An alternative explanation for this “over-hiring” is that many companies’ operating expenses have grown substantially because of AI spending. Companies can either eat the additional expense, hope AI adoption offsets it, or cut costs.

For most software companies, operating expenses are mostly wages. So, cutting costs means reducing headcount, which is likely especially true in lower-wage regions. If an engineer costs $4K/month, adding $1K/month in token costs increases employment cost by 25%. If an engineer costs $2K/month, the same $1K raises costs by only 5%.

So, I'd argue that everyone should be worried at least to some degree until the industry finds a new equilibrium.