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The truth is that a majority of tech companies don't need 50%+ of their employees. Google could lay off vast swathes tomorrow and be immensely more profitable
by adam_arthur 4y ago
The truth is that a majority of tech companies don't need 50%+ of their employees.
Google could lay off vast swathes tomorrow and be immensely more profitable without any loss in revenue.
The 2010s will be remembered as the golden era for tech employment. The second we start getting industry wide layoffs, the insanely high wage inflation we've seen will kick into reverse much faster than you probably believe possible.
Further, tech employees will be the first to suffer in a high inflation environment due to rising discount rate. Yet tech is such a small portion of the labor force that layoffs here basically mean zilch when it comes to the unemployment rate/inflation, and thus there's a long way for it to fall before the Fed adjusts policy
- cwilkes 4y agoHas any tech company that laid off 50% of it’s employees survived? Maybe one or two. That would seem to indicate that the 50% number is too high. Perhaps you see it as 50% as like when people say they only need 10% of the functionality of MS Word so they could drop 90%. Except that 10% is different for everyone.
- humanrebar 4y agoYou say that, but companies that cut tech too deep will probably get crushed under a mountain of technical debt or gradually lose goodwill due to buggy or stale products. Point is, it's possible to ship crap with a small crew. But the cuts won't come uniformly from scoping back or removing low productivity engineers. You'll also see corners cut, upgrades delayed, security flaws ignored, and so on.
- 015a 4y agoObviously there's bias involved, but I really don't see a reality where this isn't the case. I've literally never worked at a company where half the team could be laid off and the product would still function at its current level of functionality for 12 months; let alone adding functionality. If you've worked at a company like this; I imagine there are some; then sure; the lights could be kept on. Hey there Oracle & IBM 2.0. Then again, you (the company) just laid off hundreds of extremely talented engineers with few other marketable skills except "the industry you trained them in", you've been paying them insane salaries, they're just going to turn around and compete with you, except now they've got a clean slate and have learned from all the mistakes that caused them to be necessary in the first place. The well paying, large companies are literally 7 of the 10 largest companies on the S&P. Oh, and by the way, one of those other 3, UHG, they have... 850 job openings with the word "software engineer" in the title; about 15% of all their openings. Johnson & Johnson, they're on there, 300 software engineering openings, out of 3000 total. Berkshire is also on the list, harder to get their count, but you get the point; software is EVERYWHERE. I just... don't get it. I don't get how someone can believe what the grandparent believes. I mean, you can argue a more measured stance, that the outlier 99.9th percentile salaries we've seen in the past four years are probably going to stagnate. Maybe; I'm not convinced of this, but its a reasonable stance. You can argue it'll be harder to get into the industry, as companies want experience and not coding bootcamps; I'd bet on it. But to argue that tech companies don't need 50% of their employees, when they're the plurality of the wealth of the United States' public markets; its comical. Where else did that wealth come from, if not their (tech) employees? If the argument is they're overvalued, maybe, but that's speculation; buy Puts if you believe it, but I'd buy Calls on "you won't". Then again, maybe the grandparent is talking about non-tech roles in tech companies? I can't tell; and moreover, I don't think even they know what they're arguing for.
- lmm 4y ago> But to argue that tech companies don't need 50% of their employees, when they're the plurality of the wealth of the United States' public markets; its comical. If they were claiming this was something unique about tech I'd be sceptical. But if they're claiming it's just regular corporate dysfunction I'm not so sure. I've watched whole teams of extremely talented engineers put multiple years into building something that never saw the light of day, not because of any technical flaw but because of shifting organisational politics. The idea that less than 50% of employees contribute to the bottom line doesn't seem so implausible.
- ycombobreaker 4y agoI think I agree with you, but I'd take it a step further. The plan from management may in fact be various projects in development, few of which will see the light of day. Those few pay for all of the spent effort on the others. This is no different from VC behavior. It's unfair to label the shuttered projects as not contributing to the bottom line, if they were part of a pool of investments.
- vineyardmike 4y agoI don’t know if I’d agree with the claim that 50% can be cut… but there is certainly bloat and it could be time to trim the fat. This would be very good news for the industry since all those engineers will start new things and build new companies. That said, I think the salaries might stagnate. End of 2021 had everyone starting a new job and competing offers. It may not last so the negotiations won’t be as lucrative. Beyond that, tech salaries are high because the profit per person is high and that won’t change much, especially if companies trim excess employees. I read somewhere a while ago (can’t find it) that Uber once discovered they had multiple teams all making an internal map gui, just siloed into different orgs so there was no visibility. While it’s a crazy example and probably fake, it’s not hard to imagine an org like google or Amazon where there are 100k employees having some level of duplicated efforts. With office politics, some architectural decisions get made because everyone wants their team to touch important things. I was part of a team that owned a critical request flow and when they were adding new features it was decided that this API should be the entry point for those new features (10% increase in traffic estimated). So it went from a crud app (stateless app with database) to an API ingress with a (custom written) event queue linked to a queue processor (by AWS sqs) linked to a service that was responsible for handing the request off to one of several crud apps (except no new ones were written). Now 4 teams had a portion of the flow under their control. Was there a reason for this architecture? Yes. Would it have happened if the org didnt balloon from 7 engineers to 50? Probably not. Would customers have noticed? Yes, the API would have been faster and more reliable. Beyond that, it’s well documented that tech people like shiny new toys. I interviewed at DoorDash for a pretty visible product team. They said they were hiring to do a complete rewrite of their product switching to <buzzword> and that it was their main deliverable for 2022. The team I was leaving during said interview was allocating 50% of headcount to rewrite the tech stack from binary on VMs to “AWS native” technology. No new features. If the team was told to cut some headcount or was denied headcount to grow, that’s be the first project axed because it doesn’t save money or help the customer. Meanwhile, my new team has 1/3 the people for a literal 10-100x traffic product with way more customer visibly. If you spent the last few years on this team, you’d think software engineering was lean and efficient. On my last one you’d say it’s bloated and full of busywork.
