What percentage of Google's revenue is spent on R&D and employee salaries?

Updated on : January 17, 2022 by Bethany Mccarthy



What percentage of Google's revenue is spent on R&D and employee salaries?

The R&D expenditure of various technology companies is shown in the following table:

Google spending will be included in Alphabet

Google, Inc. pays its employees an average of $ 112,663 per year. Salaries at Google, Inc. range from an average of $ 65,909 to $ 161,383 per year

GOOGL Income Statement | Alphabet Inc. Stock - Yahoo Finance

Google and Apple are organized differently. Google tends to let the engineers do the driving. Apple lets customers drive.

Apple has a very diverse group of engineers - programmers, software engineers, firmware engineers, electrical, optical, and product designers, and many more. Google mainly hires programmers and most of them work on the web and infrastructure. They used to employ other parts in Google X and Robotics, but since they have been split into Alphabet, Google now only has programmers. Also, non-programmer hires are few and far between, making those positions difficult to access without knowing someone from Go.

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Google and Apple are organized differently. Google tends to let the engineers do the driving. Apple lets customers drive.

Apple has a very diverse group of engineers - programmers, software engineers, firmware engineers, electrical, optical, and product designers, and many more. Google mainly hires programmers and most of them work on the web and infrastructure. They used to employ other parts in Google X and Robotics, but since they have been split into Alphabet, Google now only has programmers. Additionally, non-programmer hires are few and far between, making those positions difficult to access without knowing someone from Google. Many of those programmers specialize in infrastructure, parallel distributed systems, and web developers.

It is also a mistake to think that Google has better advantages than Apple. Here's a breakdown:
(assume 175k senior engineer)

  1. Free food: Google (~ $ 2k value; assume $ 10 / day, but probably less), Apple (without free food, $ 0)
  2. 401k: Google (50% to maximum; value ~ 9k); Apple (9-10.5k; 9k for new; 10.5k after 4 years of ownership)
  3. ESPP: Google (none); Apple (15%; up to 10%; value around $ 4k)
  4. Workspace: Google (open plan); Apple (office or half office; in Silicon Valley, this is worth around 7k / yr more than the open plan)
  5. Other things are comparable: bus, etc.

With the salary being the same, which it probably would be, Apple's profits actually add up (around 10k, ~ 5%) more in value than Google's. Additionally, Apple's shares have appreciated faster than Google's in recent years and quarters. Apple employees end up making more dollars than Google employees.

People think that Google offers many advantages, but like Google's business model, there are many things behind the scenes. In reality, just by cramming everyone into tight spaces, Google saves around 7k a year per person.

This 7k / year is enough to pay for all the benefits (food, gym and whatever) and more. Remember that the value of the meal is 2k / year for the employee, but for Google, it is around $ 800 / year.

Everyone is jumping into Google's free food, but really, it's only worth about 2k a year! It is <1% of the total compensation. It's a novelty, so Google gets a lot of publicity. Google also gets naive younger employees who don't think about the real value of things. For this reason, free food is considered a great benefit, but it really isn't. It's just food!

I also disagree with the idea that Google is governed by algorithms and technology, while Apple does not. This is unfair to Apple engineers. For instance,

IPhone 5 touchscreen is twice as fast as Android touchscreen

Apple focuses technological development on the characteristics of the product and what is directly relevant to the user. Google focuses technology development on what's cool. Freshness is decided by engineers with a high job title, which, in a sense, introduces a subjective variable into the management chain.

Let's get real here. All companies, including Google, do not pay their employees more than they contribute to the company. And many companies pay far less than their employees deserve.

I would describe some things to keep in mind:

  1. Offer and demand. Developer shortage? No! Is there a shortage of good developers? Yes! Is there a shortage of developers who can not only code, but also lead? Do you consider business needs? speak to sales and support? teach other developers? YES. But not as much as these few guys who might come up with crazy new ideas, they are behind t
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Let's get real here. All companies, including Google, do not pay their employees more than they contribute to the company. And many companies pay far less than their employees deserve.

