Artificial intelligence (AI) is rapidly advancing and transforming industries around the world. While there are hopes for increased productivity and efficiency, there are growing concerns about the impact on employment. Companies like United Parcel Service (UPS) and BlackRock have recently undergone significant layoffs, and AI is helping to make those cuts, according to Bloomberg. However, many companies are hesitant to directly link technology and workforce reductions, and instead focus on the positive aspects of AI implementation.
UPS, the prominent logistics company, recently experienced the largest layoff in its 116-year history. CEO Carol Tomé acknowledged that new technologies, including AI, are playing a role in those layoffs. For example, machine learning allows salespeople to write proposals without relying on guidance from pricing experts. Despite this, a UPS spokesperson made it clear that AI will not replace workers, and the company did not explicitly link AI to permanent layoffs in its earnings call.
Similarly, asset management firm BlackRock announced layoffs of around 600 employees. In a memo to staff, CEO Larry Fink and President Rob Capito said the cuts are due to changes in the industry and the transformative potential of new technologies, including AI. However, he did not explicitly state that AI was the reason for the layoffs. The memo also said the company plans to expand certain areas of its business and add employees by the end of the year.
The true impact of AI on attrition is difficult to estimate. Since May, U.S. companies have been hiring people with AI expertise to free up resources to hire people with AI expertise, or to replace certain jobs with AI technology, according to outplacement firm Challenger, Gray & Christmas. As a result, the company announced more than 4,600 job cuts. However, this estimate is believed to underestimate the actual number of unemployed people. Senior Vice President Andrew Challenger suggests that many companies want to keep these cuts under the radar because publicizing them often invites negative media attention.
IBM made headlines after CEO Arvind Krishna said the company plans to pause hiring for positions that could be replaced by AI. However, an IBM spokesperson said the company does not have a hiring freeze and intends to maintain staffing levels this year. This example highlights how companies may choose to reduce their workforce covertly without making an explicit announcement.
According to Challenger’s analysis, most of the AI-related layoffs are occurring in the technology industry. Companies like Chegg and Stack Overflow, which provide online support, cut staff after their businesses were directly impacted by his AI products. Meanwhile, companies like Dropbox shifted their focus to AI, leading to layoffs to make room for new employees with AI skillsets.
Several companies, including Klarna Inc. and Duolingo Inc., are indirectly linking AI to their job reduction strategies. Klarna CEO Sebastian Siemiatkowski said tools such as OpenAI’s ChatGPT reduce the time needed for certain tasks, reducing the need for additional hires. Duolingo has chosen not to renew contracts with about 10% of its contractors, citing a reduced need for their services due in part to AI. However, the companies clarified that these job cuts are not a direct replacement for AI, as full-time employees and contractors still use technology in their work.
Although some executives, such as Elon Musk, have warned about the potential for job losses due to AI, many companies prefer to emphasize the positive aspects of AI implementation. They often emphasize the concept of augmentation, which aims to make employees more effective and efficient with the help of AI. But in reality, AI allows one person to do the work of multiple people, leading to a reduction in the workforce in certain scenarios.
AI is undoubtedly transforming the workforce, and companies are striking a delicate balance between leveraging technology to improve productivity and managing potential headcount reductions associated with AI implementation. As AI continues to evolve, it is important for companies to consider the ethical and social implications of these technological advances while ensuring a smooth transition for employees to the future of work.
