As a recently laid of senior engineer, to the extent that my job was replaced, it was replaced with offshore junior devs who'd already been working with the company for over year with a pretty rough level of productivity by man-hour, though maybe taking 3x the time to get things done is worth it if they're cheap enough. Which is to say I see my layoff as as cost cutting backed by a premise that there is no value in retaining senior level talent, to try and keep operating in the black, not because AI was materially producing a lot of benefits. (Because to the extent it was, I was the one reaping them compared to the offshore folks and less experienced onshore ones.)
Hacker News doesn't like to hear it, but remote work is a big part of this. All that effort convincing management you're just as effective working remotely was also a collective sales pitch to outsource your role.
Yeah. One of the most ridiculous things in my entire life of 40 years was seeing 90% of my fellow SW industry workers using the 2 or so years during/after COVID where we had more power than we’ve ever had to advocate hard for making ourselves much more easy to replace by insisting on remote work, and insisting on reducing our productivity (even if not actually, at least in the eyes of the employers) so we couldn’t justify our higher salaries anymore.
1. It enables them to live in lower cost of living cities. This makes them more competitive relative to outsourcing because a lower wage in a cheaper city goes farther.
2. It opens up the job pool. If you work remote, you can work at any company that takes remote workers regardless of where you live.
3. It reduces the cost of switching jobs. Many people are stuck in jobs they don't want because there are few other local opportunities and switching jobs means uprooting and moving. For a single 20-something in an apartment, that doesn't sound so bad. But once you have a partner with their own career, kids with meaningful friendships, a mortgage, etc. then moving can be extremely disruptive.
In general, more job flexibility increases the efficiency of the job market for employees.
I'd be more inclined to work in the office if most of my coworkers weren't in India anyways. I can't exactly have water cooler talk with Manglesh while he's asleep on the opposite side of the planet. At least at home I don't have to spend 10 minutes of each meeting finding an empty conference room and getting the audio/video setup to barely function.
sure but people on the other side of the world are harder to communicate with for practical reasons like time zones and also for cultural reasons that matter big time in many markets
Yeah this is the reason most offshoring projects ultimately fail to deliver the promised savings. The overseas staff can never be as effective as folks in the same time zone.
The era of American developer exceptionalism is over.
Talent abroad has access to the same tools, education, and increasingly, network. American engineers will be replaced wholesale with overseas engineers that cost a fraction of American labor.
You can hire talented React engineers for $50k that will work harder than their American counterparts.
It's not just React. Overseas markets have DevOps, SREs, embedded, systems engineers, you name it.
For years Americans joked that overseas labor was subpar. It's not, or at least it isn't in today's world.
If software engineering is not special and can be done by anyone, so can any other role in a business. So it follows that all American roles will be offshored eventually, including ownership of the company itself - or American businesses will be universally out competed.
Because most of the smartest people in the world moved to the U.S. because of the education system, great access to capital, and the fact that they and other smart people could easily move to, live and work in the U.S.
The U.S. also has the largest useful single market in the world (the EU is broken up across many languages/cultures, China is isolated so you can’t really expand out).
The U.S. is actively working to destroy several of those planks right now.
Even the capital plank, which superficially looks strong, is being hurt by the government picking winners and choosers. If the current govt bets don’t turn out to be the right ones we’re looking at an ugly, probably tax payer funded (OpenAI has already hinted at this) collapse.
It is less so about skills of workers. And more so about having lot of investors who are willing to throw money at everything and then even more after the fact. Or to just outright having enough money to buy out the better ideas.
Nah, none of this is precisely true. Even if the folks abroad are just as skilled (true), they aren’t as effective because of primarily time zone differences and also language barriers (which is exacerbated by the time zone differences).
Similar trend at my company - we're looking to hire in India to reduce costs. The rumor is that we could replace 25% of our existing IT workforce without outsourced roles.
If anyone is worried about their job, it won't be AI that takes it - it will be outsourcing. The US offshores 300k jobs per year with a high percentage of them being IT (60-80% depending on source). It's really not that different to the offshoring of manufacturing decades ago. Why pay people onshore when you can pay someone in India half of that? Any job that doesn't require a physical presence or has legal pressures to keep it onshore will be at risk. It will likely get worse over time, just like manufacturing. I don't know what the future will look like if we continue outsourcing everything. It used to be that we outsource primary and secondary sector activies so that we could expand tertiary industries. What are we replacing the outsourced jobs with now?
Offshoring/outsourcing is nice on paper, but as management doesn’t have to deal with time zones, in reality it is much more chaos than expected. And how do they want to deal with fuckups? Thru Slack or Discord? :)
We had British SaaS supplier and all the time I have talked with Bangalore-based people. They had to work in night I suppose…
I would say it is more sinister than just a cost-benefit analysis and plain racism in hiring. Cheap talent exists in far more places than India but somehow it almost always is India. Not only that but I have seen the strangest LinkedIn profiles where people graduate from no-name Indian universities and get a big-corp job here in the West like it is nothing.
It's not a racism thing, it's because India is in a fairly unique position: their population is so large, that (relatively speaking) the top 0.1% of Indians in any sector tend to outnumber the top 0.1% of (for example) Americans in that sector, plus if an Indian immigrates to America, a company can pay them less than an equivalent American employee (for various reasons).
So you basically can pay an Indian immigrant a junior dev salary, for significantly-better-than-junior-dev work. It's just stonks.
The Indian diaspora is huge and you have second and third generation folks in executive office all over. As a political force, south Asians are increasingly powerful as well in many states.
There’s a lot of opportunities for personal networks, nepotism and plain old corruption to work. (Who is going to figure out that somebody dropped a few gold coins to your sibling as a kickback?) There’s a much smaller network of people with relationships to Eastern European or other companies.
> There’s a much smaller network of people with relationships to Eastern European or other companies.
Unlike eastern Europe, India is geopolitically in a pretty good spot right now, having decent relations with most developed countries, and not engaged in any major wars with its neighbors. The last company I worked for outsourced a lot of work to Russia. At a certain time in 2022 they suddenly had to shift a lot of that work to... India!
When talking about outsourcing jobs from the U.S., you’re obviously gonna exclude the U.S. China is also not a factor. Neither are Western European countries or countries like Japan and S Korea because of relatively high salaries. Russia is out due to long standing geopolitical issues.
That basically leaves Brazil and Indonesia as the only alternatives to India in the top 10 and combined they don’t even have half the number of SW developers as India.
You need to then add Mexico, Vietnam, Turkey, Philippines and Poland to the above 3 to add up to the number of SW developers present in India.
Thats why the outsourcing industry is concentrated in India. You can setup 1 office in India and have access to as many SW developers (Indians are also very willing to migrate domestically, so an office in a single city is sufficient to cater to the entire domestic developer market) as you would if you setup 8 offices in & different countries across 4 continents.
GCCs are expanding in Canada, Ireland, Poland, Czechia, and Costa Rica as well.
Indians are more visible, but salary expections have gotten extremely out of whack in the US, and extended WFH during COVID proved to most boards that companies can continue to operate when entire teams are communicating async.
If a large portion of interns and NCGs in the US are essentially expecting $45-70/hr salaries, it just isn't sustainable especially when factoring the growing skills deficit because universities failed CS students to a certain degree over the past 10 years by watering down programs in a short term bid to compete against bootcamps.
If we are paying Bay Area salaries, we expect performance comensurate to that salary. Basically, all companies are now starting to adopt the Netflix model of hiring in the US.
The expansion of Indian offices is a result of the reverse brain drain that accelerated during the early COVID layoffs along with the EB1/2 backlogs - a number of Staff and above Engineers, EMs and above, and Sr PMs and above who were on work visas were either cut or given the option to relocate to India and start a hub office.
A similar trend happened in other countries, but India being so large means they get overshadowed.
[3] Never even heard of Cato Networks, and no figures. So irrelevant.
[4] onsemi manufacturing $2bn, not relevant as this is manufacturing numbers (Apple India is expanding multiple times that)
[5] No numbers, 2,934 employees. Mentions increment 20% of local market and an acquisition. Not relevant.
[6] Amazon plans 8,500 employees in the two [Canadian] cities. Meanwhile "Amazon to invest $233M to strengthen India operations network" https://www.aboutamazon.in/news/operations/amazon-to-invest-... (OTOH: they are laying off 800-1000 in India, out of over 15,000 desk employees just in Hyderabad)
[7] Uber to invest $200 mln in Turkey. Peanuts compared to the billions in my links.
