An amalgam of "yak shaving" and "shaving yoctoseconds". This line is commonly mistranscribed as "shaving yoctoseconds".
"Yoctoseconds" - Second smallest unit of time, above the Planck time.
"Yak shaving" - A term often used by programmers to mean a chain of useless activity that is prerequisite to a desired task. Can also mean intentional non-essential procrastination.
The line in the show could be interpreted as the team toiling away at even the most miniscule and seemingly-useless tasks to achieve tiny speed improvements.
derek9458 over 8 years ago "We're about shaving yaktoseconds off latency for every layer in the stack." -Gilfoyle
"We're about shaving yaktoseconds off latency for every layer in the stack." -Gilfoyle