Study: The Cost of Discrimination in Tech Is $16 Billion Per Year

May 17, 2017

12:50 pm

At this point, denying that discrimination in tech is a problem is like insisting the world is flat: no one is buying it and you look stupid trying to justify your stance. Study after study has shown that there is not only a problem with diversity in tech, but that this problem is costing business owners dozens of innovative ideas, unique perspectives, and driven leaders. And according to one study, it’s costing even more than that.

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A recent study conducted by Oakland non-profit Kapor Center for Social Impact, titled the Tech Leavers Study, has found that discrimination in the tech industry is responsible for an annual loss in the sector of about $16 billion.

“The costs of turnover due to unfairness in workplace culture are staggering,” wrote the authors of the study.

The study conducted a national survey of over 2,000 adults who left a job in a technology-related industry or function within the last three years in search of these answers. They found that nearly 40 percent of those who left cited unfairness and mistreatment as their primary reasons for leaving.

Even still, $16 billion seems like an outrageously high number. But when you consider the fact that the study focused on current estimates of average costs for replacing professional employees, the numbers are sound. Each person who leaves a tech job will cost companies an average of $144,000 per employee for full replacement costs, including lost productivity, recruiting costs, and salary. And with 40 percent leaving for this reason, that $16 billion sounds about right.

It’s easy for startup founders and business owners to write this off as a global problem that doesn’t effect individual companies. However, the study did a great job of putting this staggeringly huge number in context for companies that might have a discrimination problem of their own:

“What would the cost look like for an individual company? If we assume a large tech company pays engineers an average salary of $100,000 and it employs 10,000 engineers, even with a lower turnover rate (5 percent) and turnover rate due to unfairness of 37 percent, that company alone would lose $27 million per year by allowing their workplace culture to drive talent out the door,” wrote the authors of the study.

As much as this study should effect the global diversity problem in tech, the likely response will be one of apathy. However, if one startup founder, business decision maker, or general manager takes the time to consider the benefits of diversity and the downfalls of discrimination, the world will be better for it. So be that startup founder, decision maker, or general manager; it could change someone’s life.

Read more about discrimination in tech here on Tech.Co

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Conor is a writer, comedian and world-renowned sweetheart. As the Senior Writer at Tech.Co, he’s written about everything from Kickstarter campaigns and budding startups to tech titans and innovative technologies. His background in stand-up comedy made him the perfect person to host Startup Night at SXSW and the Funding Q&A at Innovate! and Celebrate, posing questions to notable tech minds from around the world. In his spare time, he thinks about how to properly pronounce the word "colloquially." Conor is the Senior Writer at Tech.Co. You can email him at [email protected].

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