From your submissions it seems like you are Indian or something.
FWIW, I get on the order of $40/hour as a senior with almost 10 years experience, and it allows me not to worry too much about spending (with a wife earning about a third of my salary and two kids). I think I could easily earn at least 50% more if I wanted to work for some rich but soul-crushing corp, but for obvious reasons I don't do that. I guess US cost of living is just insane. (I live in central Europe.)
London and Toronto have a similar CoL as the Bay Area and $45/hr is a mid-career tech salaries in both Greater London and GTA.
Edit: can't reply but every single white collar job provides an employer healthcare plan that is equally as competitive as the public healthcare plans in Canada and the UK.
And especially if you were being paid $50/hr as a new grad in 2014.
Edit 2:
> And I was in Michigan.
All the more reason I would have pushed back severely. It's easier to find talent at scale in London or GTA - metros there have a population larger than the entire state of MI, and with a breadth of options beyond UMich Ann-Arbor.
$45/hr is low for GTA. I was making about that in Toronto in 2017 with two years experience, one year vocational degree, and a bachelor's in a completely unrelated field.
GCC - Global Capacity Center, basically instead of outsourcing to WITCH or EPAM, a company creates an entire office abroad that owns profit-loss, product roadmap, has executives present, and is a direct part of the company.
NCG - New College Grad
You ain't dense btw, it's a good question. Keep asking questions!
All Western countries are devaluing their currency. No other way to reduce the debt. Cutting benefits is political suicide. Taking every dollar from billionaires would knock a 1 year of debt off. The solution is inflation
London has a similar CoL as San Francisco yet tech salaries are around 33%-50% what are offered in the Bay. Same with Toronto.
On top of that, both the British and Canadian governments give some degree of tax subsidy and regulatory support, though not to the degree that India, Israel, Poland, Czechia, or Romania provide.
Why should I pay Jeff from NCSU a US$175K TC in RTP when I can get Jane who chose to return to Toronto after living in the US working for large companies throughout her 20s?
A lot of techies on HN really underestimate the amount of reverse brain drain that happened during and after COVID. The COVID layoffs in early-mid 2020 primarily targeted those on some kind of work visa, and a number of those laid off were given the option to take a pay cut but also open a node in their home country.
Edit: can't reply so replying here
> I hear this, but the fact is a 70% pay cut in the Bay Area would simply not be workable at all
This is why we began opening offices in RTP, Denver, Chicago, NYC, etc in the 2017-22 period because we could pay closer to London or Toronto salaries back then in those offices and we had state level support.
All of that went to the wayside after COVID because a large portion of our workforce reverse braindrained, and someone in RTP demanding WFH and a Bay Area salary in a metro where CoL is comparable to Fresno and where we had to spend significant amounts of capital in commercial real estate to unlock tax benefits is ridiculous.
We are fine paying high salaries and TC, but it needs to be justified by actually high tier talent. Think the Netflix model.
This is my conclusion as well, get the cost center down to good enough after threats from competition is relatively secured.
I think this is going to be a new golden age kf innovation. Lot of senior engineers capable of pencil whipping microservice infrastructure paired with industry experience means startup mill goes brrrr
My company has been intentionally causing attrition in the US by moving to effectively a 996 style schedule. As people quit, their positions are moved to the India office. It is not an officially communicated policy. I have just surmised this based on private conversations with the executives and what is actually happening.
Exactly this, articles of that tone are starting to surface. AI is often the pretext, because it makes sense to replace labour with technology. The dissonance is why those who make layoff decisions refuse to accept reality, that AI does not replace staff.
One thing also contradicting the "AI can do it" argument, is that a business's playbook is to rather expand the work force in order to multiply the effect of technology. Yet they lay off in waves.
There is no dissonance, just a disguise: Several big tech companies in the US cut their workforce, in the US, while expanding it in countries where talent is cheaper.
Paradoxally, junior folks have it even worse. It has become very difficult to land a job without experience, again, in the US. It all makes sense, if you replace US based senior staff with Junior staff on different time zone, and having a different culture, you are left with nobody to mentor and supervise junior so staff.
I still can't explain how ending up with more Junior staff, offshore, less senior staff and little to no Junior staff locally will pay off in the long term.
I guess I will figure that out, but for now that's one piece of the puzzle I can only call an "economic downturn" outlook.
I was told that the main reason the “Who is hiring?” thread (and other job boards for startups) has much fewer remote positions that are global (the vast majority is Remote US now) is because of a legislation that reduces a fiscal incentive when hiring software engineers and the reduction is much more aggressive when the engineers are from outside the US.
Doesn’t it affect big tech companies? Only startups?
I would guess the opposite, with big companies being much more savvy and influenced by fiscal incentives.
one of the main drivers is companies like Deel that make it very easy to hire remote workers anywhere and I think AWS will soon launch a similar service
If Amazon’s layoffs aren’t AI driven, and AWS is making more money than it’s spending on AI infra… how is Amazon evidence of AI spending replacing jobs? This is an interesting topic, but this particular article left me pretty unsatisfied, it feels like juxtaposing a bunch of barely related numbers with some very popular talking points, but no new information? It hints at “AI washing” without doing any digging at all, and cites the MIT study without noting that it’s getting a ton of legitimate criticism. Is AI really a sideshow or an excuse for layoffs that big companies were hoping to do anyway, is it taking the blame for low confidence in the economy?
AWS is making more money, they are not making money running llms. The companies didn't want to reveal internal procedures and exact profit/loss statements, is that surprising to this article writer? Sorry but MIT is more trust worthy than this stonk pumper site.
> Sorry but MIT is more trust worthy that this stock pumper site.
Oh I totally agree with you, this was just the first thing that came up in a Google search. The criticism of MIT’s study has been going around widely, this site isn’t the only one saying that this study lacks objective metrics.
I don't necessarily believe this is the best explanation but: We know the economy is doing pretty poorly and tech companies are consolidating. Amazon is losing it's two main drivers of revenue: Irresponsible startups with huge AWS spend and no pressure to optimize their stack and consumers buying treats online. Regardless if people are spending on AI, the only thing businesses are investing on is AI and analysts at AWS are likely signaling that many AI companies are not seeing a large ROI and model developers will likely build their own versions of successful products (Claude Code). AWS doesn't want to scale up it's GPU fleet and be left holding the hardware bag. Amazon can't juice numbers for consumer purchases since the rest of the economy is contracting, most people are losing jobs, etc. So the easiest way to for Amazon to juice their metrics is to offshore office work that can be done anywhere. They can claim they are using AI - but from conversations with friends who are working at Amazon this does not sound very realistic - and ride the AI bubble with no liabilities.
Large companies add and remove jobs all the time. It's just the the latter gets much more media coverage. Jobs are always being created and destroyed, for all sorts of reasons.
That's an interesting point that I haven't considered before: that the narrative of AI replacing jobs plus the widespread cheating in school using LLMs is making students less engaged and new graduates less employable, becoming a self-fulfilling prophecy for AI.
This is one of the aspects of AI ethics that I don't think gets nearly enough attention: the general psychological effect that information about AI has on people, regardless of their interactions with the tools themselves.
Students getting lazy, or dropping out of subjects entirely because they don't think they have a future in them.
Depression and a general feeling of despair. I see this in programming communities quite a bit - people who see LLMs as an existential threat to their careers and that they have wasted their lives getting good at something which is now being devalued.
"ChatGPT psychosis" - where people talk to LLMs and have unhealthy thought patterns reinforced by them to disastrous ends - gets a ton of coverage. But what about these milder but still meaningful effects where the very existence of AI disrupts people's future plans and self-worth even if they're not using it at all?
No one gets fired for tuning out of temporary tuning out of his smartphone or doing chores the classic way I guess. ;)
I use mobile services timeboxed and in conjunction with blockers for certain services. I also went back to use old-school pencils and paper for work whenever possible. It is helpful - and fun.
I don't see the relation. A "ghost job posting" is not evidence of recent graduates failing to meet the requirements of the past; it is a job posting an employer has no intention of filling to begin with.
A little bit off topic: but I couldn't even start to read the article because "I reached my article limit" out of I site I never visited before... What are they using to determine how many articles I've read?