I would describe some things to keep in mind:

  1. Offer and demand. Developer shortage? No! Is there a shortage of good developers? Yes! Is there a shortage of developers who can not only code, but also lead? Do you consider business needs? speak to sales and support? teach other developers? YES. But not as much as these few guys who could come up with crazy new ideas, back them up, and unleash them.
  2. Impact. Let's compare 3 developers. You are working on your project 8 hours a day and you are doing well. He works 2 hours a day, but he is also coordinating a team of 5 people. You are working on your part 2 hours a day, but also working with the product manager to shape what will be in the next big release. If everyone is on the same level, guess who could count on more compensation?
  3. Business participation. I don't really have a good name for this one. It really has an impact on business. If the person creates something that makes a lot of money for the company, that company would give part of this money in some way to that person. And although developers are easily replaceable, replacing someone who is involved in the business part, not the technical part, is much more difficult.

So I would say that the combination of the above would result in a higher salary.

Do I think someone at Google has a base salary of a few million? Hell no. I think even the base salary of a CEO is below 1 million. I saw some questions on Quora about this topic. But the total compensation could easily be anything. You see, if the person has compensation of a few million, make sure this person has brought the company hundreds or millions or billions. And this cannot be the case for the individual contributor. This person must have very uncommon and important knowledge (# 1) or have a very broad impact (# 2) and is most likely involved on the business side (# 3). So, I wouldn't just call them developers. They probably have more impact and responsibilities.

You have come to the right person. I witnessed how Google acquired Applied Semantics and shortly after we moved to a new office in Santa Monica. That later expanded to 3 other offices in Santa Monica. In the end we ended up getting a large office in Venice. Google Los Angeles has a pretty rich history and I was there.

First of all, I recommend that you go to Glassdoor first. So I recommend that you be mentally prepared because you may not want to hear this: Google engineering, in general, does not care about your past work experience and your previous salary. In fact, I have seen years of experience working again

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You have come to the right person. I witnessed how Google acquired Applied Semantics and shortly after we moved to a new office in Santa Monica. That later expanded to 3 other offices in Santa Monica. In the end we ended up getting a large office in Venice. Google Los Angeles has a pretty rich history and I was there.

First of all, I recommend that you go to Glassdoor first. So I recommend that you be mentally prepared because you may not want to hear this: Google engineering, in general, does not care about your past work experience and your previous salary. In fact, I have seen years of experience working against the candidate, multiple times. People are not supposed to discriminate, and we all had to take the Keep It Legal class. But the truth of the matter is that discrimination happens all the time despite the laws and the best of intentions. Google LA tends to bleed more senior engineers who go to headquarters in search of better career opportunities, while keeping engineers from neighboring schools updating. Therefore, no wonder it is crowded with young people relative to other offices. I witnessed how many young men made fun of gray-haired engineers who were on the same level. I'd start with some harmless comment about gray hair and then joke around over lunch. Sometimes it felt like elementary school, full of younger people. It only takes one or two immature people to make the environment hostile to experienced people. Employees are not supposed to show bias, but the fact is, it happens all the time and is rarely reported. No one expects to go through the hassle of going through human resources and lawsuits. it happens all the time and is rarely reported. No one expects to go through the hassle of going through human resources and lawsuits. it happens all the time and is rarely reported.

However, in general, Google has so many candidates running each year that the hiring committee simply doesn't care about their salary or past experience. Google may offer something lower than the industry standard and a lot of people will still want to go to Google. Second, most technologies are so proprietary and unlike anything you've seen that an experienced person will still take a few months to improve and in some cases people just don't because it's just a world. completely different. Third, "seasoned engineers" is a code name, used by many of these younger engineers, to describe older people who seem unable to adapt to Google's own methodologies. Historically, This has hurt older workers during hiring. I 'have constantly seen bad reviews from young people rejecting very competent but older people while looking at reviews on hiring committees. Discrimination is obviously unfair and not legal, but it is not unexpected by inexperienced and immature engineers and is sadly extremely difficult to enforce and track. Some 25-year-old interviewers will look at your resume and expect you to perform well, feel protected, and raise the bar too high. They might very well give recent graduates a 3.2 in cultural adjustment (eg, codename for "people like me"), but for experienced interviewees, they are more likely to give a 2.5 or less. All it takes is a low score from an interviewer to be rejected. but it is not unexpected by inexperienced and immature engineers and sadly extremely difficult to enforce and track. Some 25-year-old interviewers will look at your resume and expect you to perform well, feel protected, and raise the bar too high. They might very well give recent graduates a 3.2 in cultural adjustment (eg, codename for "people like me"), but for experienced interviewees, they are more likely to give a 2.5 or less. All it takes is a low score from an interviewer to be rejected. but it is not unexpected by inexperienced and immature engineers and sadly extremely difficult to enforce and track. Some 25-year-old interviewers will look at your resume and expect you to perform well, feel protected, and raise the bar too high. They might very well give recent graduates a 3.2 in cultural adjustment (eg, codename for "people like me"), but for experienced interviewees, they are more likely to give a 2.5 or less. All it takes is a low score from an interviewer to be rejected. but for the experienced interviewee, they are more likely to give you a 2.5 or less. All it takes is a low score from an interviewer to be rejected. but for the experienced interviewee, they are more likely to give you a 2.5 or less. All it takes is a low score from an interviewer to be rejected.

