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I have told my designer friends in other areas how well in-house designers are paid in the Bay Area, and their response has always been that they think being in-house would be boring and they strongly prefer agency work (despite, in their experiences, super low pay and horrific management).

I have always wondered if in-house work is legitimately more boring or if the goal of working at an agency has just been drilled into them since design school.

Is it considered a stigma on one's resume to have done in-house work? If not, it seems like designers could go for the programmer model of employment -- work in-house for a few years then switch to a new place for new challenges when you stop learning and growing, unless a new challenge is presented.

Design consultancy allows the designer to work on multiple projects concurrently or in succession, avoiding burn out and getting more broad experience (important for their career). In house designers usually are assigned to the same product for a long period of time, though you'd think larger companies could avoid this by moving to an internal agency model.

My wife is just moving from being in-house to an agency, but these are in huge demand for beijing.

The things I'm seeing in the NYC area (particularly digital advertising agencies - but the lines between those, 'design' agencies, and general software development firms have become so blurry that it's hard to tell them apart anymore) point to some other issues causing a squeeze as well. Top of the list is an absolutely brutal level of competition. There are so many firms out there chasing the same business - from your top-tier Madison avenue firms who have gone digital, to your 3 person, 1 hit-wonder shop in DUMBO - that clients have these companies strapped tightly over a very large barrel. Companies are bending over backwards with just about everything: allowing late payments, cut-rate deals, and sometimes even free work for even moderately complicated jobs (in the hopes that if they properly prostrate themselves, they will be given paying work in the future), which really hurts bottom lines - and the ability to offer competitive salaries.

I'm also seeing the same talent flight as the author of the piece, not just with designers, but also devs and good producers/project managers. At some places I've seen, companies avoid certain clients because they fear poaching by their own client(!) Is it too conspiratorial to think that talent-hungry clients are doing trial-run projects to try out and entice potential employees? A couple years ago, I would have thought that was crazy. Now I'm not so sure.

My personal opinion is that a shakeout in this/these industries is coming in the next few years. That tide goes out, and a pile of firms will go with it. There's no way the numbers are sustainable. Something has to give here.

I think part of the reason for the in house move is just tighter integration with product and engineering. Design firms just aren't technologically sophisticated enough for a lot of the "design" being done in the bay area.