As I have heard from mid level managers and C suite types across a few dev jobs. Staff are the largest expense and the technology department is the largest cost center. I disagree because Sales couldn't exist with a product but that's a lost point.
This is why those same mid level managers and C suite people are salivating over AI and mentioning it in every press release.
The reality is that costs are being reduced by replacing US teams with offshore teams. And the layoffs are being spun as a result of AI adoption.
AI tools for software development are here to stay and accelerate in the coming months and years and there will be advances. But cost reductions are largely realized via onshore/offshore replacement.
The remaining onshore teams must absorb much more slack and fixes and in a way end up being more productive.
> The reality is that costs are being reduced by replacing US teams with offshore teams.
Hailing from an outsourcing destination I need to ask: to where specifically? We've been laid off all the same. Me and my team spent the second half of 2025 working half time because that's the proposition we were given.
What is this fabled place with an apparent abundance of highly skilled developers? India? They don't make on average much less than we do here - the good ones make more.
My belief is that spending on staff just went down across the board because every company noticed that all the others were doing layoffs, so pressure to compete in the software space is lower. Also all the investor money was spent on datacentres so in a way AI is taking jobs.
At a very large company at the momen: One of the things I've noticed is as translation has improved, C level preferences and political considerations have made a much bigger impact.
So we will reduce headcount in some countries because of things like (perceived) working culture, and increase based on the need to gain goodwill or fulfil contracts from customers.
This can also mean that the type of work outsources can change pretty quickly. We are getting rid of most of the "developers" in India, because places like Vietnam and eastern Europe are now less limited by language, and are much better to work with. At the same time we are inventing and outsourcing other activities to India because of a desire to sell in their market.
One of my consulting customers has been half India, half not for a decade. There is a real push over the last year to wind down the not India half and shift to mostly India.
India based folks cost 50-75% less. I realize that quality India hires would be closer to US rates, but management is ignoring that aspect.
If they're lucky they'll find one solid worker who's going to watch everyone else's hands. I've had one criminally underpaid unofficial[0] tech lead like that. He was herding a team of 11, where like four people at most really cared about the outcome of this project.
[0] Because otherwise a raise would be in order. Can't have that.
Many companies aren't selling anything special or are just selling an "idea".
Like liquid death sells water for a strangely high amount of money - entirely sales / marketing.
International Star Registry gives you a piece of paper and a row in a database that says you own a star.
Many luxury things are just because it's sold by that luxury brand. They are "worth" that amount of money for the status of other people knowing you paid that much for it.
It works. But for most it is not sustainable. It in most cases collapses eventually. But ideas and words and now pictures and videos do sell as in get pre-orders or pre-payments.
>Primarily because web search these days is so shitty but that’s besides the point.
Obviously there are a lot of reasons for this. But I think one of the most important reasons is that there is so few organic interesting content destinations anymore.
Sure there are some neat shopify stores, news sites, and a few dedicated souls keeping up blogs. But so much of the casual browsing that the web once was has been obliterated by the move to social media.
And what hasn't moved is now a mess of AI generated fluff or link farms.
I used to think Google made search worse to increase ad revenue. And maybe it's tangentially related. But the stuff I used to search for and find and get inspiration from has moved to walled gardens. Reddit is one of the few remaining open web destinations left.
Almost all tech CEOs think we want an AI button on every window, every app, every dialog. Always there no matter what to make workers more productive or need fewer workers or whatever.
The reality is that even the most ardent supporters of AI want it only in a single web page or in their IDE and that's about it.
And all of these outages happening not long after most of them dismissed a large amount of experienced staff while moving jobs offshore to save in labor costs.
Interesting insight. High interest rates keep new startups low. Well, not counting AI startups I guess.
And the lack of new (non-AI) startups allows bloated incumbents to get by without innovating or offering new products. Quality destroying measures like offshoring and outsourcing are easier to pull off. As is allowing services and standards to slide.
Maybe we'll only know once interest rates come back down. Or once the AI-replacing-workers veil has been lifted.
I think this dynamic is an under appreciated source of the chart that shows the decoupling of the job market with the stock market [1]
Interest rates aren't high, they're manipulated by the government and they're too low. When businesses, governments, and individuals increase their borrowing, as they are now, that means that the cost of borrowing, the interest rate, is too low.
>When businesses, governments, and individuals increase their borrowing, as they are now, that means that the cost of borrowing, the interest rate, is too low.
That's not necessarily the case. Credit expansion comes with healthy growth as well.
If growth is happening with high interest rates then that means capital can remain out of the hands of the public but debt replaces it
If I’m a billionaire my goal is to own everything and have everyone in debt to me based on my personal currency I issue - like points or miles or a corporate debt vehicle for example.
Surely we aren’t seeing a increase in debt also right? /s
The Fed targets price stability and employment, not growth.
Of course that is largely correlated with stimulating growth as a derivative of that, but certainly not "only" to stimulate growth. For example, the current cutting cycle has far more to do with inflation that it does growth. The Fed's primary concern currently is growth accelerating into more inflation.
There are other reasons for cutting as well. For example, funding stress. Repo funding stress caused an interest rate pivot not too long ago (and repo funding stress is rising once again, which will be a factor in the current rate decisions.)
In the past large developments would win over local government support with promises of jobs and investment in the local economy.
Now the only promises are a strained grid, higher energy bills and loud noise. It doesn't help that AI has been falsely attributed as the reason to lay people off in the past few years by CEOs who are actually just cutting costs or moving jobs offshore.
This situation probably gets worse before it gets better for the companies deploying new data centers.
But I think the more important point is the increasing number of layoffs linked in the article [1]. These layoffs are mostly ignored here and everywhere else.
Jobs are getting offshored and outsourced in large quantities and the tech community is on the whole ambivalent about it. Unless you were directly impacted.
The path for software developers looks bleak. While people are wringing their hands over AI while something else entirely is destroying job prospects for young grads.
This is why those same mid level managers and C suite people are salivating over AI and mentioning it in every press release.
The reality is that costs are being reduced by replacing US teams with offshore teams. And the layoffs are being spun as a result of AI adoption.
AI tools for software development are here to stay and accelerate in the coming months and years and there will be advances. But cost reductions are largely realized via onshore/offshore replacement.
The remaining onshore teams must absorb much more slack and fixes and in a way end up being more productive.