Bharat Express

AI is causing more job cuts than companies are willing to acknowledge

According to one tracker, US companies have reported 4,600 job reductions since May linked to artificial intelligence.

United Parcel Service Inc.’s CEO Carol Tomé recently acknowledged that the company’s largest layoffs in its 116-year history were partially facilitated by advancements in technology, including artificial intelligence (AI). She cited an example where machine learning enables salespeople to create proposals independently, without relying on pricing experts for guidance.

UPS is just one of many companies grappling with the dual challenge of demonstrating AI’s ability to enhance productivity while avoiding negative associations with job displacement. Despite assertions from a UPS spokesperson that AI isn’t directly replacing workers, the correlation between AI implementation and permanent layoffs remains a topic of concern.

BlackRock Inc. also recently announced layoffs, attributing them to industry shifts and the transformative impact of new technologies, without explicitly linking them to AI. The asset manager aims to expand certain business areas, suggesting a nuanced approach to workforce management amidst technological advancements.

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Despite these instances, accurately quantifying AI-related job losses remains challenging. According to Challenger, Gray & Christmas Inc., US companies have announced over 4,600 job cuts since May, either to allocate resources for hiring AI-skilled individuals or due to task automation. However, this figure likely underrepresents the true extent of AI’s impact on employment.

While some companies, like IBM, have openly discussed the potential of AI to replace certain roles, others have opted for a more discreet approach to workforce reduction. Many anticipate a future where organizations operate with leaner staff, achieved through slowed hiring or internal restructuring.

Most AI-related job cuts have been observed in the tech industry, where companies like Chegg and Stack Overflow trimmed staff due to direct competition from AI products. Conversely, firms like Dropbox have pivoted towards AI, necessitating workforce realignment to accommodate new skill requirements.

Several companies, including Klarna Inc. and Duolingo Inc., have adjusted their hiring practices in response to AI advancements. Klarna froze hiring, acknowledging the efficiency gains brought by AI tools, while Duolingo opted not to renew contracts, citing the reduced need for certain roles attributable to AI.

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This shift in employment dynamics isn’t confined to specific sectors. Fortune 500 chief human resources officers anticipate AI-driven job displacement within the next three years, emphasizing the inevitability of change in the labor market.

Insurer Allstate Corp.’s chief human resources officer Bob Toohey acknowledges the transformative potential of AI, foreseeing changes in training methodologies and efficiency gains within his department. While concerns persist regarding job displacement, many companies emphasize AI’s role in augmenting human capabilities rather than outright replacement.

Ultimately, as AI continues to reshape industries and job roles, the focus remains on optimizing workforce efficiency and productivity, even as companies navigate the complex terrain of technological disruption and its impact on employment.