Tech giant IBM is stopping all new hires of human workers for jobs that can be filled by artificial intelligence (AI), according to reports.
IBM CEO Arvind Krishna has revealed that the company is planning to replace almost 8,000 employees with AI over the next five years.
According to Bloomberg, Krishna said in an interview that all hiring in back-office functions, such as human resources, will be suspended or slowed.
Krishna noted that these non-customer-facing roles amount to roughly 26,000 workers.
“I could easily see 30% of that getting replaced by AI and automation over a five-year period,” he said.
That would mean roughly 7,800 jobs lost.
An IBM spokesperson said that part of any reduction would include not replacing roles vacated by attrition.
Krishna’s plan marks one of the largest workforce strategies announced in response to the rapidly advancing AI technology.
The move certainly won’t be the last as virtually all companies follow in IBM’s footsteps.
Layoffs in the tens, if not hundreds, of millions of workers in the coming years could be likely.
Krishna explained that IBM plans to make mundane tasks, such as providing employment verification letters or moving employees between departments, become fully automated.
And while some HR functions, such as evaluating workforce composition and productivity, probably won’t be replaced over the next decade, it is only a matter of time before these roles are also replaced by automation as AI becomes more sophisticated.
IBM currently employs about 260,000 workers and continues to hire for software development and customer-facing roles.
Finding talent is easier today than a year ago, Krishna said.
The company announced job cuts earlier this year, 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.
The Armonk, New York-based IBM beat profit estimates in its most recent quarter due to expense management, including the earlier-announced job cuts.
In the past, IBM had managed to manipulate its stock higher thanks to billions in stock buybacks (at much higher prices).
But once its debt load grew too big, the buyback game ended, and Warren Buffett sold his shares.
The stock price has since languished for over half a decade.
And since the company’s revenue is stagnant at best, its only hope is to drastically cut overhead.
Chief Financial Officer James Kavanaugh said on the day of earnings that AI will provide new “productivity and efficiency” steps.
The move to replace workers with algorithms is expected to drive $2 billion a year in savings by the end of 2024, Kavanaugh said.
Helping the company’s imminent transition to an AI-staffed corporation will be the coming recession.
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.
However, it remains unclear just how one can determine that a recession will be “shallow and short.”