CEOs get closer to finally saying it — AI will wipe out more jobs than they can count
Tech workers are finding out what it's like to be replaced by AI.
IBM said on Monday that it would pause hiring on roles that it thought AI could do instead.
It's the boldest statement yet from tech firms turning to AI to help them get efficient.
What's it like to be told that you're not just out of a job, but that your bosses think your job can be done by AI? Tech workers are about to find out.
On Monday, per a report by Bloomberg, it emerged that IBM is preparing to pause hiring on roles that it believed could be better performed by AI. That leaves 7,800 jobs at the tech giant vulnerable to being eradicated for good.
Since the release of ChatGPT, tech CEOs have been racing to decide if the generative AI technology underlying the buzzy chatbot is more than a gimmick and can deliver on its promises to change the very fundamental ways in which their businesses operate.
Earnings calls from tech firms such as Meta, Alphabet, and Microsoft have been littered with references to AI, with the verdict on the technology from leaders becoming more apparent than ever: AI can and will make jobs extinct.
The timing of all of this AI chatter is no coincidence. Tough economic conditions have coincided with generative AI's arrival, allowing companies to make layoffs that help them get efficient.
Some business leaders have been adamant that AI will create new jobs. Microsoft's CEO Satya Nadella has made this his stance, while acknowledging that companies like his will have to learn to do "more with less".
AI doesn't necessarily have to take existing jobs to do this, as a recent Morgan Stanley note suggested. What AI can do is slow future growth in headcount – something that has been dismissed as a vanity metric – while enhancing the productivity of a shrinking workforce.
Jobs lost through the layoffs of recent months may never return either if AI proves successful here. In tech, over 350,000 people have lost jobs since last year, according to online tracker Layoffs.fyi.
Here are five tech firms that have acted first with a big bet on AI.
As a longtime incumbent, IBM has weathered many changing trends in the tech sector in its more than 110-year history, often getting ahead of the curve to stay on top of fierce competition. Its current CEO has no plans to change that.
In an interview with Bloomberg on Monday, IBM boss Arvind Krishna said the company would be pausing hiring for roles that it deemed could instead be done by AI. This could involve roles in back-office areas such as HR, with estimates that 7,800 jobs could be lost in total.
The plans to replace workers with AI from the company, which announced layoffs earlier this year, are the starkest and most direct from a tech firm yet.
Amazon has been among the most bruised tech firms since the downturn of 2022 was kickstarted. Though the company has already announced two rounds of layoffs that will affect 27,000 workers, it seems it's ready to bet big on AI too to plug the gaps.
In an earnings call last week, Amazon's chief financial officer Brian Olsavsky said that the company is "adding more dollars for large language models and generative AI" while simultaneously "spending less year-over-year" on core fulfillment and transportation.
This will free up resources for the company's giant profit machine, Amazon Web Services. "So we're creating some space in our fulfillment and transportation number that's being repurposed over to AWS," he said.
Dropbox CEO Drew Houston announced on April 27 that the company would be laying off around 16% of its workforce – or 500 workers. With growth slowing, Houston told employees in a letter that now was the time to acknowledge that "the AI era of computing has finally arrived."
Although he didn't explicitly say AI would replace workers, the layoffs coincide with Dropbox's fresh focus on the technology. He told employees that AI has "captured the world's collective imagination" but has "also alerted our competitors to many of the same opportunities."
As the coiner of the term "year of efficiency," Mark Zuckerberg has perhaps been the most explicit of all tech CEOs about the need to save every cent possible. When announcing layoffs, his language reiterated the need to be "flatter" and "leaner."
So it should be no surprise that Meta is bringing AI to its workforce in a big way. In March, Zuckerberg said his "single largest investment is in advancing AI" while building it into every one of its products. At the same time, he said 5,000 open roles not yet hired for would be closed.
CEOs like Zuckerberg will have no doubt considered what kind of cost advantages and other efficiencies AI can offer over human workers.
Zuckerberg said back in March that focusing on the long-term means investing in tools that put the company ahead for years to come, even if that means finding ways to "automate workloads over time, or identifying obsolete processes that we can phase out."
Microsoft already has a track record of replacing workers with AI. In 2020, the company fired some workers overseeing news homepages it managed, replacing them with robots.
Now, the company is fueling the development of OpenAI's large language model, having announced a multi-billion dollar investment. A clear sign that its bet is paying off came on an earnings call last week.
Microsoft chief financial officer Amy Hood told investors that its revenue for the three months to March, which topped $52.9 billion, beat expectations thanks to "focused execution" from sales teams and partners.
Bloomberg reported in February that Microsoft's salespeople would use AI from OpenAI in a key customer-relationship app to help with time-consuming tasks. Microsoft's appetite for hiring people to teams like this in the future is likely to be diminished if AI turns its salespeople into super-workers.
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