidity of the equity component of the salaries of high-tech companies makes the compensation offered by the FAANG companies the highest of the start-up or Tier-2 company.
All FAANG and Tier-1 companies operate on a large scale, serving millions of users. Building, maintaining and improving systems requires the brightest minds in technology. Therefore, attracting the right level of talent is essential for the survival and growth of FAANG companies. One way FAANG companies do this is by offering very high returns.
If Google, Facebook, and other high-tech and FAANG companies do not attract the best talent, they will surely find themselves competing against them. Many experienced engineers choose to launch their own business or build their own products, which can capture large market shares.
In this case, FAANG companies will ultimately pay to accept or destroy such competition. One way to avoid this is to attract and hire experienced engineers as employees.
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The most obvious way to do this is to join a FAANG company. But getting into these coveted companies is no small task. Take Google, for example – the acceptance rate at Google is around 0.2%. To receive an offer from a FAANG company, you must:
This is where Kickstart Interview can help software engineers like you. We offer engineering interview preparation programs to help you become a better engineer and, therefore, nail the toughest engineering interviews.
Our instructors are hiring managers and technology leaders from FAANG and Tier-1 technology companies who have invaluable knowledge of hiring processes in FAANG companies and the challenges candidates face. Learning from them will help you gain an edge over the competition.
Having trained over 9,000 software engineers, we know what it takes to win a FAANG bid. To learn more, register for our FREE webinar.
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Some companies, such as Microsoft and Oracle, offer salaries comparable to those of FAANG companies at lower levels; however, at senior levels, the differences become more prominent. To earn FAANG level salaries in a Tier-2 company, you will have to work long and be promoted to higher levels or have specialized skills that a company needs.
However, at the same level, with the same experience, it would not be normal to earn as much money in a non-FAANG company as a FAANG company.
Yes, a growing number of startups can offer FAANG-level salaries. However, pursuing a career early on can have its pros and cons. Be sure to weigh your options before making a decision. Read FAANG vs. Startups: Which is Best for Software Engineers? and How to land a 500K job in Tech – Finding the Right Company for more insights. What are the best cities for software engineers to live in to maximize real incomes and living standards? The 2021 report has the answers.
The salary sounds great, but how much is really left in your pocket? We used the data to find the best cities for developers, comparing 2021 with our previous study years 2019 and 2017.
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San Francisco, New York, Seattle – home to some of the biggest names in the tech world – are often the first cities that come to mind when you think of where to start your software engineering career. However, they are also some of the most expensive cities to live in the United States and worldwide.
In 2017 and 2019, we conducted surveys (linked below the article) on what is the best city in the world for software engineers in terms of real income because we want to know whether San Francisco is still (or ever) those