The software engineers are likely going to be some of the highest paid employees, so laying off underperforming engineers is going to help reduce labor costs substantially.
It might seem counter-intuitive, but often businesses lay off the high-performing-but-best-paid people because that drives the biggest savings while reducing the vanity headcount metric less, especially in companies where the effort of the team greatly outweighs any individual. They assume (sometimes rightly, sometimes wrongly) that the team will carry on without the 'superstar' people. There's also an assumption that the best people will leave when there's a layoff (mostly rightly), so getting rid of them means maintaining control of who's gone.
There should never been an assumption that you're safe from layoffs because you're the highest performing person on the team. Sadly.