IBM CEO Arvind Krishna has refuted the idea that the recent layoffs in the tech sector are mainly caused by artificial intelligence (AI) technology. Krishna, who started his journey at IBM in 1990 and was appointed CEO in 2020 and chairman in 2021, explained that the layoffs are a result of excessive hiring during the pandemic, describing it as a 'natural correction.' In a conversation with The Verge, Krishna admitted that AI will result in some job displacement.
However, I believe part of this is occurring now because, when examining overall employment figures, it seems people overindulged in hiring. I used this expression during the pandemic and the subsequent year. Some of the job reductions are simply due to businesses realizing they don't need as many employees after increasing their workforce by 30, 40, 50, or even 100 percent from 2020 to 2023. A natural adjustment is inevitable. Business operations are never perfectly optimized. In engineering terms, it's an underdamped system. When there's a demand, it exceeds the necessary level. Now, it must adjust, likely dropping below the required level before reaching the right balance, based on market demand and growth," he explained to The Verge.
Reuters reported that IBM has announced plans to reduce its workforce by thousands this year as it aims to invest in rapidly expanding sectors such as artificial intelligence consulting and software. The company did not specify the exact number of jobs to be cut but mentioned that the layoffs would affect 'a low single-digit percentage' of its global staff. At the end of last year, IBM had approximately 270,000 employees worldwide.
IBM's CEO discusses the long-term effects of AI on jobs
Krishna, when questioned about AI's long-term effects on employment, forecasted significant yet manageable job displacement in the near future. He stated, 'Could there be up to 10 percent job displacement? I think that's probable over the next few years. It's not 30 or 40 percent, but it could affect up to 10 percent of the total US workforce, with a strong focus in specific sectors.'
Arvind Krishna is of the opinion that as AI boosts overall productivity, businesses will eventually employ more individuals, albeit in varied positions. He stated, “As productivity rises, companies will hire more staff, but in different areas. We are increasing our hiring because people claim, 'I don’t need to perform basic tasks since an AI agent can handle them.' I find myself questioning, 'Really?' Consider the situation strategically for a moment,” the CEO remarked.
The CEO of IBM criticized companies that primarily see AI as a tool for reducing costs on entry-level jobs, describing this perspective as 'shortsighted.' He questioned, 'Wouldn't it be better to have an entry-level employee enhanced by AI to perform like a 10-year expert? Isn't that more beneficial than the alternative? Otherwise, where will the talent come from to create the next groundbreaking product? Who will be able to persuade a client to implement technology correctly? This is why I believe some are being shortsighted,' he remarked.
Krishna mentioned last month that the company plans to keep hiring more college graduates. 'While others discuss layoffs or hiring freezes, I want to emphasize that we are doing the opposite. I anticipate that we will likely recruit more college graduates in the next year than we have in recent years, so you will notice that,' Krishna stated to CNN.