Opening in a private window solved the issue, however I'm pretty sure I don't regularly read anything on this site (maybe never was an overstatement?).
If AI really generates the value it claims to cutting jobs is short sighted. If existing human knowledge is commoditized, then we should be able to invest in generating new knowledge, and creating new kinds of products that were not even possible before.
And if AI makes workers more efficient, then businesses not actively hiring more employees are admitting that even with extra resources they have no strategy to grow their business. Like, if one person is effective as ten people, then a business should be able to grow quicker since their operating costs are effectively lower freeing up capital for growth.
So either their business is a dead end, the inefficiency is at the management layer, or AI isn’t actually making workers more efficient.
The article seems to hinge on the core assumption that revenue is much less than spending:
> Those expenditures may be approaching $1 trillion for 2025, while AI revenue—which would be used to pay for the use of AI infrastructure to run the software—will not exceed $30 billion this year
While it's clear that the author is summing up the spending from the big players, it's not clear to me that their math is right for revenue. Yes, OpenAI, Anthropic, Thinking Machines, SSI, etc. have pretty limited direct revenue (including zero!).
But this comparison assumes no revenue growth for other top computing users. Some companies are certainly saving money on some tasks and increasing revenue, particularly in fields like customer support. See the confusing figure in section 5 of https://hai.stanford.edu/ai-index/2025-ai-index-report/econo... .
That chart is by number of respondents and not weighted by revenue. Like the MIT study, it would not be surprising that "just pipe this to an LLM" isn't enough for most fields or companies. But a few have likely made material improvements.
10% of respondents saying they've seen a >10% revenue gain could be substantial, if they're bigger firms with high leverage in computing.
Edit to add: the comparison also makes a classic "GDP vs market cap" style mistake. Capital expenditure has multiple years of useful life. Revenue is annual. You'd want to compare depreciation vs revenue.
A lot of “AI” investment in countries like India is just annotation and labeling kind of work .
It has so become huge there, that is getting to similar size as the traditional call centre industry, hundreds of thousand of people work on curating data for model training.
Google hiring a senior lead who can scale low skill business processing massively is just inline with that.
Any compute investment is largely local . Internet and Electricity is expensive and erratic, there is red tape, loads of import duties, there are dozens of cheaper places for cheap data centers.
All this to say it is not the kind of outsourcing you think it is.
—-
There is a some amount of high tech outsourcing happening, those are driven by challenges in getting even a business visa in last 5 years.
those numbers are quite small in aggregate won’t be news worthy.
India simply does not have that kind of high quality talent pool .
The education system is both expensive and very poor. There is shortage of qualified teachers, even bigger shortage of good ones. Students and parents just want to get a “degree” /maximize scores to get a job, There is little interest to learn.
> A lot of “AI” investment in countries like India is just annotation and labeling kind of work .
Then why are they giving one year of free accounts for developers to the whole country? Remember they have about one million CS graduates every year. Do you see the scale of costs?
So, jobs are being replaced by AI spending (not by AI), and AI spending is increasing because of AI, which means AI is replacing the jobs. Did I get wrong?
I suppose the distinction is worth making, since if it was actual AI replacing jobs, i.e. AI that is capable enough, today, to do someone's job, or more likely to increase someone's productivity so that headcount can be reduced, then that would seem a permanent shift and is only going to ratchet up.
OTOH, if it is only dreams of AI, manifested as AI spending, or CEOs laying people off thinking that AI will soon (even if not today) be capable of backfilling them, then this may well backfire, and will be "reversed" if demand is less than forecasted and/or job-replacing AGI doesn't materialize, and all we get is productivity tools, useful mostly for a narrow band of jobs.
Incidentally, I think Karpathy might be right that there is pretty much only one job that seems it actually could be replaced by AI today, at least potentially, which is call center tech support, or customer support, staff, who are dealing with a narrow domain and just reading off a script.
Spending is happening only because, it promises to replace workers. And that possibility arises only because AI exists. Spending is only a means, not a cause.
Sure, but is the cause "AI" (here today, doing someone's job), or "promise of AI" (that may never materialize anytime soon, either in quantity or capability).
Matter of time until markets reckon with AI investment crowding out non-AI investment (cf. the massive oversubscription of Meta's latest bond offering). Must suck to be a small-cap firm squeezed by tariffs raising costs, unemployment lowering demand, and AI investment raising your own non-AI cost of borrowing.
I think the article is missing two points: if the latest layoffs aren't related to AI, then this doesn't mean AI won't have or has an impact on head count.
And investment and experiments by definition include the risk of failing. In almost everything lies a survivorship bias and no one talks about the 100+ car makers that went into goldrush mode 100+ years ago. This is life. Netflix vs Blockbuster - already forgotten?
Also the "fail rate" - so what part is failing and why? What's with the 5%? If we have a look at exponential functions this might be a really good deal, if the 5% can account for the losses. After all, benefits compound over time.
I witnessed first hand in FAANG some quota hires and I believe that now that no one gets paid for contrived and artificial business advantages, we are back to a more merits based evaluation of workers.
But AI should not be written off as fancy something with no impact. That's the wrong take. Whether it will be a springboard to new jobs that compensate for losses or replacements - I am not yet sure, but tent to be in the former group. ML engineers take care of ML - something new that takes care of something new.
Slightly tangential to the article: a lot of the "AI layoffs" are really just old fashioned layoffs, but with exciting press releases meant to reassure investors.
AMZN for example overhired in various functions because it expected demand that never materialised.
Admitting that is bad for the share price, but writing some woo about "AI and agility" will convince at least some investors to keep the faith.
This article gets the phenomenon right but the causation wrong: it's not "AI spending vs. AI replacing jobs". both are happening simultaneously, and they're causally linked.
The spending-revenue gap is real. Hyperscalers are projected to spend $300-550B on AI infrastructure in 2025[1] while generative AI revenue won't exceed $30-40B [2]. Amazon's capex jumped from $48B in 2023 to $84B in 2024 to a projected $100B+ in 2025[3], that's capital intensity doubling from historical norms of 11-16% to over 22% [4].
But here's what the article misses: this isn't financial desperation. When Amazon's CEO announces 14,000 layoffs and explicitly states that AI will enable "fewer people doing some jobs"[5], he's revealing the strategic logic — show me the incentives and I'll show you the outcome. Companies aren't cutting jobs despite AI spending; they're cutting jobs because they know AI spending will pay off.
To be clear, the article treats the spending-revenue gap as evidence of irrationality. But infrastructure buildouts always precede revenue: railroads looked insane before they transformed commerce, electricity grids consumed massive capital before delivering returns, the internet required enormous infrastructure investment before creating trillion-dollar companies.
What's different now is companies are pulling the future forward. If we take this article at face value which I can appreciate is a BIG “if” then AI is already automating 25% of tasks and delivering 10-55% productivity gains[6] so they're not waiting for AI to replace jobs organically. They're cutting headcount now to fund the infrastructure that will make those cuts permanent.
More broadly, this is rational capital reallocation in a winner-take-all race. Companies that don't build AI infrastructure won't gradually decline, they'll lose competitive positioning entirely. That's why Meta is using off-balance-sheet financing for a $27B data center[7], why Oracle is borrowing $25B annually despite already carrying 450% debt-to-equity [8]. They're all-in because the alternative is obsolescence.
The real story isn't "spending causes cuts" it's that AI infrastructure commoditizes human expertise, the complement to compute infrastructure. Companies are trading labor costs for compute infrastructure because they've correctly identified compute as the new moat. The job cuts aren't the price of spending on AI; they're the business model shift that AI enables.
The article is right that we're not seeing mass AI job replacement yet. But the job cuts are happening in anticipation of replacement, not as an unfortunate side effect of spending. That's not desperation just business strategy.
Over the last 20 years of tech, the giants have taken the smartest folks out there and put golden handcuffs on them. You could hire up all the smart folks and put them to work, or leave them out there and have them compete with you. With the launch of cloud providers and (expensive) dynamic scaling the problem only got worse. Think about hiring in the pandemic. Every one at home, with a stimulus check and nothing to do. Rather than a flurry of new software you got mass hiring.
But now we are in a capital intensive hardware cycle. Where in order to compete you need to have lots of $$$$ as well as software know how. It does not matter that there are smart people out there, without hefty backing they wont get very far.