- strix_varius 4y ago> The truth is that a majority of tech companies don't need 50%+ of their employees. Totally agree. The problem is, nobody knows how to tell which ones. On the ground it's obvious. I'm sure everyone here knows who on their team is crucial to their current production stack, and also knows others who would have no impact (or even positive impact!) if they left. One level up - the direct EM - has most of that context too, but some is already lost. At the next level (Sr. EM or Director usually), almost all of it is gone. At that point, cutting 50% is just guessing. Keep going up and eventually the risk becomes too high that you'll sacrifice your key players along with the rest. Bath water, baby.
- adam_arthur 4y agoNo heuristic is perfect, but it's fairly easy to quantify empirically from activity/records. Developers who are productive (actually write and ship large amounts of quality code) tend to be valuable and those that don't, aren't. That being said there are some intangibles, like morale etc. It's possible there are people that benefit the team while having low personal productivity. But anyway, no need to approach in that way. There are probably entire branches of google that could be laid off without any material impact to revenues/profitability, thus all layoffs concentrated in single arm. Crypto divisions could be cut at many companies without affecting their core businesses. Did Square need to rename itself to Block and add all kinds of crypto functions? How many hundreds of developers are working on that. I don't think X% headcount cuts horizontally across the org are ever a good idea. Cut non-essential functions. And cut in core branches opportunistically based on low performance.
- kingcoleman 4y ago> No heuristic is perfect, but it's fairly easy to quantify empirically from activity/records. Developers who are productive (actually write and ship large amounts of quality code) tend to be valuable and those that don't, aren't. https://www.folklore.org/StoryView.py?story=Negative_2000_Lines_Of_Code.txt https://www.folklore.org/StoryView.py?story=Negative_2000_Li... ... large amounts of quality code? How many lines of code a week constitutes a large contribution?
- rossdavidh 4y agoAdding people fast is very bad for an organization's efficiency, for a variety of reasons, including the one you mention. However, subtracting a lot of people fast is just as bad for an organization's efficiency, for a whole host of other reasons. Not that I expect Robinhood had much choice in the matter at this point.
- bagels 4y agoCovid and the wide scale embracing of remote work is really going to combine with layoffs to massacre our wages. Some FAANG companies will likely prioritize hiring in Europe and Asia and use that to pressure bay area salaries down.
- spookthesunset 4y agoThat remote work stuff will go away. People are kidding if they think large organizations can innovate and remain competitive when everybody on a team isn’t in the same room. Individually people might think they are more productive (at least coders do) but the communication issues that arise from remote work are gonna really become an issue soon enough.
- wyclif 4y agoNah, remote work isn't going anywhere—it's here to stay. I know management doesn't want to believe that because they want to count asses in seats, but the collaboration issue has been solved by Zoom/GitHub/Trello/Slack &c.
- tick_tock_tick 4y agoHow can you even say that with a straight face when it's already getting scaled back?
- vineyardmike 4y agoSo I agree people are less efficient, but I think it’s here to stay. I started a new job during covid and it took me a lot longer to few productive than I was comfortable with, and it’s because I couldn’t just grab someone and ask them to explain something quickly. Knowledge was way more siloed. But the convenience of working from home and not commuting and not dealing with the office is hard to shake.
- notfromhere 4y agoThey easily can. When you’re in a large, multinational organization with multiple offices and teams everywhere, you are essentially working remotely as is. Large companies aren’t particularly innovative, so this whole argument is pretty moot to begin with.
- pipeline_peak 4y ago> The truth is that a majority of tech companies don't need 50%+ of their employees. Then why are they hired? It can’t be image alone
- confounded 4y agoBecause managers are evaluated on their ability to grow teams and increase their scope. Organizations intrinsically "want" to hire. What's unusual about the last 20 years is that there's been so much available capital to fund tech companies doing just that.
- dominotw 4y agoThere is constant pressure from upwards to "increase scope" and hire more people.
- legalcorrection 4y agoThe bureaucracy expands until external factors force it to stop or contract. Google Search and Ads are a small percent of the company but nearly all the revenue. It’s not hard to see how that can lead to runaway bureaucracy.
