Total salary of Naver and Kakao surged by 30-40% in one year
Navers operating profit margin fell by 3.5%p
Kakao is also broken by 10% in one year
Contrasting 25-30% of Big Tech in the US
The average annual salary of Kakao is 170 million won.
Losing people in Silicon Valley…
Increase stock compensation to court developers
Mid-sized companies that have lost their manpower face a job shortage
A vicious cycle of paying more while crying
◆ IT industry labor tsunami ◆
Recently, e-commerce startup Company A raised the salary of a beginner developer from 50 million won to 60 million won. This is because the number of cases of developers moving to mid-sized information technology companies or game companies is increasing. The CEO of Company A sighed, saying that even a larger company than us is losing its manpower to a larger company and a chain reaction is taking place. .
The rising labor costs of Naver and Kakao, two big tech wagons, are spreading as a problem for the entire IT industry ecosystem. This is because, when big tech expands its workforce, a food chain structure is being formed in which mid-sized IT companies or small and medium-sized venture start-ups have a hole in their workforce one after another. In fact, Naver hired 539 employees last year to secure 4,526 employees, and Kakao expanded the number to 3,303 by recruiting 556 more. As the total number of employees increased by more than 20%, the average wage also increased. The average wage of Naver rose from 12.47 million won in 2020 to 129.15 million won last year, and Kakaos increased from 108 million won to 172 million won during the same period.
In particular, the cost of stock options tripled due to the policy to expand employee incentives. During the same period, Naver increased 2.5 times from 29 billion won to 73.4 billion won, and Kakao increased 3.4 times from 43.3 billion won to 148 billion won. As both companies plan to further increase stock compensation in the future, the cost of stock incentives is expected to rise. Kakao is responding to the increase in additional labor costs by increasing its annual salary by 15% this year. This year, the average salary of Kakao employees is expected to increase by about 5 million won. Kakao CEO Nam Goong-hoon has announced that next years annual salary budget will also be increased by an additional 6%.
Yoon Seok-chan, a tech evangelist for Amazon Web Services, said that Naver was famous for rewarding stock options in cash rather than distributing them. Unlike stock options, which are the right to buy company stock at a specific price, RSU is a reward system in which employees are paid in stock when a target is achieved within a specific period. A Kakao official said that the incentive system of Naver for cash compensation and Kakao for stock compensation seems to be in sync with each other recently.
The problem is that the burden on mid-sized IT companies and startups is greatly increasing due to the chain effect. To prevent key personnel from escaping, these companies have also offered salary increases and stock compensation. For example, Krafton raised the developer salary by 20 million won and the starting salary for new employees to 60 million won. Nexon offered an 8 million won increase in annual salary for all employees and 50 million won in starting salary for new employees, and Netmarble also raised wages at the same rate in line with Nexon. Toss, a fintech company that has grown into a unicorn company, offered up to 1.5 times the annual salary when changing jobs and offered 100 million won in stock options. An official from a mid-sized game company said that to prevent the outflow of manpower to Naver and Kakao, we have no choice but to propose a wage increase, which is a big carrot, and said that stock option policies are being considered in accordance with the atmosphere of demanding compensation for stocks in addition to wage increases.
Neither Naver nor Kakao are at the top of the human food chain. A high-ranking IT industry official said he was sorry for taking our developers from Big Tech and heard that we are losing our manpower to Silicon Valley, so we cant help it. He said he knew that there are many talents scouted by Valley Ventures. He further pointed out that it is fine if the company continues to grow, but it will be burdensome for the fixed cost to become too high when it goes through ups and downs.
In fact, securities firms are concerned about the margin slowdown of Naver and Kakao. Seo Jeong-yeon, a researcher at Shinyoung Securities, said that Naver expects sales of 8.4 trillion won this year, saying that although all business divisions are growing evenly, Navers margins are unavoidable due to continued investment expansion. . He also suggested 8.8% for Kakaos operating profit margin this year, which is lower than last years 9.7%. It seems that marketing expenses and R&D expenses are increasing along with rising labor costs. Navers marketing expenses rose 36.1% to 579.4 billion won last year, and R&D expenses increased 24.2% to 1.655 trillion won.