International Business Machines Corp. (IBM) Chief Executive Officer Arvind Krishna has halted hiring for positions the company believes could be effectively replaced by artificial intelligence (AI) in the coming years. This significant move demonstrates AI’s growing influence on the job market.
In an interview, Krishna stated that IBM would suspend or slow hiring for back-office functions, including human resources positions. There are approximately 26,000 non-customer-facing positions within the company. Krishna opined that AI and automation could supplant 30% of these positions within five years, resulting in an estimated loss of 7,800 jobs. IBM clarified that a portion of the reduction would involve not filling vacancies caused by attrition.
Concerns have been raised regarding the impact of AI tools on the labor market, even though their potential to automate customer service, writing, and computing has garnered attention. In response to the rapid advancement of AI technology, IBM Krishna’s strategy is among the most significant workforce initiatives announced.
Krishna stated that routine tasks such as providing employment verification letters and transferring employees between departments would likely be entirely automated. Nevertheless, he believes that certain HR functions, such as evaluating workforce composition and productivity, are less likely to be supplanted by AI within the next decade.
IBM currently employs approximately 260,000 individuals and will continue to hire for software development and customer-facing roles. Compared to a year ago, Krishna observed that discovering talent is now less complicated. The company announced earlier this year that approximately 5,000 positions would be eliminated by the end of the year. Despite this, IBM added about 7,000 employees in the first quarter.
Since becoming CEO in 2020, Krishna has prioritized establishing the century-old company as a market leader in software and services, notably in the hybrid cloud industry. He has divested low-growth businesses such as Kyndryl Inc.’s managed infrastructure unit and portions of Watson Health to accomplish this. Additionally, the company is contemplating selling its weather subsidiary.
IBM, headquartered in Armonk, New York, exceeded profit projections in its most recent quarter, primarily due to cost management, which included the aforementioned job cuts. By the end of 2024, Chief Financial Officer James Kavanaugh expects new productivity and efficiency measures to generate annual savings of $2 billion.
Krishna believed that the United States could prevent a recession until late 2022. Nonetheless, he anticipates a “shallow and brief” recession towards the close of this year. Anurag Rana of Bloomberg Intelligence forecasts that IBM’s robust software portfolio, which includes the acquired entity Red Hat, will maintain steady growth despite macroeconomic concerns.
Krishna emphasized that recruiting for back-office functions, including human resources, will be halted or slowed. These positions, which do not entail direct customer interaction, account for roughly 26,000 IBM employees. Krishna estimates that approximately 30% of these positions could be replaced by AI and automation over the next five years, culminating in an estimated loss of 7,800 jobs. It should be noted, however, that a portion of this reduction will be accomplished through natural attrition, with the company opting not to fill vacancies.
As AI continues to demonstrate its ability to automate tasks such as customer service, content generation, and computing, the impact of technology on the labor market has been a source of concern for many. Krishna’s workforce strategy demonstrates IBM’s willingness to adapt and optimize operations, one of the most comprehensive responses to this technological transition.
Krishna elaborated that it is probable that routine and repetitive tasks, such as employment verification letters and employee transfers between departments, will be fully automated. However, he was confident that certain HR functions, such as evaluating workforce composition and productivity, would not be readily replaced by AI in the coming decade.
Despite the temporary hiring halt in replaceable roles, IBM will continue to hire for software development and customer-facing positions, reflecting the company’s ongoing commitment to technological innovation and customer experience improvement.
Since assuming the role of CEO in 2020, Krishna has been instrumental in refocusing IBM on software and services, notably in the burgeoning hybrid cloud market. As part of this strategic transition, Krishna has divested businesses with slower growth, including the managed infrastructure unit Kyndryl Inc. and portions of the Watson Health business. In addition, IBM is actively investigating the possibility of selling its weather unit to realign its operations with its core competencies.
IBM’s recent financial performance has exceeded profit projections in the most recent quarter, primarily due to the aforementioned employment cuts and other effective cost management measures.