I see this as a trend now, lots of CEOs and investors seeking reductions in staffing amid popularity in doing so in other tech companies. I imagine there are some VC memos being passed around.
Don’t do this.
Here are your problems and solutions:
Microservices and kubernetes culture - your software is roughly 10x as inefficient to run and 10x as inefficient to deploy as equivalent “monolithic” horizontally-scaled codebases performing the same tasks circa 2000-2010. This directly impacts cloud costs in a 1:1 fashion. Use of more efficient programming languages is not a stopgap as they are less efficient to develop in. Microservices were invented by programmers as a way to avoid arguments with other teams, but they are one of the absolute worst ways to construct service based software.
You spend 50% too much time in status/process related meetings and need to especially eliminate Scrum for the outsized effects it has on morale (strongly negative), planning, and ironically… agility. This creates a power dynamic where engineering feels like an abused child rather than a trusted and responsible creator of value. You have optimized for the short term by eliminating ability to plan for the long, and falsely look at engineering resources as interchangeable. Pressured by arbitrary process structure, you research poorly and make nearly all decisions too quickly.
If you are pre-acquired startup, you should have no more than 2 layers of engineering management. Additional layers will increase micro-management, damage morale, and create bureaucracy and cost.
You should eliminate your project management organization/roles and require first-line managers to perform project management.
You should move product-decision making functions into CTO role, the product is the most important thing your company has and this is often delegated to people with too little responsibility, experience, or oversight. They frequently engage in nitpicking small details and lack long term vision, or their long-term vision is incredibly arbitrary and poorly validated.
For startups, your “CTO” and “VP of Engineering” role should probably be the same role at least until you have 150 people.
Honestly, you likely do have staff that created your present problem. It has been very popular for people to advocate for scrum, microservices, and so on, and this is a cultural problem brought on by harmful events like “DevOps Days”, social media, and such. Software should be tight and inefficient, and constant outages and endless crunch time is not normal. Unfortunately, many of the people training today’s work force do not know better and merely repeat what is popular.
However, if you cut staff, it is like de-crewing a sailing ship. You will be adrift and not be able to control your destiny in terms of changes or features. You want a more efficient ship, but must optimize your ship while sailing it, rather than making half the crew walk the plank and encouraging mutiny from the rest. Further, it is important to realize the environments that enabled the current bloat and inefficiency happened under your watch or from people like yourself. While it may seem important to take action, it is important to take the right action. Do not throw all of your resources away.
Simplify your infrastructure - drastically - first. Cloud costs and outages go down, development speed goes up. Make that a constant design point. Treat software development as you would hardware development, or even home construction - rather than making up processes that do not exist elsewhere. Morale goes up and you get 2x of your labor costs back for FREE.
Now, yes, you have extra staff, because after also cleaning up your architecture and internals, you are maybe 10x or 20x more efficient, no longer caught in some office techno hellscape of comical proportions - so arbitrary that no one could see how much needless code and process there was.
Once free, if you have extra resources, think about all of the great research projects and products and ideas you could create, if you were unimpaired by your infrastructure and project management choices. Then use those resources (people!) to do great things - to the astonishment of all of your competitors, still cargo-culting what every other company does.
I think this is why the startup market is really drying up - everybody is running startups like they were those comical giant companies of old where it took ages to get anything done, but assuming they are “agile” and “fast” and “smart” by default because they are startups. Instead, the opposite is true - these days it is more likely for the larger company to have greater intelligence. We have just replaced “nine months to ask for a VM at some bank” (old large company IT story) with a Gordian knot of meaningless architecture, constant outages, and endless status meetings where nothing happens (startups everywhere).
I think you know how to be better, and cutting staff is not fixing the problem, it is setting your ship adrift while the problem remains everywhere, with less people to work on it. This makes everything worse.
Everyone needs to take more responsibility, and see things for what they really are, and what religions we have been swept up in that were lies.