My advice is to forget that you have worked 10 years, forget that you have a salary of 150k and forget that you are in the Los Angeles area. Emphasize what Google cares about: the interview process and what you have accomplished. You can accept any offer they give you or just move on. My other advice is, if you can interview for a place other than Los Angeles or Irvine, by all means do it. Otherwise, you will probably end up like many of the older people who left these offices for better offices.

First, it doesn't really cost the company that much.

Let's say it costs Google $ 300,000 a year to provide a software engineer salary, benefits, and overhead. (It is often much more than that amount). If the engineer works 2,000 hours per year (40 hours per week, 50 weeks per year), that translates to $ 150 per hour. In the 5 minutes the engineer can spend waiting in line to pay for lunch, Google loses about $ 12 in labor, basically, which could cost your lunch anyway.

Employees often save even more time than that by not needing to cook.

But it is a great recruiting tool.

Adds to

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First, it doesn't really cost the company that much.

Let's say it costs Google $ 300,000 a year to provide a software engineer salary, benefits, and overhead. (It is often much more than that amount). If the engineer works 2,000 hours per year (40 hours per week, 50 weeks per year), that translates to $ 150 per hour. In the 5 minutes the engineer can spend waiting in line to pay for lunch, Google loses about $ 12 in labor, basically, which could cost your lunch anyway.

Employees often save even more time than that by not needing to cook.

But it is a great recruiting tool.

It adds to the "enjoyment factor" of coming to Google, either as an employee or as a visitor. Word is spreading that Google has great office benefits, and applicants are excited.

Who wouldn't want this?

Update: Some people got the wrong idea from the image above that Google primarily serves junk food. Actually, most of the foods you serve are healthy. Here's another image from ABC News. (I don't have my own photos of the salad bar, fruit stations, veggie station, or Asian salad bar.)

And here's an article on that, reflecting my experience: Google revamped eating choices to 'push' healthy choices

Give employees an incentive to work on site.

It is always better to get people to do what they want by making it easier. Google also puts calorie-free drinks like fruit-flavored water at eye level. Higher calorie drinks are lower, behind frosted glass. Google found that fewer people drank the higher calorie drinks with this setting.

And finally, build community.

Google seems to encourage employees to eat together, having coffee shops that cater to a variety of different food tastes and dietary restrictions.

Apparently, the snack bars (called "micro kitchens" in Google) are also strategically placed between separate teams, to encourage them to cross-pollinate ideas. The real reason Google serves all that food for free

Sorry to be anonymous, but I don't want to get into trouble with Google. Each year, Google distributes surveys to employees and publishes the results internally. You can also cross-reference the results with Google's Epitaph, an internal website that lists the people who "go" and "go." Co-workers can even write on the epitaph. All the data is there, any Googler can consult it. So without disclosing the actual numbers, I see that a lot of people are leaving in 2-3 years, slowly decreasing as employment reaches 4-5 years. There are a lot of people who stay between 5 and 8 years. I guess

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Sorry to be anonymous, but I don't want to get into trouble with Google. Each year, Google distributes surveys to employees and publishes the results internally. You can also cross-reference the results with Google's Epitaph, an internal website that lists the people who "go" and "go." Co-workers can even write on the epitaph. All the data is there, any Googler can consult it. So without disclosing the actual numbers, I see that a lot of people are leaving in 2-3 years, slowly decreasing as employment reaches 4-5 years. There are a lot of people who stay between 5 and 8 years. I guess they are comfortable where they are. If you look at the average stay, it is more like 2-3 years, but the standard deviation is quite high.

