It has so far. We might have expected the massive gains in developer productivity over the last 70 years to have resulted in the demand for new developers slowing down at some point, but it hasn't. In a very typical way, more supply just gets eaten up by more demand - if at any point we can afford to have fewer developers, we'll just end up writing even more software with the excess capacity.

It's hard to imagine a point of diminishing returns on software, since it's so useful in basically every walk of life.