Bureaucracy creates work so long as it owns the production function. In software that's typically through system upgrades, new API's, etc. The system will grow in internal complexity to its carrying capacity. You'd need someone who understands how to replace parts to prune, but they don't really have the incentive. This effect is reduced where software is less essential to the product, but any software-heavy product (particularly with a moat) will be more susceptible.

Companies try to manage it via CI/CD, outsourcing and internal competition, but no, companies can't magically reduce staff. They can, however, inject fear, which is good for reducing overt bureaucratic games, but actually increases covert bureaucracy and reduces knowledge-sharing, making the problem worse.

Only when incentives are aligned - when developers have an (equity) stake in growing the company - can the culture be open and efficient.

Every time the cost of software development has gone down due to higher level tools we've gotten higher software budgets, more software developers, and more released software. Demand appears to be effectively infinite.

>what is demand elasticity for software?

NP-hard