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Outsourcing plus local AI will soon become more economical vs. frontier labs

signalbloom.ai

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Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#391

Post by esafak »

ern_ave wrote: post #363
blauditore wrote: post #186

Earlier quoted context omitted.

Programming competitions are not the same as real-world engineering, plus these countries have way more people trying to use these competitions as a gateway to good jobs. Also, many good engineers emigrate to higher-income countries given the chance, and almost none will imigrate to low-income regions. The consequence is some sort of brain drain.

> Programming competitions are not the same as real-world engineering That's true but irrelevant. Nothing is "the same" as anything else. My question was, what evidence is there that offshore Indian devs are of high quality. One expected signal with be ...that they demonstrate their programming skill. > these countries have way more people trying to use these competitions as a gateway to good jobs That's ridiculous!!…

Turkey's population is around ninety million.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#392

Post by addedGone »

lunar_mycroft wrote: post #374
addedGone wrote: post #352

Earlier quoted context omitted.

Except that they do, we do. A lot of startups pile up enormous amount of accounts, companies don't need the Enterprise Anthropic solution, they can just subscribe to many accounts and have their own staff KYC for each (1 codex, 1 claude, 1 google and so-on).

That will be clamped down on by Anthropic (and other providers) for the same reason they don't offer those plans to enterprise customers already.

Yes, but why not do that while it's available?

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#393

Post by tomaskafka »

runtime_terror wrote: post #368
8note wrote: post #312

Earlier quoted context omitted.

the alternative is that api prices change to be more in line with deepseek's

So then how do these companies return profits to investors?

Here is the fun part: they don’t

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#394

Post by ern_ave »

esafak wrote: post #391
ern_ave wrote: post #363

Earlier quoted context omitted.

> Programming competitions are not the same as real-world engineering That's true but irrelevant. Nothing is "the same" as anything else. My question was, what evidence is there that offshore Indian devs are of high quality. One expected signal with be ...that they demonstrate their programming skill. > these countries have way more people trying to use these competitions as a gateway to good jobs That's ridiculous!!…

Turkey's population is around ninety million.

Sorry. I meant to write, "population under a hundred million"

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#395

Post by anthonypasq »

dminik wrote: post #356
wongarsu wrote: post #325

Earlier quoted context omitted.

There we go back to the original question: are subscriptions profitable, API pricing wildly profitable, and they just lose all that money on fixed costs like model training; or do they actually barely make money on inference? That's why talking about the profitability of inference without accounting for model training is interesting, because that is the deciding factor in whether more customers would help getting the…

Without actual data I don't know. My gut feeling is that they overall lose money on subscriptions (and especially the free tier that accounts for 95% of all users). And make thin profit (~5%) on API pricing. But it's just that. A gut feeling.

its well reported that inference margins on api pricing are 30-50%

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#398

Post by dminik »

anthonypasq wrote: post #395
dminik wrote: post #356

Earlier quoted context omitted.

Without actual data I don't know. My gut feeling is that they overall lose money on subscriptions (and especially the free tier that accounts for 95% of all users). And make thin profit (~5%) on API pricing. But it's just that. A gut feeling.

its well reported that inference margins on api pricing are 30-50%

No it's not. It's well speculated. Can you give a single source that says they have a 50% margin on inference?

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#399

Post by jujube3 »

goosejuice wrote: post #245
jujube3 wrote: post #229

Earlier quoted context omitted.

Are they willing to work for less pay than Claude?

Who claimed they would? Cost of labor dwarfs LLM costs.

Because if I want a low-cost, low-quality dev, and Claude fills that role better than an outsourced dev, such people will "decrease in numbers" due to supply and demand.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#400

Post by goosejuice »

jujube3 wrote: post #399
goosejuice wrote: post #245

Earlier quoted context omitted.

Who claimed they would? Cost of labor dwarfs LLM costs.

Because if I want a low-cost, low-quality dev, and Claude fills that role better than an outsourced dev, such people will "decrease in numbers" due to supply and demand.

Perhaps my point wasn't clear. The article suggests humans are needed. So does the person here I responded to. Someone has to tell the LLM what to do and verify it.

Outsourced can be anywhere and when you're referring to US, anywhere else is cheaper. Commonwealth devs for example are at least 20% the cost of a US dev. That 20% more than covers the cost of access to a frontier model that this dev could drive.

Thinking of LLMs in human units is super strange and if you wish to consider the economics you have to also account for the lowering of barriers to entry.

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