AI is set to reset the Software Industry

 It's no surprise that AI is disruptive. One area where it is definitely causing waves is the software industry.  Historically developing software was "linear".  If it was a big project then you needed more people to deliver the code. Sadly with all things human - the more people you add to the mix the less productive they became.  Choice of software language could yield some gains  eg the Erlang/Elixir programming language can deliver equivalent functionality to Java with approximately 1/10th of the lines of code. 

The holy gain of software has always been abstraction - allowing more and more detail to be hidden.  I always say "abstraction is evil" - the further you get away from understanding how things work, the more likely you are to have catastrophic failure events.  eg AWS outages taking out half the internet.

For software consultancy businesses - to double revenues, it usually means doubling the number of software developers.

Growth was linear: more people → more hours → more revenue

In more recent years, there has been a shift of offshoring to lower cost economies like India in order to control the scaling costs of developing software.  This usually creates other problems eg cultural norms are different and software developer output (quality) varies by individual.

AI is already changing things.  The role of the the software developer in AI agentic coding is more like the conductor of an orchestra.  Not much "writing code" but more co-ordinating AI agents to write the code. The conductor needs to be skilled and understand software.  

Long term this will create a dilemma as these experts retire or die. The fresh blood will not get the low level jobs to cut their teeth and gain the experience in order to be able to be the conductor at a future date....

AI is another abstraction. Doubtless it will change things but there are hidden dangers lurking in the abstraction ocean.

Returning to now. The economics of software developing is shifting. Margins compress, differentiation erodes, and scaling based on headcount is no longer a  constraint.

So if the cost of developing software falls (assuming AI continues to be priced below the real cost of production) then it becomes viable to develop software for just one customer.  Or to experiment with hundreds of different product variants to see what works best. The gain is now one of creativity to differentiate and not effort to deliver.

There's a risk that we are going to experience another tsumani of apps or software.  

Or potentially A/B testing could ensure that the best software bubbles to the surface.

So returning to countries like India. I expect significant challenges for the outsourcing industries.  AI quality is probably higher than  50% of the world's programmers and with current pricing it undercut low cost economies.  We still need those expert programmers - at least for now. 


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