Still sucks if you're on the receiving end, though.
The fact that new loans are not cheap thanks to high interest rates is the more threatening factor.
Hiring in 2021 and 2022 was really out of control at many companies. There was a feeling that companies had to keep even the underperforming engineers earning $200K TC because it was so hard to hire replacements. That has changed, so it makes sense to start cutting the employees who were hired into roles they couldn’t handle.
My company had layoffs late last year. It has only made things more efficient. We lost some good people, but there were too many people assigned to every project. Half of our time was spent dividing up work and coordinating across teams for things that should have been handled by a single team. There was just too much hiring in 2021 when money was cheap.
So yes, they're just going to put some things in the backlog again, it's totally normal.
This doesn't really seem to be a rather narrow situation. The tech companies were hiring like crazy for the past two years. Quick googling shows that DigitalOcean increased headcount by 31% last year.
And contrary to the popular opinion here, for me this does sound like the right move for the time. The logic, on the growing market, was "let's hire people now for 200k TC and give 50k raise after a year, because year later they'll be asking for 500k TC upfront". Now it's clear the salaries won't be going to the moon in the nearest future, so it makes sense to cut the fat.