I suspect that software is about to enter its "punk" era. We have software for small businesses that will help with accounting, HR, customer service, and cloud providers are starting to see some interesting competition. Much like the old punk poster showing you 3 chords and telling you to start a band it is entirely possible to find three friends and start a business that makes 1-10 mill a year with little effort and lower costs. The moment you stop thinking "unicorn" and start thinking "sustainable" the economics shift radically.
Not to mention that there's already a small market for software products that work just like existing products that were once good, only without all the AI getting in your way at every turn. You're just not going to be making huge enterprise sales with such a product (in 2025).
Funny to me how many of the replies to this comment assume you are assuming you mean all these "punk" startups will be possible because of AI, when your actual comment says nothing of the sort.
The effort in those businesses was never coding, it was always connecting with and selling customers, understanding them, and supporting them as time went on. AI can help with some of that but generally the connections and network effects have outsized contributions in the smaller niches.
I think you're on to something, but interest rates probably have to come down a bit more for it to really have legs. We definitely need a response to enshittification though.
This does not reflect my reality. I have worked on half a dozen projects where we would have hired consultants to get the job done but have used coding agents to document, understand, migrate a project, create backend services, dashboards, and other things with budgets ranging from a few thousand euros to 200,000 euros. No consultants hired, nothing spent.
In our case - agentic loop optimization of kernels. Works like a dream - after all, you have a perfect python spec (validation), the kernel is small (under 10 kloc), and the entire thing is testable. The trick is to have enough back test data so that things like cache behavior are taken into account. Ended up with different kernel versions for batch-back-test vs real-time work - which was interesting. 5 years ago would have hired about 10 ppl for the job - now 2.
AI processing hardware deprecates (and depreciates) at a much faster rate than conventional CPUs, as much as 50% per year. Consider the billions being dumped into compute at that rate of depreciation and explain to me:
1. How will tangible assets generate profit net of near term capex requirements and interest on debt?
2. Why wouldn't payroll shrink as a result of the increased AI capabilities emerging from the capex spend?
3. If AI lives up to the hype & given recent news that public backstops are being requested, why shouldn't the US quasi-nationalize cash strapped players and distribute equity to every American?
4. As NVDA and AAPL local models and local compute eat into utility and base automation business, how do edge players maintain profitability without pricing capabilities well beyond the affordability of SMBs and individuals?
I can't read the article but that won't stop me from commenting..
This year alone something like 400B was spent on investing in chips, datacenters, electricity buildouts. That's 400B that could have otherwise been invested in people.
While i don't doubt that people will find a few solid business cases for LLMs, i am on team-bubble. I don't think this investment will add 400B worth of value and I very much doubt that this 400B is any good for future growth or long-term aspirations of AGI. Investing 400B into people and (tech) manufacturing would be a solid long-term bet with benefits.
Bah, all of that is still employing people. Companies have completed almost $1T of stock buybacks this year. Since 2018, with the exception of 2020, that number has been between $800B and $1T every single year. And that number has been more than $500B since the 2008 recession. AI spend is bad but it’s not even close to how much stock buybacks have ruined the employee wages and employment prospects.
Imagine if 10% of that money had been spent just training young people, or on a new cohort of PhDs. Imagine what benefits we would have reaped in a decade's time.
Because in any country with poor worker protections, the outcome is layoffs regardless.
AI succeeds? Layoffs of unneeded roles.
AI fails? Layoffs to cut expenditure to make up for the written-off expenditure.
In the UK, if AI makes a well-established employee redundant, the employee is entitled to redundancy pay. And if the company fucks up and overspends on chasing a ridiculous Macguffin they can't just fire people without making them formally redundant.
The damage that is going to be done in the USA if the AI bubble bursts is going to be generational.
You can already buy cheap but powerful old servers. But newer hardware tends to be more power efficient. So, depending on time horizon you consider, it might be cheaper to buy newer hardware.
Assuming that GPUs power efficiency will increase, the same will be true about them.
Yes, like renewable energy infrastructure (which China does, and would be highly useful anyway in case generative AI does live up to its promise).
Even if generative AI lives up to its hype, with current US administration there's no way America is going to lead the race for long. There's just not enough energy available, when those in power oppose developing many of the energy projects that make most economical sense.
As a recently laid of senior engineer, to the extent that my job was replaced, it was replaced with offshore junior devs who'd already been working with the company for over year with a pretty rough level of productivity by man-hour, though maybe taking 3x the time to get things done is worth it if they're cheap enough. Which is to say I see my layoff as as cost cutting backed by a premise that there is no value in retaining senior level talent, to try and keep operating in the black, not because AI was materially producing a lot of benefits. (Because to the extent it was, I was the one reaping them compared to the offshore folks and less experienced onshore ones.)
Hacker News doesn't like to hear it, but remote work is a big part of this. All that effort convincing management you're just as effective working remotely was also a collective sales pitch to outsource your role.
Yeah. One of the most ridiculous things in my entire life of 40 years was seeing 90% of my fellow SW industry workers using the 2 or so years during/after COVID where we had more power than we’ve ever had to advocate hard for making ourselves much more easy to replace by insisting on remote work, and insisting on reducing our productivity (even if not actually, at least in the eyes of the employers) so we couldn’t justify our higher salaries anymore.
Just outright insane.
Remote work benefits workers too, though:
1. It enables them to live in lower cost of living cities. This makes them more competitive relative to outsourcing because a lower wage in a cheaper city goes farther.
2. It opens up the job pool. If you work remote, you can work at any company that takes remote workers regardless of where you live.
3. It reduces the cost of switching jobs. Many people are stuck in jobs they don't want because there are few other local opportunities and switching jobs means uprooting and moving. For a single 20-something in an apartment, that doesn't sound so bad. But once you have a partner with their own career, kids with meaningful friendships, a mortgage, etc. then moving can be extremely disruptive.
In general, more job flexibility increases the efficiency of the job market for employees.
I'd be more inclined to work in the office if most of my coworkers weren't in India anyways. I can't exactly have water cooler talk with Manglesh while he's asleep on the opposite side of the planet. At least at home I don't have to spend 10 minutes of each meeting finding an empty conference room and getting the audio/video setup to barely function.
sure but people on the other side of the world are harder to communicate with for practical reasons like time zones and also for cultural reasons that matter big time in many markets
Yeah this is the reason most offshoring projects ultimately fail to deliver the promised savings. The overseas staff can never be as effective as folks in the same time zone.
This is the biggest unspoken story in tech.
The era of American developer exceptionalism is over.
Talent abroad has access to the same tools, education, and increasingly, network. American engineers will be replaced wholesale with overseas engineers that cost a fraction of American labor.
You can hire talented React engineers for $50k that will work harder than their American counterparts.
It's not just React. Overseas markets have DevOps, SREs, embedded, systems engineers, you name it.
For years Americans joked that overseas labor was subpar. It's not, or at least it isn't in today's world.
If software engineering is not special and can be done by anyone, so can any other role in a business. So it follows that all American roles will be offshored eventually, including ownership of the company itself - or American businesses will be universally out competed.
Absolutely! $50k is ₹45,00,000 which is at the 95th percentile of tech salary in India across all levels of seniority.
So yeah it’s not surprising that jobs are going offshore.
Any data backing this? If this were the case, why isn’t most innovation done outside the US?
Jobs that have a high 0-1 component will still be in the US but jobs that are more 1-n may be offshored.
Because most of the smartest people in the world moved to the U.S. because of the education system, great access to capital, and the fact that they and other smart people could easily move to, live and work in the U.S.
The U.S. also has the largest useful single market in the world (the EU is broken up across many languages/cultures, China is isolated so you can’t really expand out).
The U.S. is actively working to destroy several of those planks right now.
Even the capital plank, which superficially looks strong, is being hurt by the government picking winners and choosers. If the current govt bets don’t turn out to be the right ones we’re looking at an ugly, probably tax payer funded (OpenAI has already hinted at this) collapse.
It is less so about skills of workers. And more so about having lot of investors who are willing to throw money at everything and then even more after the fact. Or to just outright having enough money to buy out the better ideas.
> If this were the case, why isn’t most innovation done outside the US?
Capital
Nah, none of this is precisely true. Even if the folks abroad are just as skilled (true), they aren’t as effective because of primarily time zone differences and also language barriers (which is exacerbated by the time zone differences).
