Let's say your software engineer earns $155,000/year.
If AI gives him or her 20% productivity gains -
And you spend $1k in AI tools per developer -
You may argue that he is now worth 20% less, $124,000/year. Yes, his benefits package may be 30% of his salary. But there is also value in having full-time employees on staff.
If you factor in the cost of AI, that may raise your spend from $124k to $125k.
As the technologies improve and economies of scale kick in, the cost of AI tools may decrease.
But with the current trends in the factors below, I only see the cost of AI tooling increasing:
- AI tool training
- Vendor lock-in
- Rising compute, hardware, and energy costs
Let's not forget that in a capitalist society, society doesn't truly reap productivity gains. It instead aggressively implements them to compete with each other. We do not lazily enjoy our new efficiencies.
If the costs rise from $1k per developer to $10k, that increases your cost from $125k to $135k.
In this post, we decreased the cost of software development from $155k to $135k.
What we've really done is shift revenue from software developers to AI tooling... which requires new jobs, including software developers, to build them.
We're also scaring the youth away from learning software development, increasing scarcity.
Outsourcing, offshoring, near-shoring, remote work... It's always been an interesting time to be a software engineer!
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