Profit Centers vs Cost Centers at Tech Companies
Profit Centers vs Cost Centers at Tech Companies
Why the difference between them matters for career growth, and how to determine which one you work in
Q: “When choosing which company to join, how can I balance impact, career growth, and job security? Are there principles I can use to find companies and teams that tick all three?”
A useful comparison I find myself thinking of frequently is the concept of working at a profit center, versus working at a cost center. The implications of which one you’re in are wide-ranging; it frequently impacts compensation, career growth speed and job security. In this issue we dive deeper into this topic:
Profit centers vs cost centers. The differences.
Engineering as a cost center. Which companies treat it as such, how can you recognize if this is the case where you work and what you can do about it.
Engineering as a profit center. Which places operate like this and what are the telling signs?
When cost centers are called what they are. Investment banking, back offices, and what happens when people know which teams are cost centers.
Traditional companies and the digital transformation struggle. Why do so many older companies struggle with transforming into tech companies, and will this ever change?
The gray areas. Where do platform teams, SRE, R&D, or security engineering sit?
Implications at large companies. What impact does working at a profit center or cost center have on promotions, performance reviews or internal transfers?
We’ll also touch on whether it could be a coincidence that in the top 10 most valuable companies in the world, based on market cap, those founded in the past 30 years all treat software engineering as a profit center.