Similar trend at my company - we're looking to hire in India to reduce costs. The rumor is that we could replace 25% of our existing IT workforce without outsourced roles.
If anyone is worried about their job, it won't be AI that takes it - it will be outsourcing. The US offshores 300k jobs per year with a high percentage of them being IT (60-80% depending on source). It's really not that different to the offshoring of manufacturing decades ago. Why pay people onshore when you can pay someone in India half of that? Any job that doesn't require a physical presence or has legal pressures to keep it onshore will be at risk. It will likely get worse over time, just like manufacturing. I don't know what the future will look like if we continue outsourcing everything. It used to be that we outsource primary and secondary sector activies so that we could expand tertiary industries. What are we replacing the outsourced jobs with now?
Offshoring/outsourcing is nice on paper, but as management doesn’t have to deal with time zones, in reality it is much more chaos than expected. And how do they want to deal with fuckups? Thru Slack or Discord? :)
We had British SaaS supplier and all the time I have talked with Bangalore-based people. They had to work in night I suppose…
Actual Indians, as always. Humans are cheaper, and have the capacity for long term memory formation.
I would say it is more sinister than just a cost-benefit analysis and plain racism in hiring. Cheap talent exists in far more places than India but somehow it almost always is India. Not only that but I have seen the strangest LinkedIn profiles where people graduate from no-name Indian universities and get a big-corp job here in the West like it is nothing.
Even Japan has become pro-Indian on immigration for tech: https://eastasiaforum.org/2025/11/06/takaichis-japan-looks-t... Wtf...
It's not a racism thing, it's because India is in a fairly unique position: their population is so large, that (relatively speaking) the top 0.1% of Indians in any sector tend to outnumber the top 0.1% of (for example) Americans in that sector, plus if an Indian immigrates to America, a company can pay them less than an equivalent American employee (for various reasons).
So you basically can pay an Indian immigrant a junior dev salary, for significantly-better-than-junior-dev work. It's just stonks.
Tons of anecdotes like this: https://www.reddit.com/r/recruitinghell/comments/1eblg0d/rea...
The Indian diaspora is huge and you have second and third generation folks in executive office all over. As a political force, south Asians are increasingly powerful as well in many states.
There’s a lot of opportunities for personal networks, nepotism and plain old corruption to work. (Who is going to figure out that somebody dropped a few gold coins to your sibling as a kickback?) There’s a much smaller network of people with relationships to Eastern European or other companies.
> There’s a much smaller network of people with relationships to Eastern European or other companies.
Unlike eastern Europe, India is geopolitically in a pretty good spot right now, having decent relations with most developed countries, and not engaged in any major wars with its neighbors. The last company I worked for outsourced a lot of work to Russia. At a certain time in 2022 they suddenly had to shift a lot of that work to... India!
No conspiracy theories are necessary here. The numbers speak for themselves.
Here is an article putting together data from GitHub about SW developers per country.
https://data-player.com/highest-number-of-software-developer...
When talking about outsourcing jobs from the U.S., you’re obviously gonna exclude the U.S. China is also not a factor. Neither are Western European countries or countries like Japan and S Korea because of relatively high salaries. Russia is out due to long standing geopolitical issues.
That basically leaves Brazil and Indonesia as the only alternatives to India in the top 10 and combined they don’t even have half the number of SW developers as India.
You need to then add Mexico, Vietnam, Turkey, Philippines and Poland to the above 3 to add up to the number of SW developers present in India.
Thats why the outsourcing industry is concentrated in India. You can setup 1 office in India and have access to as many SW developers (Indians are also very willing to migrate domestically, so an office in a single city is sufficient to cater to the entire domestic developer market) as you would if you setup 8 offices in & different countries across 4 continents.
Here you go, h1b hires still get paid American salaries so that throws the whole 'they get hired because they are cheap' argument out of the window: https://fortune.com/2025/09/22/india-government-responds-tru...
>70% is a pretty insane number that certainly speaks for itself.
Also, when you start giving a lot of tech jobs to people from one specific country, than the github developer numbers will naturally reflect that.
Grandparent was referring to outsourcing, not H-1B hiring.
I am talking about bias in hiring in general. I am responding that the bias in hiring towards this one country goes beyond that it is 'cheap'.
It is easy to make the 'cheap' argument when you talk about outsourcing but it no longer makes sense when you look at h1b numbers.
GCCs are expanding in Canada, Ireland, Poland, Czechia, and Costa Rica as well.
Indians are more visible, but salary expections have gotten extremely out of whack in the US, and extended WFH during COVID proved to most boards that companies can continue to operate when entire teams are communicating async.
If a large portion of interns and NCGs in the US are essentially expecting $45-70/hr salaries, it just isn't sustainable especially when factoring the growing skills deficit because universities failed CS students to a certain degree over the past 10 years by watering down programs in a short term bid to compete against bootcamps.
If we are paying Bay Area salaries, we expect performance comensurate to that salary. Basically, all companies are now starting to adopt the Netflix model of hiring in the US.
Are they investing tens of billions in new offices in those non-Indian countries?
My other comment: https://news.ycombinator.com/item?id=45867014
Yes. (Still in process of generating the list)
Poland [0][8]
Ireland [1][2]
Czechia [3][4]
Canada [5][6]
Turkiye [7]
The expansion of Indian offices is a result of the reverse brain drain that accelerated during the early COVID layoffs along with the EB1/2 backlogs - a number of Staff and above Engineers, EMs and above, and Sr PMs and above who were on work visas were either cut or given the option to relocate to India and start a hub office.
A similar trend happened in other countries, but India being so large means they get overshadowed.
[0] - https://www.gov.pl/web/primeminister/google-invests-billions...
[1] - https://www.amd.com/en/newsroom/press-releases/2023-6-20-amd...
[2] - https://enterprise.gov.ie/en/news-and-events/department-news...
[3] - https://www.itpro.com/business/cato-networks-announces-major...
[4] - https://www.onsemi.com/company/news-media/press-announcement...
[5] - https://www.reuters.com/business/lyft-open-toronto-tech-hub-...
[6] - https://www.connectcre.ca/stories/amazon-plans-toronto-offic...
[7] - https://www.reuters.com/world/middle-east/uber-invest-200-ml...
[8] - https://news.microsoft.com/pl-pl/2025/02/17/microsoft-announ...
[0] no concrete number, and wording implies intent in the order of 1 billion total
[1] only $135 Million
[2] only 1,300 new employees (over 6,000 current); meanwhile "Apple India leases [...] likely to be one of the largest single-tenant office leases in [Bengaluru]" https://timesofindia.indiatimes.com/technology/tech-news/app...
[3] Never even heard of Cato Networks, and no figures. So irrelevant.
[4] onsemi manufacturing $2bn, not relevant as this is manufacturing numbers (Apple India is expanding multiple times that)
[5] No numbers, 2,934 employees. Mentions increment 20% of local market and an acquisition. Not relevant.
[6] Amazon plans 8,500 employees in the two [Canadian] cities. Meanwhile "Amazon to invest $233M to strengthen India operations network" https://www.aboutamazon.in/news/operations/amazon-to-invest-... (OTOH: they are laying off 800-1000 in India, out of over 15,000 desk employees just in Hyderabad)
[7] Uber to invest $200 mln in Turkey. Peanuts compared to the billions in my links.
From your submissions it seems like you are Indian or something.
I was making $50/hour fresh out of college back in 2014. And I worked remotely. $45/hour today is not great given the cost of living.
FWIW, I get on the order of $40/hour as a senior with almost 10 years experience, and it allows me not to worry too much about spending (with a wife earning about a third of my salary and two kids). I think I could easily earn at least 50% more if I wanted to work for some rich but soul-crushing corp, but for obvious reasons I don't do that. I guess US cost of living is just insane. (I live in central Europe.)
London and Toronto have a similar CoL as the Bay Area and $45/hr is a mid-career tech salaries in both Greater London and GTA.
Edit: can't reply but every single white collar job provides an employer healthcare plan that is equally as competitive as the public healthcare plans in Canada and the UK.
And especially if you were being paid $50/hr as a new grad in 2014.
Edit 2:
> And I was in Michigan.
All the more reason I would have pushed back severely. It's easier to find talent at scale in London or GTA - metros there have a population larger than the entire state of MI, and with a breadth of options beyond UMich Ann-Arbor.
