The rise in job cuts across the technology sector is largely the result of over hiring during the pandemic years, according to IBM CEO Arvind Krishna. In a recent interview, he said the current wave of layoffs is a natural correction and not mainly driven by artificial intelligence.
Krishna explained that many companies rapidly expanded their workforce between 2020 and 2023. He said, “But I also think that some of this is happening right now because if you look at the total employment numbers, I think people gorged on employment. I used that phrase during the pandemic and the year after. Some of the displacement is just people saying, ‘I don’t need so many people because I went up 30, 40, 50, 100 percent from 2020 to 2023.”
He added that business cycles often swing beyond what is required before settling again. “There is going to be some natural correction. Business is never completely optimized. I think in engineering terms, it’s an underdamped system. When there’s a need, it goes above. Now, it has to correct. It’s probably going to go below what’s needed, and then it’ll hit the correct equilibrium, depending on market demand and growth.”
IBM itself is trimming its global workforce as it shifts towards artificial intelligence consulting and software. The company has planned job cuts that will affect a low single digit percentage of its 270000 employees, according to information shared by a news outlet.
Krishna also spoke about the long term impact of AI on employment. He believes some displacement is likely but not severe. “Could there be up to 10 percent job displacement? I believe that’ll be likely over the next couple of years. It’s not 30 or 40 percent, but it is up to 10 percent of the total US employment pool. It is very concentrated in certain areas,” he said.
He argued that as AI improves productivity, companies will hire more people for new kinds of roles. He said leaders should not view AI only as a way to cut entry level jobs. “Wouldn’t you rather have an entry level person and AI makes them more like a 10 year expert? Isn’t that more useful to me than the other way around?”
Krishna also said in another interview that hiring fresh graduates will increase. “People are talking about either layoffs or freezing hiring, but I actually want to say that we are the opposite. I expect we are probably going to hire more people out of college over the next 12 months than we have in the past few years, so you’re going to see that.”
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