Still, 2-3 years is a very short time. You may wonder why. Unfortunately, I don't have data to analyze why, and I doubt that Google HR has good data on this as well because virtually no one tells HR the hard truth during their exit interviews. However, it is not difficult to analyze well-known problems in the company. First, you need to address the problem of morale in recent years. Facebook and countless companies have been poaching Googlers and giving them ridiculous amounts of MSW 1. I've seen countless people jump onto Facebook after being offered ~ $ 1M worth of FB RSUs acquired over 4 years, valued at Second Market rate. That's way better than its average value of ~ $ 200K at GSU (page on Computerworld) acquired over 4 years. In second place, Googler's salary has been depressed for a long time. Only after Google and Apple were caught with their secret anti-poaching deals (Apple, Google, Intel likely conspired not to rob workers, judge rules) did Google decide to give all employees a 10% raise. (Google to Give Staff 10% Raise) and more in the following years in an attempt to retain employees. Just look at the data on Glassdoor and see the big leap. Third, Googler's median age is 37, which is lower than many of the Silicon Valley companies. The helm of Google is governed by a group of older and older guys, and obviously there is also a group of super young guys. How many guys between the ages of 25 and 30 want to keep working in a big corporation for " it's much more satisfying going to a startup than having to deal with big corporate policies and time-consuming perfs. Lastly, Google employees are heavily influenced by endless calls from recruiters from high-profile VC and founder-funded companies. I literally received several calls a week. I guess having Google on my resume and LinkedIn profile is like having a degree from a top-tier tech school. it's much more satisfying going to a startup than having to deal with big corporate policies and time-consuming perfs. Lastly, Google employees are heavily influenced by endless calls from recruiters from high-profile VC and founder-funded companies. I literally received several calls a week. I guess having Google on my resume and LinkedIn profile is like having a degree from a top-tier tech school.

I left Google for all of the above reasons.

1: https://en.wikipedia.org/wiki/Restricted_Stock_Unit

While Google did a lot of generous things for us, the only benefit I've really missed since I left was showering on campus.

I love to think about the shower and I often work on ideas there. The opportunity to go out and run if you had some energy to work, knowing you could just shower and change your clothes, helped alleviate much of the restless energy I felt pent up in a cubicle. It allowed me to focus on work. I also felt comfortable putting more effort into my bike ride in the morning, knowing that I would be able to shower and change when I got there.

They provided

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While Google did a lot of generous things for us, the only benefit I've really missed since I left was showering on campus.

I love to think about the shower and I often work on ideas there. The opportunity to go out and run if you had some energy to work, knowing you could just shower and change your clothes, helped alleviate much of the restless energy I felt pent up in a cubicle. It allowed me to focus on work. I also felt comfortable putting more effort into my bike ride in the morning, knowing that I would be able to shower and change when I got there.

They provided towels. I don't think I would have used it that often if I had to drag a wet towel around all day. They didn't have conditioner, but I think most guys would have been happy with the shower gel / shampoo combo they provided.

I felt like a lot of the other generous benefits came down to things I could buy for myself if I earned a little more and then saved for them a financial priority: more money for retirement, more money if I had a child (I could take leave without pay salary and living on money), charity money, death benefit (you could buy a bigger life insurance policy), etc.

I thought the benefit I would lose would be food, but when I lost 15 pounds after quitting without doing anything, I realized how badly I had been overeating. Now I'm kind of grateful that my new employer doesn't have free food everywhere.

Admittedly, I was also naive and negligent in taking Google's food health ratings at face value when it turns out that no person / scientific system has taken them and they count empty calories as brown rice "healthy / eat everything you want "because" there is nothing wrong with them. " Admittedly, it's not Google's job to educate me, but it was a shame to realize how unscientific it was done and how that affected my health while working there. Yay late self-education!

2018 Edition: I seriously underestimated healthcare at Google. It was excellent.

Offering employee benefits like free food, on-site gyms, kitchens, and haircuts may seem extravagant on the surface, but it's actually a great deal for Google and its employees.

Last year in 2017, Google's parent company Alphabet made about $ 12.66 billion in profit while employing just 88,000 workers. 1 That's enough profit to give each employee an additional $ 158,250 per year and still not lose a penny after operating costs.

Compare them to Walmart, which made $ 9.86 billion in comparable profit last year but employed 1.4 million people in the US alone.

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Footnotes

1 Alphabet Inc. - Wikipedia

Offering employee benefits like free food, on-site gyms, kitchens, and haircuts may seem extravagant on the surface, but it's actually a great deal for Google and its employees.

Last year in 2017, Google's parent company Alphabet made about $ 12.66 billion in profit while employing just 88,000 workers. 1 That's enough profit to give each employee an additional $ 158,250 per year and still not lose a penny after operating costs.

