Does Your Employer See Software Development as a Cost Center or a Profit Center?
A Developer’s First Steps to Finding a New Job, Part III
In parts I and II of this series we explored knowing what it is you really want and working with recruiters. This week’s is a little bit of an extension of part I: do you want to work in a cost center or a profit center?
In accounting, every department within a company is classified as either a cost center or a profit center. A cost center is a department that’s primarily identified by its costs to the company; a profit center, naturally, is one that’s primarily identified by the revenue it brings in.
If you work for a software company, developers are building the product that makes the company money — they’re a profit center.
But what if you don’t work in software? What if you build software for a banking company, or an insurance company? These days developers are working in all kinds of fields, and that’s great. But you need to be aware if your company isn’t seeing you as driving profit, but rather as sucking resources — a cost center.
Does this mean you can’t be happy working in a non-software company? Of course not. But this is something you need to take into consideration when you’re searching for a new job. Are you ok working somewhere where you’re seen as overhead? Or do you need to be driving revenue and building a product that is the backbone of the business?
Cost Centers Versus Profit Centers
The difference is in the mindset of decision makers answering questions when developers need something to get their job done. If a developer wants a second monitor, cost center logic says, “Well, once that person gets a second monitor, everyone is going to want a second monitor, and that’s going to cost us more than we budgeted for developers this year.” So no, you can’t have a second monitor; but they might consider it for the budget for next year. By contrast, profit center logic says, “Will a second monitor help you work faster or more efficiently? Will you be a more effective driver of revenue? Great. Here’s your tracking number; it’ll be here in 2 days.”
While it might sound crazy to ever think working in a cost center could be enjoyable, just remember that the number of times this kind of situation comes up is typically only once or twice a year because you’ll get used to working on whatever you’ve got before too long anyway. Equipment does go bad and upgrades do need to happen, and licensing for tooling does need to be updated regularly, but most cost centers are aware of those kinds of things. It’s when you want a new book or a special piece of hardware or an event ticket when these kinds of situations come up. People can be happy under both methodologies, just be aware of your needs.
Have you worked in a cost center or a profit center? What was your experience? Any advice for new developers searching for their first jobs? Let us know in the comments.
Update: Part IV can now be read here.
Obviously as a profit center for sure. As in reality the software development has given us so much profit that one can not point it out at all. Thanks
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