Question: I am from Eastern Europe with a strong research record. This year, I applied for similar professor positions in the US and UK. From 5 applications in the US universities, I was invited for interviews for 3 positions. I got one offer and one is still pending.

However, all 4 applications I submitted to the UK universities were unsuccessful. The last position was relisted after my rejection, which means they had not received strong applications.

I prefer to move to the UK since I still do not need a work permit. I am now confused if the standards and criteria for recruiting a faculty member is this much different in the US and UK. The 9 positions I applied for were all similar, full professor in the same field in mid-level universities.

Answer: 
1) All organizations--including private companies--have indirect costs which need to be added to grant budgets. Like universities, private companies negotiate indirect cost rates with the government which apply to any contracts or grants awarded. The rates can be comparable to university rates, and at some types of institutions (nonprofits) they can be significantly higher! ([This *Nature* blog post](http://www.nature.com/news/indirect-costs-keeping-the-lights-on-1.16376) dedicated to indirect costs has a nifty graphic of the range of rates across institution types.)

2) If you are working in a private company, you might think you would be relieved of the burden of grantwriting altogether. However, then you need to convince the people above you in the company that the research/development project you want to pursue is the one that is in the best interest of the company. This might be more difficult than you are anticipating.
A "bad deal" for who?

> 
> I find it disheartening to find how much of a cut of total grant
>  awards are taken by a university.
> 
> 
> 

Note that for many grant mechanisms, and indeed probably the largest single grant agency (the NIH), overhead is not "a cut of the total grant award" but is added on to the total cost of the grant. If the overhead rate was lower, the amount you'd get for your lab would not be larger.

> 
> Sure, there are overhead costs, but 40 - 60%? Come on. This seems like
>  a terrible deal. Especially in some fields, such as software research,
>  where faculty do all the work, rely very little on physical
>  infrastructure, power, depreciation costs of facilities and equipment,
>  administrative costs, etc, it makes such little sense to me.
> 
> 
> 

Our institution has an overhead rate in the middle-high end of that range, and having looked at it, that rate doesn't actually cover the cost of administering research. I'm also skeptical of your claim that you use little in the way of overhead - I'm in a very similar field, and I derive a great deal of value from the overhead rates I pay. Additionally, overhead goes to things like startup packages, which are consumed in large chunks at a single time, but largely invisible to you.

Further, overhead rates tend to be institution wide, which means that it has to cover the *average* cost of research - for every cheap software researcher, there's also someone who has to maintain a cattle herd for their research, and a single overhead rate needs to cover both of those.

> 
> Why on earth would a modern researcher obtain grants and give up half
>  to an aging academic institution rather than working within the realm
>  of industry-led research?
> 
> 
> 

Why would you think this is true? Industry has an overhead rate as well - they're just allowed to roll it into the total costs of their research contracts, rather than being forced to keep it as a separate entry. Or are you under the impression that industrial research doesn't have to pay for electricity and internet and offices and administrative support?