I tend to agree with you, considering IRCC just cut about 3,300 jobs. Also explains why the average processing time keeps increasing.
My own small theory on this is that the number of applications may be increasing. Think back: August 2021 restrictions on covid travel started being lifted (if I remember correctly), more and more people were arriving, there was pent up demand / people with immigration files that had been approved and didn't want to come until things had been regularized.
Now it's 3 1/2 years after that, those who started arriving in summer 2021 have accumulated enough days, I think the peak of new PR arrivals and returnees (there were also a fair number of PRs who'd been stuck abroad who returned, they too now maybe have enough days) was perhaps late 2022/1H2023. Plus some temporary workers during that process of 'converting' temporary residents who became PRs and now have enough days.
To me that corresponds pretty cleanly with the slow but steady rise in processing times.
Layoffs? Maybe. But I think they'll be cutting down more in those program areas that work on the types of immigration being cut - most of all, student visas and some temporary workers.
If I'm right, I'd expect the processing times to increase slowly (not 1-for-1 increases) until about the end of this year, and stabilize/decline. I don't think that means dramatic increases in processing times (assuming no other changes).
Yes, this is a guess. A somewhat informed guess, but a guess.