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The tech market is fundamentally fucked up and AI is just a scapegoat

bayramovanar.substack.com

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Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#91

Post by rvz »

graemep wrote: post #34
rvz wrote: post #7

> Yesterday, the news of 16k Amazon layoffs plus two LinkedIn posts on the same topic back-to-back encouraged me to finally write about it. Amazon is fundamentally a logistics + robotics company and is one of the worst companies to join for 'stability' as they have razor-thin margins. With almost 1.6M workers, the layoffs there are at least in the 5 figures and they will not stop to do the easiest thing possible in o…

They have an 11% operating margin. That is far from razor thin. Their biggest business is AWS. They have subscription income, and they sell digital downloads and streaming which are high margin. https://s2.q4cdn.com/299287126/files/doc_financials/2025/ar/...

All thanks to previous layoffs since 2022 which they cut 27,000 jobs in 2022 to 2023 due to mass over-hiring.

Compared to the other FAANG companies, these margins not only thin, but terrible and Amazon has the worst margins out of FAANG regardless of AWS or not.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#92

Post by Imustaskforhelp »

j05ev1f3 wrote: post #52
jasode wrote: post #15

>In traditional industries like manufacturing you don’t hire 500 factory workers unless you have a production line that needs them. You don’t over-hire based on a guess. Traditional factories do make wrong guesses about the future and overhire all the time. Example: https://www.google.com/search?q=Ford+f150+lightning+laid+off...

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail. Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work. It’s incredible how s…

> It’s incredible how some engineers assume they understand economics, then proceed to fail on some of its most basic premises. This tends to happen when engineering-style certainty is applied to systems that are driven by incentives and uncertainty.

Dunning Kruger effect, am I right?

We consider we are smart because we can make computers go beep boop so we know about the economy too. I mean, I am part of this too even though I (or we all) know the effect but I guess my point is that there should be an humility if we are wrong.

I can be wrong, I usually am. If someone corrects me, I would try to hopefully learn from that. But let's see how the author of this post responds to the GP's (valid, from what I can tell) critique.

Edit: Looks like they have already responded (before I wrote it but I forgot to see their comment where they said that its not at the scale or frequency we see in tech)

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#93

Post by ra »

Bayramovanar wrote: post #27
jasode wrote: post #15

>In traditional industries like manufacturing you don’t hire 500 factory workers unless you have a production line that needs them. You don’t over-hire based on a guess. Traditional factories do make wrong guesses about the future and overhire all the time. Example: https://www.google.com/search?q=Ford+f150+lightning+laid+off...

Sure, factories also overhire sometimes or shrink their businesses but not at the scale or frequency we see in tech.

that's true but does tech generally hold a more aggressive default-growth stance?

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#94

Post by stego-tech »

dangus wrote: post #66
stego-tech wrote: post #54

I will add some commentary from my subjective POV in IT: “Efficiency” is a damned lie . Enterprise IT is one of the most inefficient spaces out there, full of decades of band-aids layered atop one another in the form of fad products, fancy buzzwords, and “defining leadership” projects. The reason you cannot get shit done at work quickly isn’t because of bureaucracy or management layers standing in the way so much as…

I think you need some kind of source to back up the idea that IT or the software industry as a whole isn’t efficient. Software companies have much higher profit margins than companies that ship physical products. There really aren’t many industries that do better margins than software. To sell software, you don’t need a production facility, warehouse, nor do you even need an office building if you don’t want one. htt…

…bruh. Literally the very first line:

> I will add some commentary from my subjective POV in IT:

Subjective is doing the carrying, there. I am admitting up front that this is specific to me, my career, and the specific life experiences I’ve had with it thus far.

Like…I won’t even entertain the rest of your comment if you’re not even going to read the entirety of mine before vomiting out an “UhM aHkShUaLlY” retort.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#95

Post by sznio »

ido wrote: post #8
austin-cheney wrote: post #4

From around 2010-2020 the stock market was rewarding growth more than profit. That means large tech employers hired like crazy to indicate growth. Then came COVID and the economy contracted. As a result the stock market changed to reward profitability. So, excess developers had to go. We are still feeling this. I do agree that AI is not to blame for this. In fact I will go further and claim that AI is a net negative…

It wasn't covid - it was the post-covid coming down from all the free stimulous and ZIRP. The Russian war in the Ukraine is a much closer market to when the economy started tanking for devs.

covid was a last gasp for zirp. the interest rates were growing since 2016 and would've remained high if not for the pandemic. covid required a quick return to zirp to save the economy from a crash, then required a quick return to high interest to save the economy from inflation.

if not for covid, the zirp era would end more gently. covid overhiring was the last hurrah for companies to use the low interest. if not covid, there wouldn't be overhiring and subsequent firing

the market would be as bad as now (or dare i say, *normal*), but it would be stable bad, not whiplash.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#97

Post by vmg12 »

> But in Tech, the playbook is different. Companies over-hire software engineers intentionally. To play the lottery.

The actual reason tech companies overhire is because people get promoted based on the number of people that are "under" them. All leaders are incentivized to fight for headcount.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#98

Post by servo_sausage »

lm28469 wrote: post #12
hrimfaxi wrote: post #6

Earlier quoted context omitted.

How exactly are good doctors easy to identify and hard to fire? And how does it follow that AI is a net negative when wielded by professionals who are excellent at what they do? If people can't identify qualified professionals without relying on credentials, they probably aren't qualified to be hiring managers.

> And how does it follow that AI is a net negative when wielded by professionals who are excellent at what they do? Simple, the 80% of code monkeys who are not good at what they do will cause way more damages than the "professionals who are excellent at what they do". And out fo tech I can guarantee you the vast majority of people use llms to do less, not to do more or do better It's also easily verifiable, supposedl…

The big wins I've seen with llm tools is in translation more than the actual code.

We have been able to move our "low cost" work out of India to eastern Europe, Vietnam and the Philippines; pay per worker more, but we need half as many (and can actually train them).

Although our business process was already tolerant of low cost regions producing a large amount of crap; seperate teams doing testing and documentation...

It's been more of a mixed bag in the "high skill" regions, we have been getting more pushback against training, people wanting to be on senior+ teams only, due to the llm code produced by juniors. This is completely new, as it's coming from people who used to see mentoring and teaching as a solid positive in their job.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#99

Post by thunky »

Bayramovanar wrote: post #88
j05ev1f3 wrote: post #52

Earlier quoted context omitted.

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail. Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work. It’s incredible how s…

I will avoid getting into a “who understands economics better” debate. But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning. By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations…

This, and I would also assume it's easier to spot idle factory employees, where idle devs (especially remote ones) can be easier to miss.

And, (assumption again) the factory boss doesn't have an incentive to increase idle worker numbers, where a dev manager often benefits from being in charge of a larger number of hardly working people.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#100

Post by jjmarr »

HWR_14 wrote: post #84
mexicocitinluez wrote: post #44

Earlier quoted context omitted.

Also anecdotally, I've had a handful of software development positions throughout the years (never at a position with more than 200-300 person company) and have yet to be laid off due to money. I've yet to be laid off at all, but that's irrelevant. I truly believe that these new tools will actually hurt the bigger companies and conversely help smaller ones. I'm in healthcare. The big players in the EMR space are Epic…

> What if, instead of having to reach out to the big players, the economics of having a software developer or 2 on staff make it such that you could build custom-tailored, bespoke software to work "with" your company and not against? It's probably risk and liability and not development costs that keep things from moving in house. Not things AI is great at mitigating.

Hospitals are huge liability sinks. Doctors are constantly sued for killing, injuring, or traumatizing patients, because it's impossible to consistently save everyone.
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