The Big Blue 'IBM' says it can easily replace 7,800 Jobs with AI

US-based technology company IBM's CEO Arvind Krishna has announced plans to pause hiring for roles and said that the company could easily replace 7,800 jobs with artificial intelligence in the coming years, impacting back-office functions such as human resources to be suspended or slowed.

This could impact around 26,000 non-customer-facing roles. 

Krishna suggests that up to 30% of these positions could be replaced by AI and automation over five years, resulting in the loss of approximately 7,800 jobs. However, some HR functions, such as evaluating workforce composition and productivity, are unlikely to be replaced over the next decade.

Krishna's plan is one of the most comprehensive workforce strategies announced in response to the rapidly advancing technology of artificial intelligence. AI tools to automate customer service, write text, and generate code have captured the public imagination. Still, it has also raised concerns about its potential to disrupt the labor market.

According to Arvind Krishna, IBM currently employs around 260,000 workers and continues to hire for software development and customer-facing roles, but finding talent is easier today than a year ago. The company also recently announced job cuts, which may amount to around 5,000 workers once completed.

Despite this, Krishna said IBM has added to its workforce, bringing on about 7,000 people in the first quarter.

Krishna has been working to focus the century-old company around software and services such as hybrid cloud, divesting lower-growth businesses like the managed infrastructure unit Kyndryl Inc. and part of the Watson Health business. IBM is also currently considering selling its weather unit.

In its most recent quarter, IBM topped profit estimates due to expense management, including the earlier-announced job cuts. According to Chief Financial Officer James Kavanaugh, new productivity and efficiency steps are expected to drive $2 billion annually in savings by the end of 2024.

Krishna had previously believed that the US could avoid a recession until late 2022 but now sees the potential for a “shallow and short" recession toward the end of this year. According to Bloomberg Intelligence's Anurag Rana, IBM's strong software portfolio, including the acquired unit Red Hat, should help the company maintain steady growth despite these concerns.

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