[SilverBirch]

I'm incredibly skeptical of this idea that AI is creating such efficiencies that employers can hire fewer engineers.

Firstly, there's the massive confounding factor of Covid, the stock market went crazy, companies went on crazy hiring sprees etc. and the tail of that bullwhip effect is clearly still putting downward pressure on hiring from organisations that overhired.

But secondly, are we seriously saying that in the last 2 years, relatively slow moving companies adopted AI LLMs to help coders, integrated them into our work flows, and saw the results of those productivity gains in business outcomes?

I think it's unlikely. I think it's much more likely that CEOs love to watch where the crowd is going and then run to the front and shout "follow me". You don't actually need to have productivity gains for shareholders to reward you for saying how this is going to boost your margins and cut your costs. And this is even more true for companies like Salesforce for whom "AI" is a product they're selling. Marc Benioff isn't actually doing "AI is great I'll fire all my engineers", he's saying "AI is great, come buy Salesforce's AI products!". As for Microsoft, they employee almost a quarter of a million people, laying off 6,000 is a drop in the ocean, that scale of layoffs happen frequently at companies the size of Microsoft.

It's very much more just vibes than real data driving this. "<CEO who sells product> says product will cure cancer".

The underlying truth is that the competitive environment hasn't changed, if you can hire fewer engineers to do the same job, great, but your competitors are going to hire more engineers and out-compete you.

[rorylaitila]

Yeah I agree with you. There is also a subtly incorrect belief people have that employees are just costs. Therefore increased efficiency = fire people = increased profits.

The more accurate frame is that employees produce more value than their costs, so each employee is actually a profit producer. If you can increase their efficiency, then they produce more profit. Firing profit producers decreases your profit, not increases it.

"if you can hire fewer engineers to do the same job, great, but your competitors are going to hire more engineers and out-compete you." - this is correct in aggregate across the market. Of course any individual company may have other constraints that makes hiring additional people unviable. I think this is the common mistake, its easy to look at an individual company and believe that the constraint applies to all companies simultaneously.

[_benton]

I agree with you but I think at a certain point with large teams, the marginal benefit of hiring n+1 becomes negligible and then dips negative.

I've never worked for a company with thousands of devs but I imagine at a certain point the cost of simply collaborating and managing those devs becomes pretty high too.

[rorylaitila]

Yeah there are certainly diminishing returns. It's just that if they had N employees today, it's very unlikely they were at the top of their s-curve, such that N+1 employees is now net negative. Unless the business was already very mature. Most companies are expecting to grow revenue.

So it would be the exceptional case that firing employees because they were suddenly more productive makes sense.

What's more likely is they were already overhired and the new found "efficiency" is the excuse to resize.

Edit: btw this comes up IRL for me all the time in my work. Companies default play is to cut expenses to hit desired margin. It's much more beneficial in most cases to keep the team but increase their efficiency and handle more revenue. There are diminishing returns to profit by cutting back.

[kjkjadksj]

It isn’t that simple because your profit upside is usually finite. Say you run a lemonade stand in a small town. Number of employees can’t really exceed some threshold set by the amount of lemonade customers a given day in that town. Even if the employee is the profit producer. It isn’t an infinite money machine and money has to be made available to seek.

[rorylaitila]

Yeah that's correct, I mentioned "Of course any individual company may have other constraints that makes hiring additional people unviable". One such constraint would be the total market size.