International Business Machines Corp. expects to pause hiring for roles as roughly 7,800 jobs could be replaced by artificial intelligence (AI) in the coming years, CEO Arvind Krishna told Bloomberg News on Monday.
Hiring specifically in back-office functions such as human resources will be suspended or slowed, Krishna said, adding that 30 percent of non-customer-facing roles could be replaced by AI and automation in five years.
His comment comes at a time when AI has caught the imagination of people around the world after the launch of Microsoft Corp.-backed OpenAI’s viral chatbot, ChatGPT, in November last year.
The reduction could include not replacing roles vacated by attrition, the PC-maker told the publication.
IBM’s Profitability
IBM beat Wall Street expectations for first-quarter profit two weeks ago, signaling demand for IT services was better than feared.The company’s software and consulting businesses rose 6 percent and 8.2 percent, respectively, at constant currency in the first quarter, in line with IBM’s targets. It also reiterated its full-year free cash-flow forecast of $10.5 billion.
“Investors blew a sigh of relief that IBM’s quarterly update was better than feared,” said Jesse Cohen, senior analyst at investing.com.
The IT industry is facing a slowdown after a post-pandemic surge in demand for services such as consulting, as high inflation and interest rates have forced customers to put the brakes on spending. Growth at IBM’s consulting and software business has also slowed down from the mid- to high teens it saw last year.
Krishna said clients were prioritizing digital transformation projects that focus on “cost takeout, productivity, and quick returns,” mirroring comments by Accenture executives last month.
As a result, IBM cut its full-year consulting revenue growth forecast to 6–8 percent from earlier expectations of high single-digit percentage growth.
It forecast annual revenue growth of 3–5 percent at constant currency, having said in January it expected revenue to rise at the lower end of its mid-single-digit target. Analysts on average expect a 3.6 percent growth, according to Refinitiv data.
Analysts, however, believe IBM is better equipped to weather cuts in corporate IT spending.
IBM also has less exposure to U.S. regional banks and is largely shielded from the banking crisis in the country, with Chief Financial Officer James Kavanaugh noting regional banks make up less than 1 percent of the company’s revenue in the United States.
Total revenue in the first quarter rose 4.4 percent at constant currency, to $14.25 billion, compared with analysts’ estimate of $14.35 billion.
Dangers of AI
A pioneer of artificial intelligence said he quit Google to speak freely about the technology’s dangers after realizing computers could become smarter than people far sooner than he and other experts had expected.“I left so that I could talk about the dangers of AI without considering how this impacts Google,” Geoffrey Hinton wrote on Twitter.
In an interview with The New York Times, Hinton said he was worried about AI’s capacity to create convincing false images and texts, creating a world where people will “not be able to know what is true anymore.”
“It is hard to see how you can prevent the bad actors from using it for bad things,” he said.
AI Regulations in Europe
The European Union drafted a new legislation last week which identified copyright protection as a core piece of the effort to keep AI in check, something not mentioned in previous proposals.The draft bill is not final, and lawyers say it will likely take years to come into force.
The speed of their work, though, is also a rare example of consensus in Brussels, which is often criticized for the slow pace of decision-making.
