I agree with you it’s in a lot of way similar to the dotcom bubble but the issue seems to me simpler than you make it seems. Propped by an easy access to cheap investment fonds, companies massively over hired developers to work on projets which have actually no value. The massive demand leads to under qualified people being hired. The current layoff is a return to a sustainable situation. And even then if you look at the number for the entire market we are not even back to a prepandemic number.
> companies massively over hired developers to work on projects which have actually no value.
It's still unclear to me the layoffs are affecting actual engineers, outside of Meta and Twitter.
Meta is trying to execute one of the biggest company pivot in tech's history after completely giving up on the metaverse. Industry-wide they account for a huge number of laid-off developers.
In the meantime, Twitter's layoffs are minimal (it's always been a small company) but extremely visible due to the company's new owner's very public persona.
Elsewhere, it's pretty close to the normal number of layoffs large tech companies do every year. It's a little known fact to outsiders, but tech companies trim underperformers every year from their workforces. The media almost never report on it, except this year they did because Twitter and Meta were in the news cycle.
These stats also have "Software Engineers" as a category alongside "QA Testers", "Web Devs" and "Application Engineers" listed as different jobs, so I'm skeptical of how accurate they are.
This is surely a gross oversimplification of what's happening. If you see layoffs.fyi, there are a lot of rows with more than 5% fired or where the numbers are in several hundreds to thousands.
While some companies are known to regularly use the tactics you mention (and a lot others also do the same from time to time), they don't use mass firing as a means.
> there are a lot of rows with more than 5% fired or where the numbers are in several hundreds to thousands.
These include "Non-Technical staff" which have been the majority of laid off employees. [0] [1] [2] [3] [4]
> they don't use mass firing as a means.
They do. Google, Amazon, Microsoft and Apple all had yearly layoffs for underperformers, while maintaining growing headcounts. Target was around 5-10%. The difference is these layoffs were not nearly as talked about in the media.
In control systems, a common tradeoff is between a fast response that overshoots or a slow response that does not overshoot.
We've seen that pace of innovation matters and if your goal is to maximize the pace of innovation, you want that fast response even if it means overshooting somewhat whenever there's a step change.
I am not sure if you mean that dirt-cheap money accelerated the pace of innovation.
But, if that is what you mean, i.e. historically low interest rates accelerate the pace of innovation, we would witness innovation gains in countries with negative or zero interest rates. But we haven't seen any shift.
There's a difference between malinvestment and investing in projects that don't go anywhere.
This is the difference between burning cash in a bonfire, vs using $1 dollar to make $0.XX cents.
I'd argue the system was rife with the former, not the latter
People really can't predict what investments represent the bonfire vs. good investments, and even if they get that right, it's even harder to get the timing right.
For example myspace vs. facebook, webvan vs. amazon vs. instacart. You can also look at physical industries like the aerospace boom after WW2 that brought us into the jet age. The high influx of cash allows huge numbers of companies to bloom, representing the testing of lots of ideas and designs in parallel. Many aerospace companies failed, just as many tech companies have failed, but those tests accelerate innovation.
“We've seen that pace of innovation matters and if your goal is to maximize the pace of innovation, you want that fast response even if it means overshooting somewhat whenever there's a step change.”
Does the pace of innovation really matter as much as you think? Or is it possible execution on the business side can matter more?
Also, it has been proven that adding more software developers can actually slow down a project. Increased hiring, therefore, does not necessarily correlate with faster innovation.
