Don't forget the race to the bottom of the payroll scale. Where you had IT majors making good money before, now you have tech school grads and drop outs making min wage. You get less devoted employees and less dedicated professionals. The joy of lowest bidding off-shore contractors adds to the mess.

Why hire one quality developer when you can get several cheapies. The CEO has to make his bonus.

The managers are paid based on head-count, not code quality metrics.