- papito 4y agoGrowing your office plankton messages to investors that "we are growing, give us more money".
- miked85 4y agoThe same reason a product is never finished and there is a never-ending churn of "features" nobody wants or needs.
- tenpies 4y ago> Yet tech is such a small portion of the labor force that layoffs here basically mean zilch when it comes to the unemployment rate/inflation, and thus there's a long way for it to fall before the Fed adjusts policy The really scary thing for me is the possible macro environment for tech. Indians will soon overtake any of the Western countries as the largest English-speaking population on the internet. As I'm sure many of you know, Indians are hugely talented and most of us who had to deal with CS or Maths have probably resorted to some of the extremely generous Indian experts who teach these subjects on Youtube. There are some very good institutes and universities with solid reputations, many expanding to boot camps and such - so there is a very good volume of tech talent coming online fast. So you have a tsunami of highly educated, English-speaking tech workers coming online AND a sudden surplus of laid off tech workers in the West. It could potentially get really ugly for the Western tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks. After all, we just tested remote work and you can live like a king in India for much less than even the cheapest Western town.
- moneywoes 4y agoUnfortunately I agree but what can we aka a western tech worker do to combat this?
- deleted 4y ago[deleted]
- fastball 4y agoDamn 30 hours a day sounds like a slog though.
- pstuart 4y agoThat one weird trick is to sleep -6 hours to fit it all in.
- muglug 4y ago> tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks > You've never worked a job that isn't 30 minutes of work and then the rest of the day is posting "day in the life of a FAANG employee" Tiktoks or being a paid activist. That is incredibly not what it's like to work in tech in the US. I doubt you've been anywhere near a big tech programming job.
- reiichiroh 4y agoAren’t we complaining we can’t reach anyone human at Google Support?
- adam_arthur 4y agoThey could hire entire call centers in poorer countries for the cost of a few engineers. That's a prioritization issue on their end
- MomoXenosaga 4y agoA call center requires actual people skills. An engineer would be the last person you want for that job.
- tekknik 4y agoMany engineers have great people skills, they tend to become contractors.
- zxcvbn4038 4y agoSo nothing will change then? Instead of 135k people not answering the phone and telling you to go F… yourself you’ll only have 120k people not answering the phone and telling you to go F… yourself. Or maybe Google has amassed so much AI knowledge that all of its employees can be replaced by a single Raspberry Pi that doesn’t answer the phone and responds to all inputs with go F… yourself! A hundred years ago you would have had to pay a million people a penny a week to sit around not answering the phone and telling you to go F… yourself to achieve the same effect. Hard to believe the human race has come so far so little time. But what’s more amazing is AWS support, because they answer the phone, and they solve your issue, and that’s the trick nobody else seems to be able to master.
- wly_cdgr 4y agoThat's probably true-ish, but remember the saying, "keep your friends close and your enemies closer"
- acchow 4y agoThe key is competitiveness. If all your competitors are improving their offerings year over year, you must do the same. If they all cut staff and stall on development, you can too
- jupp0r 4y agoWell then - found a company that employs half the people and become the next Google. Should be easy if your magic insights can make you twice as profitable. Maybe this is not how innovation works though.
- legalcorrection 4y agoNot a good argument from you. As if the sheer number of employees is what made Google successful in the first place. And as if efficiency alone makes a successful company. Why would you think these things?
- jupp0r 4y agoGP was stating that 50% of tech workers at big companies are redundant. Armed with that knowledge he should be in a stellar position to found a company that is very profitable compared to its competitors who incur double the labor costs. This incredible competitive advantage will enable him to become the next Google eventually. Sounds plausible? No? I wonder where the error is.
- reshlo 4y agoHaving a better understanding of who the essential employees are is necessary, but not sufficient, to run a more profitable company than the current market leaders.
- jupp0r 4y agoI get your point, but don’t you think that if it was really so easy, somebody would have done this already? There are other factors like key people leaving if half their colleagues get laid off. The claim itself is so extraordinary because it defies all economics.
- adam_arthur 4y agoGoogle could fire their entire org outside of ads, search, and android and still roughly maintain the same revenue/growth. It's quite obvious. They are dominant via first mover advantage and monopoly esque positioning in search. And they could likely even not change search at all and stay on top for 10+ years. What is the marginal value today of a given Google employee to the company's bottom line? Super low. The tailwinds driving strong growth for these companies came primarily from macro/digitalization, not because they invented feature X which enhanced revenue
- MomoXenosaga 4y agoUnemployment in the Netherlands is historically low. But can people who work in tech become teachers, nurses and police officers? I am not sure.
- recursive_ 4y agoYou say that like these well established tech companies (like Google) haven't already optimized the employee counts and employee salaries needed to produce the (current) best ROI and also figuring for future company growth. A bare-bones, scrappy team makes sense in the startup world but not the publicly traded enterprise engineering world. Move Google back into this world and it'll quickly crumble in a few quarters.
- repentless_a 4y agoIf they don't need 50%+ of their employees they probably need don't need 95+% of their management.