I think there is something like Parkinson's Law: "Work expands so as to fill the time available for its completion."
This is more like the engineering team scales to match your budget.
It is why successful companies, when starting out and getting to their defining project completion state have significantly less engineers then 10 years later when they are massively more successful.
The cost of having the engineers is nothing compared to the profits, so why not hire more so you can defend your position. Are 80% of them needed to keep the system going, I think Elon showed that you can prune most of them away and the system will keep humming along (ignoring some initial problems). The trouble is bureaucracy, lack of technical knowledge at the top, and the hazy difficulty of identifying what is needed is really difficult, and if you mess it up, you could ruin a billion dollar business to save a hundred million dollars in salaries.
That is the crux of it. You can't know who to cut, and even if you are really good at it, you will still create problems and create ill will. Elon was pretty successful, but it did have some momentary problems. If his negative cult of personality didn't get in the way, it would have been better off.