Earlier this year, I was the tech lead in a project where 75% of the people were short term contractors. I was one of three company employees who would actually code. The rest of them were managers or product types. I was also on call roughly one week per month.
Management wasn't keen on spending money on medium or long term projects. Instead, they would redirect resources to short term, high single sale impact, or performance critical stuff, thus no good features were added for a while and people got severely burnt.
I suspect that the misalignment in resource allocation with actual requirements, is a larger problem than overstaffing, and all derives from wrong management incentives.
Management wasn't keen on spending money on medium or long term projects. Instead, they would redirect resources to short term, high single sale impact, or performance critical stuff, thus no good features were added for a while and people got severely burnt.
I suspect that the misalignment in resource allocation with actual requirements, is a larger problem than overstaffing, and all derives from wrong management incentives.