Talent Neuron Weekly Digest

May 16th 2013

From Neuron Lab Employee Benefits: Proposed Tax Changes and Implications
The intense competition for the highly skilled tech talent especially in the Silicon Valley has compelled companies to provide innovative perks and benefits to its employees. These perks range from telecommuting, free meals, free/subsidized massage services, hair cut, to child care benefits etc. However, these benefits may not come free anymore as Internal Revenue Service (IRS) is considering taxing some of the fringe benefits such as free meals and child care. Currently, these benefits are considered to be noncompensatory, and therefore non taxable. The above stated proposed change can be attributed to the following two reasons : All the employee benefits are paid out of pre tax dollars In US, employee benefits today account for about 19.8 percent of the total compensation as compared to 16.6 percent in the year 2000 Talent Neuron is working on incorporating wage inflation trends under Total Cost Simulator. By using this feature, our clients will be able to understand a 7- 10 year wage inflation trends by domain and by function

Key Acquisitions
Yahoo!s business strategy is focused on increasing its breadth of offerings in the mobile space and drive revenues through mobile advertising. To bring newer and innovative mobile applications faster to the market, company has added top engineering talent through acquihiring. Yahoo! has recently acquired three more startups in the mobile space namely GoPollGo (a web and mobile based social polling app), MileWise (personalized flight search app) and Loki Studios (location based game, Geomon). Since 2012, Yahoo! has acquired 10 startups accounting over USD 70 million. Other recent acquisitions include Astrid, Summly, Jybe, Alike and

If taxes are imposed on free meals then employees could end up paying tax for extra USD 3000 - 5000 annually, assuming the average market value per meal to be between USD 5 -10. Employers who want to keep their employees motivated are of the opinion that the non- cash benefits should not be taxed. In addition, as the marginal taxes are pretty high, employers cannot substitute these benefits with higher salaries.

Cost Trends- UI/ UX Designers

Over the last two years, the demand for UI/ UX designers has witnessed an increase. The user experience industry has become a hot place to work with the increasing client side mobile applications, online advertisements on social networking site and increased number of e-commerce sites, shopping

carts etc. The number of job openings for UI/UX developers in US is expected to double in 2013 ( Source: Talent Neuron Skills Search). In 2012, there were 50 percent more job openings (for for UI/UX developers role) compared to 2011. In 2013, the salaries of UI/UX designers are expected to increase by 7 percent, about 4 percent more than the industry average. The graph below indicates the expected salary trend for UI/ UX designer:

Snip.it. The acquired startups have been shut down and their technology has been integrated with Yahoo!s mobile products. Talent Neuron research reveals that with these acquisitions over 65 entrepreneurs and innovators have joined the companys mobile engineering teams in Sunnyvale and New York in the last 12 months.

Country Spotlight Chile

With more than 500 IT companies, Chile is one of the preferred outsourcing destinations in Latin America. In 2013, the IT industry in Chile is expected to grow by 13-15 percent. Also, the availability of bilingual talent has attracted companies like CSG, IBM, Shell, Sitel and Atento to set up contact centers in the country. The average software development salaries in Chile are about 9 percent lower than that of Brazil, but 54 percent higher than the salaries in Argentina. There are about 58 universities and 60 technical training institutes in the country which produce a fresh talent pool of 55,000 graduates annually suitable for ICT industry. The government offers tax credits to promote innovation and employment in the areas of technology.

Note: Salaries indicated is for a resource with 0-3 years of experience. Software industry average refers to salaries of resources with skills in software development such as Java, .NET etc. Source: Talent Neuron Skill Framework, discussion with HR Executives and Leaders

Organization Restructuring Focus - Electronic Arts

Electronic Arts is consolidating its operations through organizational restructuring. The company recently downsized its employee count by about 10 percent (about 900 employees) in Los Angeles and Montreal. The previous downsizing in headcount happened in 2010 when 1200 (or 15%) employees were laid off. EA has also shut down its Popcap and Quicklime studios in Vancouver in 2013. The companys focus has been to shift away from producing console games to free-to-play gaming. By 2015, the market for free-to-play gaming is estimated to account for USD 15 billion. From a skill supply standpoint, there has been an influx of mobile gaming talent in the market which is being effectively leveraged by competitors. The Talent Neuron Skill Framework data provides the following insight on the talent flow from EA to other major competitors in Vancouver and Los Angeles.

Is Facebook Facing Executive Brain Drain?

Our research indicates that in the past one year, Facebook has witnessed 16 executive moving out of the company, of which 8 executives held the engineering leadership positions (product heads, SVP, etc.) whereas 6 of them held non- engineering positions. Former executives of Facebook have either started their own entrepreneurial ventures (Quip, Startup tbn) or joined other startups (Drop Box etc.) or other social networking companies like Quora and Pinterest. Facebook recently reported that, Bubba Muraraka, Head of Product for Android, is leaving the company to join a Silicon Valley venture capital firm Draper Fisher Jurvetson as general partner and managing director. Another Facebook executive, John Hegeman, Director of Engineering for Ads, quit the company to join Quora. About 100 former employees of Facebook, who have worked in the company for at least two years in various roles, have their started their own ventures.

Companies involved in innovation can obtain a tax benefit up to 35 percent spent on R&D. In addition, the University of Chile is building a Technology Park with over 1,000 hectare space. However, with only 15 percent of the talent with English speaking capabilities, companies find it challenging to scale up their operations and build a center employing more than 300 engineers.

City Spotlight - Santiago, Chile

There are about 150 IT and BPO companies in the city and over 18,500 professionals employed in the ICT sector. Santiago has 14 universities which generate a fresh talent pool of 36,000 graduates every year suitable to be employed in the ICT sector. 3000 of these graduates are skilled in work in software development domain. The city has an installed talent of 1,600 engineers working in software development, of which 13 percent are skilled in mobile development and web technologies. Companies such as Yahoo!, Equifax, Citigroup, and IBM have set up centers in Santiago. Yahoo! has about 30 engineers working on search technologies and data mining. Equifax has about 50 engineers at its center in Santiago, developing analytical software and algorithms to analyze the financial data.

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