$45/hr is low for GTA. I was making about that in Toronto in 2017 with two years experience, one year vocational degree, and a bachelor's in a completely unrelated field.
London and Toronto give people healthcare. And I was in Michigan.
Sorry for being dense. What are GCCs and NCGs?
I guess GCC night be Global Capability Center?
GCC - Global Capacity Center, basically instead of outsourcing to WITCH or EPAM, a company creates an entire office abroad that owns profit-loss, product roadmap, has executives present, and is a direct part of the company.
NCG - New College Grad
You ain't dense btw, it's a good question. Keep asking questions!
So GCC is basically a subsidiary in another country?
> but salary expections have gotten extremely out of whack in the US,
You mean cost of living and inflation has devalued the dollar.
All Western countries are devaluing their currency. No other way to reduce the debt. Cutting benefits is political suicide. Taking every dollar from billionaires would knock a 1 year of debt off. The solution is inflation
London has a similar CoL as San Francisco yet tech salaries are around 33%-50% what are offered in the Bay. Same with Toronto.
On top of that, both the British and Canadian governments give some degree of tax subsidy and regulatory support, though not to the degree that India, Israel, Poland, Czechia, or Romania provide.
Why should I pay Jeff from NCSU a US$175K TC in RTP when I can get Jane who chose to return to Toronto after living in the US working for large companies throughout her 20s?
A lot of techies on HN really underestimate the amount of reverse brain drain that happened during and after COVID. The COVID layoffs in early-mid 2020 primarily targeted those on some kind of work visa, and a number of those laid off were given the option to take a pay cut but also open a node in their home country.
Edit: can't reply so replying here
> I hear this, but the fact is a 70% pay cut in the Bay Area would simply not be workable at all
This is why we began opening offices in RTP, Denver, Chicago, NYC, etc in the 2017-22 period because we could pay closer to London or Toronto salaries back then in those offices and we had state level support.
All of that went to the wayside after COVID because a large portion of our workforce reverse braindrained, and someone in RTP demanding WFH and a Bay Area salary in a metro where CoL is comparable to Fresno and where we had to spend significant amounts of capital in commercial real estate to unlock tax benefits is ridiculous.
We are fine paying high salaries and TC, but it needs to be justified by actually high tier talent. Think the Netflix model.
I hear this, but the fact is a 70% pay cut in the Bay Area would simply not be workable at all. You don't just cut out Starbucks and Amazon junk.
This is my conclusion as well, get the cost center down to good enough after threats from competition is relatively secured.
I think this is going to be a new golden age kf innovation. Lot of senior engineers capable of pencil whipping microservice infrastructure paired with industry experience means startup mill goes brrrr
My company has been intentionally causing attrition in the US by moving to effectively a 996 style schedule. As people quit, their positions are moved to the India office. It is not an officially communicated policy. I have just surmised this based on private conversations with the executives and what is actually happening.
Exactly this, articles of that tone are starting to surface. AI is often the pretext, because it makes sense to replace labour with technology. The dissonance is why those who make layoff decisions refuse to accept reality, that AI does not replace staff.
One thing also contradicting the "AI can do it" argument, is that a business's playbook is to rather expand the work force in order to multiply the effect of technology. Yet they lay off in waves.
There is no dissonance, just a disguise: Several big tech companies in the US cut their workforce, in the US, while expanding it in countries where talent is cheaper.
Paradoxally, junior folks have it even worse. It has become very difficult to land a job without experience, again, in the US. It all makes sense, if you replace US based senior staff with Junior staff on different time zone, and having a different culture, you are left with nobody to mentor and supervise junior so staff.
I still can't explain how ending up with more Junior staff, offshore, less senior staff and little to no Junior staff locally will pay off in the long term.
I guess I will figure that out, but for now that's one piece of the puzzle I can only call an "economic downturn" outlook.
https://www.reddit.com/r/Layoffs/comments/1j3c5in/it_seems_t...
https://bloomberry.com/blog/amazons-layoffs-tell-half-the-st...
https://www.theregister.com/2025/03/27/ibm_cuts_jobs_in_us/
I was told that the main reason the “Who is hiring?” thread (and other job boards for startups) has much fewer remote positions that are global (the vast majority is Remote US now) is because of a legislation that reduces a fiscal incentive when hiring software engineers and the reduction is much more aggressive when the engineers are from outside the US.
Doesn’t it affect big tech companies? Only startups?
I would guess the opposite, with big companies being much more savvy and influenced by fiscal incentives.
one of the main drivers is companies like Deel that make it very easy to hire remote workers anywhere and I think AWS will soon launch a similar service
If Amazon’s layoffs aren’t AI driven, and AWS is making more money than it’s spending on AI infra… how is Amazon evidence of AI spending replacing jobs? This is an interesting topic, but this particular article left me pretty unsatisfied, it feels like juxtaposing a bunch of barely related numbers with some very popular talking points, but no new information? It hints at “AI washing” without doing any digging at all, and cites the MIT study without noting that it’s getting a ton of legitimate criticism. Is AI really a sideshow or an excuse for layoffs that big companies were hoping to do anyway, is it taking the blame for low confidence in the economy?
https://www.futuriom.com/articles/news/why-we-dont-believe-m...
https://www.cnbc.com/2025/11/04/white-collar-layoffs-ai-cost...
AWS is making more money, they are not making money running llms. The companies didn't want to reveal internal procedures and exact profit/loss statements, is that surprising to this article writer? Sorry but MIT is more trust worthy than this stonk pumper site.
> Sorry but MIT is more trust worthy that this stock pumper site.
Oh I totally agree with you, this was just the first thing that came up in a Google search. The criticism of MIT’s study has been going around widely, this site isn’t the only one saying that this study lacks objective metrics.
I don't necessarily believe this is the best explanation but: We know the economy is doing pretty poorly and tech companies are consolidating. Amazon is losing it's two main drivers of revenue: Irresponsible startups with huge AWS spend and no pressure to optimize their stack and consumers buying treats online. Regardless if people are spending on AI, the only thing businesses are investing on is AI and analysts at AWS are likely signaling that many AI companies are not seeing a large ROI and model developers will likely build their own versions of successful products (Claude Code). AWS doesn't want to scale up it's GPU fleet and be left holding the hardware bag. Amazon can't juice numbers for consumer purchases since the rest of the economy is contracting, most people are losing jobs, etc. So the easiest way to for Amazon to juice their metrics is to offshore office work that can be done anywhere. They can claim they are using AI - but from conversations with friends who are working at Amazon this does not sound very realistic - and ride the AI bubble with no liabilities.
Large companies add and remove jobs all the time. It's just the the latter gets much more media coverage. Jobs are always being created and destroyed, for all sorts of reasons.
That's an interesting point that I haven't considered before: that the narrative of AI replacing jobs plus the widespread cheating in school using LLMs is making students less engaged and new graduates less employable, becoming a self-fulfilling prophecy for AI.
This is one of the aspects of AI ethics that I don't think gets nearly enough attention: the general psychological effect that information about AI has on people, regardless of their interactions with the tools themselves.
Students getting lazy, or dropping out of subjects entirely because they don't think they have a future in them.
Depression and a general feeling of despair. I see this in programming communities quite a bit - people who see LLMs as an existential threat to their careers and that they have wasted their lives getting good at something which is now being devalued.
"ChatGPT psychosis" - where people talk to LLMs and have unhealthy thought patterns reinforced by them to disastrous ends - gets a ton of coverage. But what about these milder but still meaningful effects where the very existence of AI disrupts people's future plans and self-worth even if they're not using it at all?
Btw, the recent Conversations with Tyler had a few minutes on this topic with Sam:
https://podcasts.apple.com/us/podcast/conversations-with-tyl...
It was a bit towards the end, I think.
No one gets fired for tuning out of temporary tuning out of his smartphone or doing chores the classic way I guess. ;)
I use mobile services timeboxed and in conjunction with blockers for certain services. I also went back to use old-school pencils and paper for work whenever possible. It is helpful - and fun.
Blocking mobile internet on smartphones improves sustained attention, mental health, and subjective well-being: https://academic.oup.com/pnasnexus/article/4/2/pgaf017/80160...
Brain Drain: The Mere Presence of One’s Own Smartphone Reduces Available Cognitive Capacity: https://www.journals.uchicago.edu/doi/full/10.1086/691462
In the span of like 2 yrs?
