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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Global boardrooms are deep into the experimentation phase of adopting artificial intelligence in their businesses. Many cost and time-saving applications of the technology, from customer service chatbots to nimble data analysis tools, will endure. On other uses, the jury is still out. Coca-Cola’s first AI-generated Christmas “Holidays Are Coming” advert last year sparked an online backlash. This week Swiss bank UBS revealed that it was using deepfakes of its analysts to interact with clients. Despite the uncanny resemblance, investors may trust a live human more for portfolio advice. Some studies place the failure rate of AI projects as high as 80 per cent.
Still, the disruption is starting to show up in job markets. The tech industry is on the frontline. Last week, Microsoft announced 6,000 lay-offs, including in product management and software engineering roles. In April Duolingo, the language training app, said that it would go “AI-first”. That, in part, means only adding headcount if a team cannot automate more of its work. Last year at least 95,000 workers at US-based tech companies were laid off in mass job cuts, according to Crunchbase’s tally of news articles.
Fears of a further imminent and widespread wave of AI-linked redundancies in the tech sector may be overblown, however. Though references to “AI” are now common on S&P 500 companies’ earnings calls, these are not all linked to immediate cost savings projects or investments. They are sometimes provisional plans to implement AI, which may impress investors, but don’t always come to fruition. In other cases AI-induced job cuts can even backfire. Last year Klarna boasted that AI had replaced 700 full-time agents. But recently the CEO of the payment services company said it was launching a recruitment drive to ensure users could always have access to a live representative.
Getting customers used to non-human interactions is not the only reason why AI integration will take time. Legacy IT systems take time to update. There is also a risk of extrapolating too much from recent tech cutbacks. It is routine in times of economic uncertainty for the industry to slow hiring and lean more on technology to make efficiencies.
Yet the long-term trend towards greater AI adoption across the tech sector is unmistakable, and will reshape the industry. Microsoft CEO Satya Nadella recently said as much as 30 per cent of the company’s code is already written by AI. Openings for coders and application engineers are shrinking in the US. The job postings index for US software development roles on the employment site Indeed is at its lowest in five years.
Tech workers know that creative destruction is part and parcel of working in a highly innovative industry. That is also why, despite the anxiety around job losses, new openings will arise. Close to one in four US tech job postings are already explicitly seeking familiarity with AI. Even with automation, there is still programming and verification work to do. With businesses still integrating AI, there is also time to augment skills and retrain. The brightest IT minds meanwhile will be freed up for more creative thinking, and tech start-ups will be able scale their ideas faster.
After the dotcom bubble burst, doom-mongering over the future of tech employment was rife. Following a few years of rewiring, the industry and jobs bounced back. Now, the great AI disruption is becoming more visible. But where there is innovation, there will always be scope for new opportunities.
