IBM Likely To Pause Hiring, Replace 7,800 Jobs With AI

A multinational technology player, International Business Machines Corporation (IBM) announces the era of artificial intelligence (AI) to replace human jobs. The company's chief executive officer Arvind Krishna said the company expects to pause hiring for roles and believes that some of the jobs could be replaced by AI in few years time.

He pointed that roughly around 26,000 workers are within the non-customer facing roles of back office such as human resources could get impacted. In an interview, reported by Reuters, Krishna said, "I could easily see 30% of that getting replaced by AI and automation over a five-year period." This would mean nearly 7,800 employees losing their jobs.

While an IBM spokesperson added, that part of any reduction would include not replacing roles vacated by attrition.

According to the report, Krishna's plan marks one of the largest workforce strategies announced in response to the rapidly advancing technology. The ability of AI tools have opened up doors of imagination to automate customer service, write text and generate code. This is worrisome for many observers of the potential to disrupt the labor market.

Mundane tasks like providing employment verification letters or moving employees between departments would be fully automated, as per Krishna. While some other functions like evaluating workforce composition and productivity, probably won't be replaced over the next decade, he said.

IBM currently has an employee strength of about 260000 workers and continues to hire for software development and customer-facing roles. Finding talent is easier today than a year ago, Krishna said.

Earlier this year the company had announced several job cuts, which may amount to about 5,000 workers once completed. Still, Krishna said IBM has added to its workforce overall, bringing on about 7,000 people in the first quarter.

Krishna, who has been CEO since 2020, has worked to focus the century-old company around software and services such as hybrid cloud. He has divested lower-growth businesses like managed infrastructure unit Kyndryl Inc. and part of the Watson Health business. The company is currently considering selling its weather unit.

Armonk, New York-based IBM topped profit estimates in its most recent quarter due to expense management, including the earlier-announced job cuts. New productivity and efficiency steps are expected to drive $2 billion a year in savings by the end of 2024, Chief Financial Officer James Kavanaugh said on the day of earnings.

Until late 2022, Krishna said he believed the US could avoid a recession. Now, he sees the potential for a "shallow and short" recession toward the end of this year. Though the company's strong software portfolio, including acquired unit Red Hat, should help it maintain steady growth despite worsening macroeconomic concerns, wrote Bloomberg Intelligence's Anurag Rana last week.