Recently Terrain announced some exciting news about expanding our offices and shared some of our key factors that helped us choose Toronto as our newest office location. Our decision to expand our offices to Toronto had many advantages. For example, Toronto as a city offers a relatively large population of diverse high-quality technical talent, especially when compared to other cities we considered such as Portland and Vancouver. But by leveraging machine learning to tap into vast and different types of data, our decision ultimately came down to which city offered the best quality talent at a reasonable price. For comparison, we’ve also included Portland and San Francisco in our analysis to represent how Toronto stacked up against our shortlist of cities.
Understanding the Relationship between Talent Quality and Software Engineer Salary
Our analysis begins by collecting representative data for Toronto, San Francisco, and Portland regarding the cost of technical talent associated with each city. Using machine learning, we analyzed thousands of salary reviews for technical roles from companies located in each chosen city. We collect this salary data from a professional social media platform for individuals at specific companies in specific technical roles.
For each city, we also assessed the quality of technical talent from local companies by using our TalentRank tool. Terrain’s TalentRank tool is our machine-based learning methodology that acts similarly to a resume ranking by pulling data sets from the web and taking into account details such as where employees have worked, how long they’ve worked at these companies, academic history, open-source contributions, skills, and other employee-specific online data. It evaluates a city’s talent quality using a Talent Quality Depth score based on a scale of 100, allowing us to compare the talent quality of metropolitan cities regardless of any size differences between markets. We’ve seen from experience that any Talent Quality Depth score above 50 indicates excellent market talent, while a score of 30 represents good market talent; scores below 20 are below average.
To bring all this data together, we ran a few regressions to create linear approximations of a company’s average salary for tech workers based on their Talent Quality Depth scores within each city. All three of our regression analyses produced excellent R-squared values, indicating a strong relationship and statistical soundness between our local TalentRank and average technical salary data.
Our deep dive into the salary data from companies in the cities we considered supports our decision to make Toronto our newest office. The regression model reveals that Toronto offers equivalent-quality talent for a more reasonable salary than Portland and San Francisco, especially for relatively higher-quality talent where the average salary in Toronto is much more reasonable than the alternative cities. For an average salary of $108k USD (139k CAD) in Toronto, we have access to extremely excellent talent in Toronto (predicted TalentRank score of 80) as opposed to affording only above average talent in San Francisco (TalentRank score of 26) and strong talent in Portland (TalentRank score of 34) at the same price point.
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