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rnxrx | on: Microsoft starts canceling Claude Code licenses
Thus does kind of beg the question: If developers are being laid off because AI is better/faster/cheaper or makes all their people 10x or whatever fig leaf, what happens if the required tooling ends up being more expensive? From the investor’s point of view is the drag of employee costs better or worse than a ballooning expense item?
andrewl-hn | parent | next
They lay people off and look good in front of investors. Then they hire people, talk about "growth", and once again look good in front of investors.

This would never fly if stock market was rational. But it never is.

dawnerd | root | parent
And if/when companies need to scale back their ai investments they can spin it too and the stock market will eat it up.
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ako | parent | next
More expensive is a difficult calculation: faster can sometimes warrant the higher cost, if it means you can go faster to market. Also, LLMs work 24x7, and can be scaled up and down as needed. Faster to off board an LLM than to fire an employee (especially here in Europe). So, even if AI is more expensive than a developer, from TCO and ROI perspective it can still make business sense.
dividedbyzero | parent | next
I suppose if it all works out it'll end up way more expensive than the employees the models displaced ever were. These kinds of technologies usually end up as an oligopoly at best, and those players will have a wide moat by then, and the things these models build will be tweaked such that no other model or human being can realistically work on them anymore, and then they can price gouge everyone to the brink of unprofitability.
kridsdale1 | root | parent | next
At least the models don’t need health insurance, office space, a cafeteria, or have a threat of unionizing.
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user34283 | root | parent
There's 10-15 labs near the frontier, and like 30 serious inference providers, over 70 total on OpenRouter.

With research and hardware near guaranteed to bring the efficiency way up, I'm not scared here of massive price hikes.

There is no moat.

thewebguyd | parent | next
I suspect AI would have to get drastically more expensive before it starts looking worse than payroll. If one developer using Claude Code can effectively substitute for 2 developers, you are already coming out ahead at current API pricing assuming very heavy usage, your cost is going to be ~1.5x developer (factoring in beyond salary - benefits, PTO, the other overhead that comes with having employees).

So you're getting 2 for the price of 1.5. Scale that up to 500 devs at a big company and it's a big chunk of change saved on payroll.

Keeping your headcount or hiring humans instead, AI would have to start to cost upwards of $15k/month/developer or more before it costs more than hiring. You're looking at about 4 billion tokens per month before humans start to break even or are cheaper.

jayd16 | root | parent | next
You're starting from the assumption that its a 2x benefit. That's a massive leap.
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ilovecake1984 | root | parent
This is economy dependant. It’s really Indians why will take the brunt of AI job losses.
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JumpCrisscross | parent | next
> If developers are being laid off because AI is better/faster/cheaper

This is, in my opinion, tripe. SWEs are being laid off because of post-Covid over-hiring. The only evidence for labour destruction is in junior hires. But not because anyone is being fired, but because entry-level jobs are being cannibalised.

Ekaros | root | parent
In general economy that is not the stock market is looking less and less great. Answer to this is to tighten the belt and that means losing employees. Especially as there has not been any new great revenue sources outside AI in recent years.
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ngc248 | parent | next
"AI" is just a cover for laying ppl off and saving cost. But the pendulum will swing the the other way and the companies will realise that knowledgeable ppl are still required to generate and utilize the generated code. No serious company can run with vibe-coded apps generated by laymen.
ares623 | parent | next
There is no profit, expense, revenue. Those don't matter. Only thing that matters is stock price goes up, and laying off makes stock price go up. When laying off make stock price go down, then laying off stop.
stock_toaster | root | parent
I imagine layoffs are also very much "this quarter and next quarter" with regards to investor visibility.

While LLM Opex is "some future quarter" and very easy to co-mingle with other expenses.

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