I work for a digital consulting company in Tokyo (I thing they are also called SIer here in Japan) as a Lead Engineer/Tech Lead with 7+ years of experience. We have many clients and most are very large companies here in Japan, from car industries, to beverage industries, banking, etc.
Usually an engineer here works at 1 or 2 year long project at the same time, or two 6 months projects, but we mostly are never free from more than a few weeks a year between projects.
So lately I came in contact with a document that says how much the client from my current job was paying me (the company doesn’t seem to care much about it).
So right now my yearly income is ¥7,400,000 (monthly is yearly/14), but the client actually pays ¥2,4000,000 a month for my company. I already thought my salary was kinda low, but I feel like the rate I am being paid compared to how much the client is paying is quite low. I was expecting the rates to be at least around 40% or so. I wonder what are the industry standards in Japan in those cases, does anyone knows?
Assuming they’re billing you out full time (8 hour days, 20 days in a month), that implies an hourly rate of ¥15,000. That doesn’t sound particularly high for a Tech Lead being billed out to large companies.
While it does sound like they have a high margin on you, there are some other factors to consider:
The company is presumably paying for your social insurance, which could be a million or so on top of their salary that they’re paying.
If they do run into a shortage of work, they’re still responsible for paying you.
Depending on the contract, they may be responsible if the project is not delivered on time or to the spec.
I’m guessing they spend a significant amount of money on client development (e.g. paying sales people to wine and dine prospective clients, maybe for years without it going anywhere).
The document you say if for a client that’s paying an exceptionally high rate compared to other clients.
Still, it seems likely that they could afford to be paying you more. You might be able to negotiate a raise, and if you like your job otherwise, maybe it is worth it. Or maybe it’s a good chance to shop for a new job and see what other companies think you’re worth.
I had a similar situation where the company I was working for hired a software developer as a consultant for what I felt like was an exorbitant price. This helped give me the confidence to set out on my own and charge similarly when I started my own consulting company. So if nothing else, it helps demonstrate that what you’re doing is quite valuable.
Yes, I totally agree that the company does spend more money on welfare and what not, and that there is probably a whole package of services which are not solely technical stuff being offered to the clients.
All the points you mentioned and the risks the company might be taking with the projects also make a lot of sense.
I still do feel a little underpaid and despite liking the company I am at, I will definitely consider a move to a different company in the near future if nothing changes. I feel like consulting companies are fun and being able to work with a variety of projects and technologies can be super interesting, but at the same time I feel it sometimes lacks the more complex use cases and long term challenges you have when working with companies that develop their own services.
I am also considering maybe going freelance in some years from now, and FWIW it at least helps me understand my worth a little bit better.
Thanks a lot for sharing your perspective and experience.