International Business Machines Corporation (IBM) is preparing for a significant shift in its workforce, as CEO Arvind Krishna revealed in an interview with Bloomberg News. Krishna estimates that approximately 7,800 positions within the company may be replaced by Artificial Intelligence (AI) technology in the coming years, prompting IBM to suspend or slow down hiring for specific roles.
The Impact On Back-Office Functions
The majority of the affected positions are expected to be in back-office functions such as human resources. The CEO predicts that 30% of non-customer-facing roles could be replaced by AI and automation within the next five years. In light of these changes, the company plans to adjust its hiring practices, including potentially not replacing roles vacated through attrition.
This announcement arrives amidst growing global interest in AI, spurred by the launch of OpenAI’s viral chatbot, ChatGPT, in November last year. As AI technology advances at an unprecedented pace, businesses like IBM are reevaluating their workforce structures to adapt to the evolving technological landscape. The increasing capabilities of AI in automating customer service, generating text, and coding have raised concerns about their potential to disrupt the labor market, prompting companies to proactively adjust their strategies.
IBM’s Automation Strategy
Among the most comprehensive strategies of its kind, IBM’s plan focuses on automating routine tasks like issuing employment verification letters and managing employee transfers between departments. Krishna envisions these functions becoming fully automated, while other HR responsibilities, such as evaluating workforce composition and productivity, may remain untouched for at least another decade.
In a recent tweet, Arvind Krishna highlighted the potential of artificial intelligence to reshape the economy and society. “People working together with trusted AI will have a transformative effect on our economy and society,” Krishna wrote, emphasizing IBM’s commitment to embracing AI-driven tools for fostering innovation and collaboration.
IBM, which boasts a workforce of around 260,000 employees, remains committed to hiring for software development and customer-facing positions. Krishna has observed that recruiting talent is now easier than it was a year ago. While the company unveiled plans to cut jobs earlier this year, potentially impacting 5,000 employees once finalized, Krishna highlighted that IBM has grown its workforce overall, adding approximately 7,000 individuals in the first quarter.
A Shift In Focus And Financial Outlook
Since assuming the role of CEO in 2020, Krishna has steered the century-old company towards a focus on software and services, such as hybrid cloud technology reported Bloomberg News. In line with this vision, he has divested from slower-growing businesses like managed infrastructure unit Kyndryl Inc. and a segment of the Watson Health division. Presently, IBM is exploring the possibility of selling its weather unit.
Armonk, New York-based IBM recently exceeded profit expectations for its latest quarter, attributing the success in part to expense management, including the job cuts announced earlier. On the day of the earnings report, Chief Financial Officer James Kavanaugh shared that new productivity and efficiency initiatives are anticipated to generate $2 billion in annual savings by 2024.
Arvind Krishna had previously held the belief that the US would be able to avoid a recession until late 2022. However, his outlook has shifted, and he now foresees the potential for a “shallow and short” recession occurring near the end of this year. Despite the mounting macroeconomic concerns, IBM’s solid software portfolio, which includes the acquired Red Hat division, is expected to help the company maintain steady growth, as noted by Bloomberg Intelligence analyst Anurag Rana in his recent analysis.
As businesses like IBM adapt to the rapidly evolving technological landscape, it becomes increasingly important for industries and individuals to stay abreast of these changes and acquire the skills necessary to thrive in the future job market. While the transition might be challenging for some, companies taking proactive measures to adjust their workforce strategies and optimize their operations serve as a testament to the potential of AI and automation to reshape our world.