Feels early to blame AI for most of this. A lot of it still looks like a reset from 2021-era hiring assumptions rather than actual labor replacement
So the issue is not necessarily the over-hiring.. more that the large tech firms are running out of projects to take that are value-creating. Which is not surprising - the labour market in its currently state is absolutely not perfect in allocating labour.
It should be noted that fixing tech debt is not necessary value-creating from a financial standpoint. What engineers think is value creating has nothing to do with what a CFO determines to be a value creating project - whose job is to maximize firm value.
There were companies growing organizations faster than they could be made productive. They acquired a lot of bureaucracy, excess structure, and inefficiency. The current backlash is trying to reverse the excess structure and middle management buildout so they can get back to more functional teams.
> It does so happen all three companies used the same large payroll management provider, so that company knows, but it would be pretty bad to share customer data wouldn’t it?
You may be in for a surprise.
Thanks a lot for ruining it for all of us.
When interest rates are low, even low value creation projects are viable.
When rates are high, those exact same projects are no longer viable.
Therefore, i would argue that the labour market is not perfectly allocating labour, but it is close enough for practical purposes.
"labour market is not perfectly allocating labour, but it is close enough for practical purposes."
No its not lmao. Do you even know what characteristics a 'perfect labour market' is even comprised of? Go on, surprise me.
"more of".
If you wanna finesse the discount rate by a few percentage points go ahead. Cash flows contribute more toward the end value number.
in b4 some numpty writes about the fed changing a market set rate.
The rate of non-tech business growth has slowed, who is going to continue to buy all these cloud software services? Tricking consumers into subscribing to AI tools or extra storage only goes so far.
I very much agree.
A lot of tech job growth during the late 2010 and pandemic period were frankly BS for a ROI perspective. Late 2010s was really the first time in tech that I started to feel like most of the stuff that needed to be built was built, and increasingly I was working on BS projects offering less and less value every year.
Consider:
- In the 80s developers were needed to write fundamental business software for word processing and spreadsheets
- In the 90s computers became mainstream and there was a huge demand for consumer software
- In the 00s the internet took off and we needed people build the web
- In the 10s the smart phone revolutionised computing and we needed people to build apps and rebuild websites to be mobile-first
But towards the late 10s entrepreneurs and investors seemingly ran out of no-brainer tech investments so increasingly started trying mental stuff still promising tech-like returns – block-chain, metaverse, Web 3.0, [insert traditional industry here] but a tech company.
I'm not saying there's nothing to build or maintain anymore, but I also no longer see where people think the exponential need for new software and software developers could come from, and I suspect this would have become obvious earlier if it wasn't for ZIRP.
But it's not a lack of productive things to build. We also have other trends hurting demand for new SWEs today. Consider how today completely non-technical people can start and scale an ecommerce company without any developers. Things that would have taken armies of developers just 10-15 years ago, can now be largely done in an afternoon on platforms like Shopify. It's actual hard to believe that just 15 years ago selling things online used to be very hard if you weren't technical.
Similarly starting in the early 2010s even being a developer got significantly easier because increasingly there was packages for everything. Things I might have spent weeks building before could now be built in days or less. And another thing that changed was sites like stackoverflow and blogs which help you solve problems and learn new skills. I remember trying to learn how to do things before 2010s was hard, and before the 00s it very hard.
And of course now we also have AI coding tools which don't just hurt the overall demand for developers, but effectively expands the supply of developers to anyone with an internet connection and computer.
So to summerise:
- There's much fewer good investments to be made in new software today.
- Where there are investments to be made you need far less developers.
- When you need developers there's far more people who can do the job.
Even if tech companies are doing well and the number of tech jobs is increasingly, the above means the average person trying to find a job in tech today will find it much, much harder than they have in the past. People working in tech today genuinely should consider a career change if they're primarily in tech for the money.
I mean, I feel like we've barely touched on what applications AI could be used in, that we have only just begun to start developing. It's tech that can be used in more advanced robotics, video games (adaptive NPCs, PCG, narratives), better data analysis, search, and more.
I understand the fears and dislikes around AI at the moment, but I think people need to understand that it can never fully replace human labor. At least, I am not concerned about that aspect in the slightest. To me, the real thing to fear isn't so much the tech itself, but our fellow man, and the ways they might possibly use it against others.
These companies need liquid cash to invest in AI infrastructure, and so they're doing mass layoffs to give them the capital to invest. Simple as that.
2022-2024 was COVID reset. 2025-2027? is reallocation of spending from R&D to infrastructure.
Block, for example, said that they had experienced record profits… in spite of their, “hiring spree.”
This is just capitalism working as usual, only more of it, faster.
AI has a part in it. So does austerity policies and the rise of a certain political climate.