There are two ways of reaching AGI: smarter AI and dumber humans.
They told us TV would rot our brains, but AI actually does.
Surely this would be indicated by a glut of unfilled job postings.
Here: https://www.npr.org/2025/11/02/nx-s1-5591302/ghost-jobs-are-...
I don't see the relation. A "ghost job posting" is not evidence of recent graduates failing to meet the requirements of the past; it is a job posting an employer has no intention of filling to begin with.
A little bit off topic: but I couldn't even start to read the article because "I reached my article limit" out of I site I never visited before... What are they using to determine how many articles I've read?
Opening in a private window solved the issue, however I'm pretty sure I don't regularly read anything on this site (maybe never was an overstatement?).
Exact same experience here.
If AI really generates the value it claims to cutting jobs is short sighted. If existing human knowledge is commoditized, then we should be able to invest in generating new knowledge, and creating new kinds of products that were not even possible before.
And if AI makes workers more efficient, then businesses not actively hiring more employees are admitting that even with extra resources they have no strategy to grow their business. Like, if one person is effective as ten people, then a business should be able to grow quicker since their operating costs are effectively lower freeing up capital for growth.
So either their business is a dead end, the inefficiency is at the management layer, or AI isn’t actually making workers more efficient.
The article seems to hinge on the core assumption that revenue is much less than spending:
> Those expenditures may be approaching $1 trillion for 2025, while AI revenue—which would be used to pay for the use of AI infrastructure to run the software—will not exceed $30 billion this year
While it's clear that the author is summing up the spending from the big players, it's not clear to me that their math is right for revenue. Yes, OpenAI, Anthropic, Thinking Machines, SSI, etc. have pretty limited direct revenue (including zero!).
But this comparison assumes no revenue growth for other top computing users. Some companies are certainly saving money on some tasks and increasing revenue, particularly in fields like customer support. See the confusing figure in section 5 of https://hai.stanford.edu/ai-index/2025-ai-index-report/econo... .
That chart is by number of respondents and not weighted by revenue. Like the MIT study, it would not be surprising that "just pipe this to an LLM" isn't enough for most fields or companies. But a few have likely made material improvements.
10% of respondents saying they've seen a >10% revenue gain could be substantial, if they're bigger firms with high leverage in computing.
Edit to add: the comparison also makes a classic "GDP vs market cap" style mistake. Capital expenditure has multiple years of useful life. Revenue is annual. You'd want to compare depreciation vs revenue.
I can tell that editors doing CMS translations, marketing images have certainly been replaced.
Likewise many tasks I used to do with Java, .NET, Node.js, have been replaced by low code/no code tools with agentic orchestration.
Thinking that AI isn't replacing jobs is wishful thinking.
https://archive.is/9sdT5
This week OpenAI, Google, And Perplexity announced free 1 year subscription to Indian devs. It must cost quite a fortune in inference https://www.bbc.co.uk/news/articles/c14pr0enjr6o
Not a single mention of jobs being moved to India including tens of billions of investments in new offices.
Backing links from a quick search earlier this week when an obviously Indian HNer tried to deny this was really happening:
Microsoft announces US $3bn investment over two years in India https://news.microsoft.com/en-in/microsoft-announces-us-3bn-... (Jan 2025)
Google announces $15B investment in AI hub in India https://apnews.com/article/google-artificial-intelligence-vi... (3 weeks ago)
[Indian] ex-Accenture CTO named Google Cloud’s Chief Product https://www.hindustantimes.com/trending/us/who-is-karthik-na... (last week) (a lot of people speculate they named an Indian Accenture guy to move as much as possible to India)
Big Tech giants defy US-India trade tensions, record strongest 12-month headcount growth in India in 3 years https://www.moneycontrol.com/technology/big-tech-giants-defy... (September)
https://www.reuters.com/world/india/openai-launch-first-indi...
https://www.anthropic.com/news/expanding-global-operations-t...
and so on. Something very crazy is going on.
NOTE: I am not American and this doesn't affect me directly.
A lot of “AI” investment in countries like India is just annotation and labeling kind of work .
It has so become huge there, that is getting to similar size as the traditional call centre industry, hundreds of thousand of people work on curating data for model training.
Google hiring a senior lead who can scale low skill business processing massively is just inline with that.
Any compute investment is largely local . Internet and Electricity is expensive and erratic, there is red tape, loads of import duties, there are dozens of cheaper places for cheap data centers.
All this to say it is not the kind of outsourcing you think it is.
—-
There is a some amount of high tech outsourcing happening, those are driven by challenges in getting even a business visa in last 5 years.
those numbers are quite small in aggregate won’t be news worthy.
India simply does not have that kind of high quality talent pool .
The education system is both expensive and very poor. There is shortage of qualified teachers, even bigger shortage of good ones. Students and parents just want to get a “degree” /maximize scores to get a job, There is little interest to learn.
> A lot of “AI” investment in countries like India is just annotation and labeling kind of work .
Then why are they giving one year of free accounts for developers to the whole country? Remember they have about one million CS graduates every year. Do you see the scale of costs?
Confirmation bias, maybe? 15B is like 1.5% of a trillion dollars currently being invested in AI..
So, jobs are being replaced by AI spending (not by AI), and AI spending is increasing because of AI, which means AI is replacing the jobs. Did I get wrong?
I suppose the distinction is worth making, since if it was actual AI replacing jobs, i.e. AI that is capable enough, today, to do someone's job, or more likely to increase someone's productivity so that headcount can be reduced, then that would seem a permanent shift and is only going to ratchet up.
OTOH, if it is only dreams of AI, manifested as AI spending, or CEOs laying people off thinking that AI will soon (even if not today) be capable of backfilling them, then this may well backfire, and will be "reversed" if demand is less than forecasted and/or job-replacing AGI doesn't materialize, and all we get is productivity tools, useful mostly for a narrow band of jobs.
Incidentally, I think Karpathy might be right that there is pretty much only one job that seems it actually could be replaced by AI today, at least potentially, which is call center tech support, or customer support, staff, who are dealing with a narrow domain and just reading off a script.
Spending is happening only because, it promises to replace workers. And that possibility arises only because AI exists. Spending is only a means, not a cause.
Sure, but is the cause "AI" (here today, doing someone's job), or "promise of AI" (that may never materialize anytime soon, either in quantity or capability).
Matter of time until markets reckon with AI investment crowding out non-AI investment (cf. the massive oversubscription of Meta's latest bond offering). Must suck to be a small-cap firm squeezed by tariffs raising costs, unemployment lowering demand, and AI investment raising your own non-AI cost of borrowing.
I think the article is missing two points: if the latest layoffs aren't related to AI, then this doesn't mean AI won't have or has an impact on head count.
And investment and experiments by definition include the risk of failing. In almost everything lies a survivorship bias and no one talks about the 100+ car makers that went into goldrush mode 100+ years ago. This is life. Netflix vs Blockbuster - already forgotten?
Also the "fail rate" - so what part is failing and why? What's with the 5%? If we have a look at exponential functions this might be a really good deal, if the 5% can account for the losses. After all, benefits compound over time.
I witnessed first hand in FAANG some quota hires and I believe that now that no one gets paid for contrived and artificial business advantages, we are back to a more merits based evaluation of workers.
But AI should not be written off as fancy something with no impact. That's the wrong take. Whether it will be a springboard to new jobs that compensate for losses or replacements - I am not yet sure, but tent to be in the former group. ML engineers take care of ML - something new that takes care of something new.
We will see.
Slightly tangential to the article: a lot of the "AI layoffs" are really just old fashioned layoffs, but with exciting press releases meant to reassure investors.
AMZN for example overhired in various functions because it expected demand that never materialised. Admitting that is bad for the share price, but writing some woo about "AI and agility" will convince at least some investors to keep the faith.
This article gets the phenomenon right but the causation wrong: it's not "AI spending vs. AI replacing jobs". both are happening simultaneously, and they're causally linked.
The spending-revenue gap is real. Hyperscalers are projected to spend $300-550B on AI infrastructure in 2025[1] while generative AI revenue won't exceed $30-40B [2]. Amazon's capex jumped from $48B in 2023 to $84B in 2024 to a projected $100B+ in 2025[3], that's capital intensity doubling from historical norms of 11-16% to over 22% [4].
