Ten years ago, we watched Square pay more than $1 million per head to acqui-hire Yik Yak’s engineers — not for product, not for revenue, just for the people. That was the peak of the “scarcity premium” era, when coders were treated like beachfront real estate.
Fast forward to 2025: more than 300,000 tech jobs have disappeared in the past 18 months across the U.S. and Europe. Developers now flood freelance platforms at rates last seen a decade ago. AI tools like GitHub Copilot and Claude are slashing developer effort by half. And world-class engineering talent in places like Romania or Morocco now work at a fraction of Western European salaries — in many cases, without any real trade-off in quality.
This is no temporary fluctuation. We are entering an era of technology deflation — where the cost, time, and complexity of building software will continue to decline year over year. What costs $1 million to build today may cost half as much in 24 months — and take half the time. It’s not just about access to cheaper labor or smarter tools. It’s about a systemic shift: infrastructure is standardized, open-source components are abundant, and AI agents are turning developers into force multipliers.
For private equity firms and their portfolio companies, this shift carries major implications.
It means the “build vs. buy” decision is no longer static. Building now might be rational — but waiting six months could be even more cost-effective, depending on the scope. At the same time, small, strategic tech investments made today may compound in value if integrated correctly, because the same capital buys more capability each year. It’s a strategic tension: delay for efficiency, or act now for differentiation.
But here's the catch: in a deflationary environment, the constraint is no longer capital. It’s integration discipline more than ever. Execution. Roadmaps. Cultural alignment. You don’t need to outspend — you need to out-integrate.
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