3.6L vs 25L Salary - Why is there a DIFFERENCE? | Product vs Service Company | Warikoo Careers Hindi

Summary

This video explores the significant salary disparity between employees at service companies like TCS and product companies like Google, emphasizing that business models, not just skills, determine compensation. The script explains that product companies offer higher salaries due to infinite scalability, whereas service companies are limited by project-specific work. Career advice is offered, urging individuals to focus on value creation, continuous improvement, and building irreplaceable skills. The speaker encourages professionals to treat their careers like a product, constantly evolving and improving, to maximize their impact and value in the job market.

Takeaways

• 😀 Skills are not the only factor that determines salary. Business models and the nature of the company play a crucial role in salary disparities.
• 😀 Service companies tend to offer lower salaries compared to product companies, even for employees with the same skill set, due to differences in scalability and market demands.
• 😀 Product companies, such as Google, offer higher salaries because their business models allow them to generate more value per employee, thanks to their ability to scale infinitely.
• 😀 Market capitalization per employee is a key metric to understand the financial health of a company. For instance, Google generates far more value per employee compared to TCS, despite TCS having more employees.
• 😀 The limited supply and high demand for talent in product companies leads to higher salaries, as the market values the scarcity of certain skill sets.
• 😀 It's important to understand the value creation framework in your career. The more value you can create, the more you can command in terms of salary.
• 😀 There is a difference between roles that require creative problem-solving and technical skills that AI or automation can easily replace. Invest in skills that are harder to automate.
• 😀 Careers in industries with limited talent supply and high demand for skills are more likely to be lucrative. In contrast, industries with abundant talent supply may not offer high-paying opportunities.
• 😀 To remain valuable in your career, it's essential to develop skills that cannot be easily replaced by technology or AI, such as critical thinking and creative problem-solving.
• 😀 Your job's impact on the company and how much profit it generates should influence your salary. High-impact roles tend to be more valuable and are better compensated.
• 😀 Treat your career like a product, constantly evolving and improving. Just like a product, if you keep updating your skills and solving problems, you will remain valuable in the long run.

Q & A

What is the main reason for the salary gap between employees in product and service companies?

The salary gap is primarily due to the different business models. Product companies, like Google, generate significantly more value per employee because they can scale their products globally, while service companies, like TCS, require more employees to manage individual client projects.

How does the market capitalization of companies relate to employee salaries?

Companies with higher market capitalization can afford to pay higher salaries because they generate more value per employee. For example, Google has a market cap of $2 trillion with 180,000 employees, while TCS has a market cap of $200 billion with 65 lakh employees.

Why does a service company like TCS require more employees compared to a product company like Google?

Service companies need more employees because their business model involves managing specific client projects. Each project is limited to a particular client or user base, requiring separate work for each client. In contrast, product companies can scale their products to millions of users, requiring fewer employees.

What is the role of scalability in the salary differences between service and product companies?

Scalability plays a critical role because product companies can leverage their products across a vast user base, making their business highly scalable. This allows them to generate more revenue with fewer employees, which translates into higher salaries. Service companies, however, have limited scalability and require more employees to generate revenue.

How does the operating margin of a company affect employee salaries?

Operating margin reflects how much profit a company makes relative to its revenue. Companies with higher margins can afford to pay employees more. For example, TCS has an operating margin of 24%, meaning it has to spend a significant portion of its income on infrastructure and other expenses, limiting the amount available for salaries.

What are some examples of jobs that are less likely to be replaced by AI in the future?

Jobs that require creative problem-solving, critical thinking, and the ability to handle complex problems are less likely to be replaced by AI. These skills are irreplaceable because AI excels at automation but struggles with tasks that require human creativity and decision-making.

How does understanding the value chain of your work help in career growth?

By understanding the value chain, employees can identify whether their work is creating repeatable value or solving problems that are essential to the business. The more often and widely a solution is used, the more valuable the employee’s work becomes, which leads to higher career growth and salary potential.

Why is it important to develop skills that are rare and in high demand?

Developing rare and in-demand skills increases your value in the job market. When skills are scarce and highly sought after, employees can command higher salaries because their expertise is harder to replace and critical to the company's success.

What is the difference between a product approach and a service approach to career development?

A product approach to career development involves continuously improving your skills, similar to how a product is updated regularly. A service approach is reactive and waits for feedback to make changes. The product approach leads to consistent growth and long-term success in your career.

How can understanding the demand and supply of talent in your field impact your salary expectations?

If you are in a field where there is a high demand for talent but a low supply, you are more likely to receive higher salaries. Conversely, if many people possess the same skills and there is a surplus of talent, salaries tend to be lower due to competition in the job market.