I think this is both the over-hiring effect from the last few years and a small bubble bursting from the rush to get on the AI train that a lot of companies have been on lately (Causing over spending in order to "grow" faster).
Also I think that at this point if someone worked for a company in the last 3 years the burnout is crazy and the productivity is getting lower so this kind of layoff can be a way to shake up the trees a little bit and make other employees "Wake up"
Well, given I was laid off due to “AI productivity gains” (in actuality, improving opex), I’m already worried…. About my mortgage payments. The interview bar has felt extremely high in this job search, and the only way I can get in front of a recruiter is by referral or if they reach out first.
To your actual point, these companies are making insane amounts of money and many are posting their best quarters yet while doing these layoffs. I’m not concerned that their business will suffer. Just the rest of us rank and file as they squeeze more blood from a stone with a narrative that Wall Street finds appealing.
An alternative explanation for this “over-hiring” is that many companies’ operating expenses have grown substantially because of AI spending. Companies can either eat the additional expense, hope AI adoption offsets it, or cut costs.
For most software companies, operating expenses are mostly wages. So, cutting costs means reducing headcount, which is likely especially true in lower-wage regions. If an engineer costs $4K/month, adding $1K/month in token costs increases employment cost by 25%. If an engineer costs $2K/month, the same $1K raises costs by only 5%.
So, I'd argue that everyone should be worried at least to some degree until the industry finds a new equilibrium.
I think this is both the over-hiring effect from the last few years and a small bubble bursting from the rush to get on the AI train that a lot of companies have been on lately (Causing over spending in order to "grow" faster). Also I think that at this point if someone worked for a company in the last 3 years the burnout is crazy and the productivity is getting lower so this kind of layoff can be a way to shake up the trees a little bit and make other employees "Wake up"
Well, given I was laid off due to “AI productivity gains” (in actuality, improving opex), I’m already worried…. About my mortgage payments. The interview bar has felt extremely high in this job search, and the only way I can get in front of a recruiter is by referral or if they reach out first.
To your actual point, these companies are making insane amounts of money and many are posting their best quarters yet while doing these layoffs. I’m not concerned that their business will suffer. Just the rest of us rank and file as they squeeze more blood from a stone with a narrative that Wall Street finds appealing.
An alternative explanation for this “over-hiring” is that many companies’ operating expenses have grown substantially because of AI spending. Companies can either eat the additional expense, hope AI adoption offsets it, or cut costs.
For most software companies, operating expenses are mostly wages. So, cutting costs means reducing headcount, which is likely especially true in lower-wage regions. If an engineer costs $4K/month, adding $1K/month in token costs increases employment cost by 25%. If an engineer costs $2K/month, the same $1K raises costs by only 5%.
So, I'd argue that everyone should be worried at least to some degree until the industry finds a new equilibrium.