Compare them to Walmart, which made a comparable profit of $ 9.86 billion last year, but employed up to 1.4 million people in the US alone (2.3 million worldwide)! 2

Suffice it to say, Google benefits from running a highly profitable business with very few highly-skilled workers. In addition, the advantages that Google offers its employees benefit from economies of scale. For example, offering free breakfast, lunch, and dinner at the Google scale may only cost about $ 10 per employee per day, but the employee, who is comparing the value of Google food to comparable restaurants, might value it at, say , $ 20 per day. So it's actually a very good deal for Google.

The benefits themselves don't cost that much in the grand scheme of things, certainly not close to $ 150,000 per employee. And for Google employees, they earn enough each year that the extra money is no longer such a motivating factor, and having a good work environment and quality of life begins to have more value.

So, for Google, it is completely rational from an economic point of view.

Footnotes

1 Alphabet Inc. - Wikipedia 2 Walmart - Wikipedia

There is some information in Alphabet Inc's 10-K annual report on R&D spending. Alphabet Inc is the parent company of Google and Other Bets. It does not provide a specific breakdown.

Alphabet Inc's R&D spending in 2017 was $ 16.6 billion, or 15% of revenue, compared to $ 13.9 billion in 2016 and $ 12.3 billion in 2015. Rapid growth in spending on R&D has been roughly in line with revenue growth.

In the notes to the financial statements, some of the most useful comments on R&D are:

  • Research and development expenses include the vast majority of engineering and technical personnel responsible for the research and development of our former
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There is some information in Alphabet Inc's 10-K annual report on R&D spending. Alphabet Inc is the parent company of Google and Other Bets. It does not provide a specific breakdown.

Alphabet Inc's R&D spending in 2017 was $ 16.6 billion, or 15% of revenue, compared to $ 13.9 billion in 2016 and $ 12.3 billion in 2015. Rapid growth in spending on R&D has been roughly in line with revenue growth.

In the notes to the financial statements, some of the most useful comments on R&D are:

  • Research and development expenses include the vast majority of engineering and technical personnel responsible for the research and development of our new and existing products and services, as well as their associated costs.
  • We continue to invest heavily in research and development (R&D) in strategic focus areas such as advertising, cloud, machine learning, and search, as well as new products and services.
  • R&D expenses consist mainly of:
    • Compensation expenses, including SBC, and facilities-related costs for employees responsible for R&D of our new and existing products and services; and
    • Depreciation and equipment-related expenses.

If you want to assess the R&D big picture, I suggest that you also consider that a significant portion of CapEx (Capital Expenditure) spending (balance sheet / cash flow statement), as well as many acquisitions, are related to R&D. + D.

TLDR: Hundreds of Google employees earn more than $ 1,000,000 per year.

That said, the only Google employees whose specific compensation packages are publicly available are those the executives listed in their annual proxy statement to the SEC.

Google, and many other companies, pay engineers $ million / s (up to $ 7M) when they are in a highly competitive situation with another company over that employee AND Google believes (strongly) that one or both of the following situations:

  1. The employee is fundamental to the functioning of Google
  2. The employee is crucial to the operation of the competition and Google wa
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TLDR: Hundreds of Google employees earn more than $ 1,000,000 per year.

That said, the only Google employees whose specific compensation packages are publicly available are those the executives listed in their annual proxy statement to the SEC.

Google, and many other companies, pay engineers $ million / s (up to $ 7M) when they are in a highly competitive situation with another company over that employee AND Google believes (strongly) that one or both of the following situations:

  1. The employee is fundamental to the functioning of Google
  2. The employee is crucial to the operation of the competition and Google wants to prevent that competitor from gaining any advantage.

In the above situations, Google will offer multi-million dollar stock awards to retain existing employees, as well as to get potential employees to join Google.

You can read my full answer to a related question: Does Google really pay some engineers multi-million dollar salaries? If so, about how many Google employees earn such remarkable salaries?

There's also the recent news that Google pays its autonomous car engineers so much that they actually quit. Read it here.

This salary is not fair at all.

Google hires new employees at the L3 level (called Software Engineer II) and offers them the following package:
--100k base
--15k variable
- 250 RSU's for 4 years

So a newer version gets a CTC of = 100 + 15 + (250/4) * 550
= 100 + 15 + (~ 35)
= 150k annually
Assuming Google Class C shares are valued at $ 550

In your case
CTC = 130k (base) + 19.5k (variable) + 12.5k (shares)
= 162k annually

Decide for yourself, as you will earn only 8% more annually than a fresh out of college student.

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