3. IT vs Technology vs AI
This note is written in response to an Economist podcast that highlights the impact of AI in the tech industry. It's a fascinating observation of the macro trends that are taking place in the industry. Given my last two posts on the macro environment over the past two to three years, I thought I would put forward my POV and my own observations and hypotheses.
The economist podcast to note. https://www.economist.com/podcasts/2025/07/10/the-global-asylum-system-is-broken-this-is-how-to-fix-it. From 10:26 min
For those that did not listen to it here are the top 3 quotes from the discussion.
Microsoft just last week announced a layoff of 6,000 people that was on top of the 2,000 or 3,000 I think they announced earlier this year
CEO of Salesforce, earlier this year, he said that Salesforce is not gonna hire any quote unquote net new engineers for this year
So that has been a continuing trend where companies are cutting back on the rank and file developers, even as they’re investing a lot in AI
Its an interesting observation as the economist recognises that these lay offs are still an overrun from the impact of Covid.
during COVID, a lot of companies really ramped up their hiring to new highs and some would say they over hired
In 2022, the global economy experienced a significant stock market decline, which was a bear market that included the decline of several stock market indices worldwide between January and October 2022. The decline was due to the highest inflation readings as part of the 2021-2023 inflation surge and the resulting increases in interest rates, combined with fears of a global recession due to a decline in economic indicators and an inverted yield curve. Supply chain disruptions due to the 2022 Russian invasion of Ukraine and uncertainty over the long-term effects of the COVID-19 pandemic on the economy further exacerbated the situation.
In October 2022, I saw the types of companies I work with completely stop investing in technology development. All new spending and budgets were put on hold.
Then, on November 30, 2022, a little-known company called OpenAI launched their consumer product, ChatGPT. The uncertainty of the market, the overzealous hiring, and suddenly the AI hypegeist put the brakes on everything.
Until this point companies were focused on digital transformation, product transformation and really investing to change how they built and sold products. Reference my 2 previous posts 1. Digital transformation a technology transformation or an IT refresh? and 2. Decoupling your technology from your IT.
Suddenly with no spare cash to spend, interest rates soaring the focus switched to "Productivity". Technology investments dried up, all spare cash was going into IT projects focused on productivity.
And this is where we find ourselves. A market that is still cutting its cloth after an overspend in Covid. A focus on productivity with a mandate in every company for an AI strategy.
Customers needs have not disappeared and companies still need to transform. But the route to transformation is different now. The expectation is that AI systems will be able to deliver the same results as humans, faster and cheaper, Time to become a plumber. But 5 minutes on LinkedIn and its impossible to know what is true. The industry anecdotally acknowledges a 10 to 30% improvement in software development productivity.
There have been some numbers floated around between 10 to 30% improvement in productivity, depending on how you measure it.
- Economist Podcast
Yet, there is compelling research that disputes these claims.
AI coding tools make developers slower but they think they're faster, study finds - Predicted a 24% boost, but clocked a 19% drag
- The Register
while 75% of developers report feeling more productive with AI tools, their actual software delivery performance is declining.
- The State of DevOps
But then you read stories of people VibeCoding complete products in 6-months!!!
6-month-old, solo-owned vibe coder Base44 sells to Wix for $80M cash
- TechCrunch
If the VibeCoding dream is true, then its not a case that AI Coding will make your release process slower, we just need to reinvent how we write software to capitalise on this new capability.
Now those cost sensitive, complex IT Apps and projects are perfect candidates for quick, Vibe Coded solutions. Maybe the greatest transformation to come is in simplifying the boring stuff, the IT mess.