Late projects is just a theme used to convey the core ideas, as it is a common thinking/pitfall, but the reasoning of why late projects because later equally apply to initial software estimates.

The core idea is that software cannot be simple divided into "man months". That is, saying this software will take 80 manhours, and therefore 10 engineers can do it in 10 days, and a 80 engineers could do it in a day. The reasoning being 1. Software tasks are complex and not easily partitioned, and 2. Software projects require a lot of communication and the more people you have the communication channels needed greatly increase. Essentially what happens is when you have too many people, more time is spent communicating what needs to be done and whose going to do it than doing the actual work.

In any case, efficiency is not really relevant because what happens in layoffs typically, is that entire teams/projects/or initiatives are dismantled. So its not about serving the same projects with less people, but reprioritizing whats essential.