During this Labor Day holiday, the tech giant IBM announced that it would temporarily halt recruitment for positions that can be replaced by AI, resulting in the permanent elimination of around 7,800 jobs. While the news of “being replaced by AI” is not new, as reported by the foreign media outlet Ars Technica, IBM has directly put this issue on the table. In other words, IBM has fired the first shot among tech giants in using AI to replace human positions.
IBM is not the only one taking this step. Meta, Microsoft, Amazon, and other giants have previously halted job recruitments, expressing their intention to follow the footsteps of AI. Even in this wave of generative AI, the “first disrupted company” has emerged. After an internet company listed on the stock market admitted to being impacted by ChatGPT, its stock price instantly dropped by 50%. Some netizens lamented that the “iPhone moment” in the AI industry has indeed arrived, and countless Blackberry and Nokia-like companies will fall.
By replacing 7,800 workers with AI, an annual cost saving of $2 billion is projected. According to IBM CEO Arvind Krishna, this slowing down of recruitment will initially target “non-customer-facing” positions, mainly focusing on back-office functions like human resources. Currently, these positions involve a total of 26,000 employees, and Krishna claims that 30% of them will be easily replaced by AI and automation within the next five years. This translates to 7,800 people being laid off by AI.
Who specifically will be affected? Krishna mentioned that it would be positions that involve mundane tasks such as providing employment verification letters or transferring employees between departments. Therefore, HR roles that handle “higher-order tasks” such as evaluating workforce composition and employee productivity (performance) are unlikely to be affected in the next decade. Similarly, software development and customer-facing positions will also remain unaffected and continue to be recruited.
Interestingly, Krishna stated that it is now easier to recruit talent compared to a year ago. Currently, IBM has a total of 260,000 employees worldwide and a total market value of $113.6 billion. At the beginning of the year, IBM announced its plan to cut approximately 1.5% of its global workforce, which amounts to 3,900 people. However, in the first quarter of this year, they actually hired around 7,000 new employees.
The latest financial report shows that IBM achieved a first-quarter revenue of $14.252 billion, a 0.4% year-on-year increase, and a net profit of $927 million, compared to $733 million in the same period last year, surpassing expectations. IBM attributes this to “expense management,” including the aforementioned layoff plan announced earlier this year.
Meanwhile, the CFO stated that new cost-saving and efficiency measures are expected to save the company $2 billion annually (approximately 13.8 billion RMB) by the end of 2024, which includes the “7,800 worker layoff plan.”