I don't think the only side effect of this type of inefficiency is increased costs. I would love to see some scientific research on it, but my hunch from working in overstaffed companies suggests that if you don't let people self-actualize through taking responsibilities and putting their ego into the problems they solve, they start self-actualizing in office politics, creating a toxic environment and ultimately making the company incapable of smart decisions. Modern work culture does a pretty good job hiding it behind a thick layer of company values, virtue signalling and multiple-page integrity policies though.

Besides, you can actually mitigate the cock-up risks without going crazy on your head count: have focus groups, beta testers, roll out updates gradually, have a clear separation of layers and a mechanism to roll back a breaking change, etc.