But here's what the article misses: this isn't financial desperation. When Amazon's CEO announces 14,000 layoffs and explicitly states that AI will enable "fewer people doing some jobs"[5], he's revealing the strategic logic — show me the incentives and I'll show you the outcome. Companies aren't cutting jobs despite AI spending; they're cutting jobs because they know AI spending will pay off.
To be clear, the article treats the spending-revenue gap as evidence of irrationality. But infrastructure buildouts always precede revenue: railroads looked insane before they transformed commerce, electricity grids consumed massive capital before delivering returns, the internet required enormous infrastructure investment before creating trillion-dollar companies.
What's different now is companies are pulling the future forward. If we take this article at face value which I can appreciate is a BIG “if” then AI is already automating 25% of tasks and delivering 10-55% productivity gains[6] so they're not waiting for AI to replace jobs organically. They're cutting headcount now to fund the infrastructure that will make those cuts permanent.
More broadly, this is rational capital reallocation in a winner-take-all race. Companies that don't build AI infrastructure won't gradually decline, they'll lose competitive positioning entirely. That's why Meta is using off-balance-sheet financing for a $27B data center[7], why Oracle is borrowing $25B annually despite already carrying 450% debt-to-equity [8]. They're all-in because the alternative is obsolescence.
The real story isn't "spending causes cuts" it's that AI infrastructure commoditizes human expertise, the complement to compute infrastructure. Companies are trading labor costs for compute infrastructure because they've correctly identified compute as the new moat. The job cuts aren't the price of spending on AI; they're the business model shift that AI enables.
The article is right that we're not seeing mass AI job replacement yet. But the job cuts are happening in anticipation of replacement, not as an unfortunate side effect of spending. That's not desperation just business strategy.
-- 1.(Morgan Stanley: https://www.datacenterdynamics.com/en/news/morgan-stanley-hy...) 2. (Grand View Research: https://www.grandviewresearch.com/industry-analysis/generati...) 3. (CNBC: https://www.cnbc.com/2025/02/06/amazon-expects-to-spend-100-...) 4. (Cerno Capital: https://cernocapital.com/accounting-for-ai-financial-account...) 5. (CNBC: https://www.cnbc.com/2025/10/28/amazon-layoffs-corporate-wor...) 6. (PwC: https://www.pwc.com/gx/en/issues/artificial-intelligence/ai-...) 7. (Fortune: https://fortune.com/2025/10/31/metas-27-billion-bet-turns-ai...) 8. (The Register: https://www.theregister.com/2025/09/29/oracle_ai_debt/)
https://archive.is/9sdT5
This should shock no one.
Over the last 20 years of tech, the giants have taken the smartest folks out there and put golden handcuffs on them. You could hire up all the smart folks and put them to work, or leave them out there and have them compete with you. With the launch of cloud providers and (expensive) dynamic scaling the problem only got worse. Think about hiring in the pandemic. Every one at home, with a stimulus check and nothing to do. Rather than a flurry of new software you got mass hiring.
But now we are in a capital intensive hardware cycle. Where in order to compete you need to have lots of $$$$ as well as software know how. It does not matter that there are smart people out there, without hefty backing they wont get very far.
I suspect that software is about to enter its "punk" era. We have software for small businesses that will help with accounting, HR, customer service, and cloud providers are starting to see some interesting competition. Much like the old punk poster showing you 3 chords and telling you to start a band it is entirely possible to find three friends and start a business that makes 1-10 mill a year with little effort and lower costs. The moment you stop thinking "unicorn" and start thinking "sustainable" the economics shift radically.
Not to mention that there's already a small market for software products that work just like existing products that were once good, only without all the AI getting in your way at every turn. You're just not going to be making huge enterprise sales with such a product (in 2025).
Funny to me how many of the replies to this comment assume you are assuming you mean all these "punk" startups will be possible because of AI, when your actual comment says nothing of the sort.
Yeah with ChatGPT anyone with enough agency and programming chops can design tailored solutions for local businesses.
I don't think that ChatGPT coding is valuable but rather it's ability to tutor people and guide them towards idiomatic patterns.
The effort in those businesses was never coding, it was always connecting with and selling customers, understanding them, and supporting them as time went on. AI can help with some of that but generally the connections and network effects have outsized contributions in the smaller niches.
I think you're on to something, but interest rates probably have to come down a bit more for it to really have legs. We definitely need a response to enshittification though.
Why not both?
Given all those articles with AI generated images I bet that some artists lost their jobs
This does not reflect my reality. I have worked on half a dozen projects where we would have hired consultants to get the job done but have used coding agents to document, understand, migrate a project, create backend services, dashboards, and other things with budgets ranging from a few thousand euros to 200,000 euros. No consultants hired, nothing spent.
What job did the llm do that was worth 200k Euro to you? Be extremely specific w/ hours worked etc bc we all totally believe you!
In our case - agentic loop optimization of kernels. Works like a dream - after all, you have a perfect python spec (validation), the kernel is small (under 10 kloc), and the entire thing is testable. The trick is to have enough back test data so that things like cache behavior are taken into account. Ended up with different kernel versions for batch-back-test vs real-time work - which was interesting. 5 years ago would have hired about 10 ppl for the job - now 2.
AI processing hardware deprecates (and depreciates) at a much faster rate than conventional CPUs, as much as 50% per year. Consider the billions being dumped into compute at that rate of depreciation and explain to me:
1. How will tangible assets generate profit net of near term capex requirements and interest on debt?
2. Why wouldn't payroll shrink as a result of the increased AI capabilities emerging from the capex spend?
3. If AI lives up to the hype & given recent news that public backstops are being requested, why shouldn't the US quasi-nationalize cash strapped players and distribute equity to every American?
4. As NVDA and AAPL local models and local compute eat into utility and base automation business, how do edge players maintain profitability without pricing capabilities well beyond the affordability of SMBs and individuals?
I can't read the article but that won't stop me from commenting..
This year alone something like 400B was spent on investing in chips, datacenters, electricity buildouts. That's 400B that could have otherwise been invested in people.
While i don't doubt that people will find a few solid business cases for LLMs, i am on team-bubble. I don't think this investment will add 400B worth of value and I very much doubt that this 400B is any good for future growth or long-term aspirations of AGI. Investing 400B into people and (tech) manufacturing would be a solid long-term bet with benefits.
Bah, all of that is still employing people. Companies have completed almost $1T of stock buybacks this year. Since 2018, with the exception of 2020, that number has been between $800B and $1T every single year. And that number has been more than $500B since the 2008 recession. AI spend is bad but it’s not even close to how much stock buybacks have ruined the employee wages and employment prospects.
You think the companies are just going to give you the money if they don't do buybacks?
Imagine if 10% of that money had been spent just training young people, or on a new cohort of PhDs. Imagine what benefits we would have reaped in a decade's time.
Absolute garbage site. After all the popups it redirects to some general page. No sign of OPs arcticle.
This is absolutely crucial to understand.
Because in any country with poor worker protections, the outcome is layoffs regardless.
AI succeeds? Layoffs of unneeded roles.
AI fails? Layoffs to cut expenditure to make up for the written-off expenditure.
In the UK, if AI makes a well-established employee redundant, the employee is entitled to redundancy pay. And if the company fucks up and overspends on chasing a ridiculous Macguffin they can't just fire people without making them formally redundant.
The damage that is going to be done in the USA if the AI bubble bursts is going to be generational.
Many are predicting the AI bubble will burst soon. Then we will see massive layoffs.
wait until the GPUs and data centers start getting written off for being obsolete in a couple years when we still have nothin but fancy auto complete.
interesting questions, how will this unroll
right now I see even old GPUs like V100 are still popular. Maybe the old GPUs will shift to the countries with cheap electricity?
Probably could be repurposed for something else though?
You can already buy cheap but powerful old servers. But newer hardware tends to be more power efficient. So, depending on time horizon you consider, it might be cheaper to buy newer hardware.
Assuming that GPUs power efficiency will increase, the same will be true about them.
what else could possibly use that much compute? especially somewhat specialized compute, not suited for general purpose compute?
Imagine if you spent those years building something else.
Yes, like renewable energy infrastructure (which China does, and would be highly useful anyway in case generative AI does live up to its promise).
Even if generative AI lives up to its hype, with current US administration there's no way America is going to lead the race for long. There's just not enough energy available, when those in power oppose developing many of the energy projects that make most economical sense.