The rivalry between Cape Town and Johannesburg has reached a new territory: the tech industry.
Cape Town has long been considered South Africa’s tech capital, even earning the nickname Silicon Cape. But now, new data revealing the pay gap between Johannesburg and Cape Town-based developers may see a northward exodus of developers.
OfferZen, a recruitment company aimed specifically at software programmers, found that the more senior developers become, the more lucrative Johannesburg becomes. The company used salary and location data from successful placements and found that Johannesburg-based developers with about five years’ work experience began to out-earn their Capetonian competitors.
This is likely because most of larger corporates and banks are headquartered in Johannesburg and offer a higher salary ceiling to more experienced developers, said OfferZen co-founder Phillip Joubert.
“The majority of South African tech startups are based in Cape Town and being cash-strapped, usually can’t afford senior salaries that match those of larger corporates,” Joubert said. “In Cape Town it’s not unusual to see a developer taking a pay cut to join an exciting startup they believe in.”
In general, the average developer on OfferZen’s books earned 39 298 rand (about $2,985) per month. Programmers who had unique skills or brought unique experiences to the table earned 90,000 rand ($6,836) and higher per month. In South Africa, these salaries bring with them a comfortable middle class life in what is still a nascent industry.
Another recruitment site, Payscale, found that the median annual income was 243,282 rand (a monthly salary of about 20,273 rand or $1,540), but this was based on a much smaller sample, without details on location.
At the beginning of their career, developers earned 38% more in Cape Town, OfferZen found. Despite this, Cape Town’s cost of living meant that Johannesburg junior developers were taking roughly the same.
The 2017 Savills Tech Cities report showed that while Cape Town’s startup scene was still quite small, the quality of life in the city ranked it just behind cities like New York and San Francisco, and ahead of Seattle, Stockholm and Hong Kong. (Berlin was ranked number one, based on factors like buzz, affordability and wellness).
Cape Town was also the only African city listed on the report as one of 22 cities with a thriving and growing tech scene. Like Santiago and Buenos Aires, the survey saw Cape Town as a regional magnet for young developers.
Cape Town is likely to continue to attract young developers. Along with the decent starting salary, the city is also home to most of South Africa’s start-ups, tech incubators and generous venture capital investors. But, for how long?