CEOs Look to AI to Replace Workers: Amazon and other major companies say AI will reduce their corporate workforces

Leaders at some of the biggest U.S. corporations say they’re preparing for AI to eliminate many jobs within their organizations.

What’s new: Amazon CEO Andy Jassy wrote in a memo to employees that generative AI and AI agents within the next few years would enable the company to reduce its corporate workforce. (Disclosure: Andrew Ng is a member of Amazon’s board of directors.) Similarly, the CEOs of Bank of America, IBM, Shopify, and Williams-Sonoma have said they are embracing AI and expect to hire fewer workers as a result. Worldwide, around 40 percent of employers expect to downsize their workforce, largely due to the rise of AI, according to a survey by the World Economic Forum.

How it works: Many business leaders skirt the topic of job losses when they describe the impact of AI on their companies, but these executives put the technology front and center in their plans to downsize.

• Amazon, which employs roughly 1.5 million people, is investing in AI “quite expansively,” Jassy’s memo notes. “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs. It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce,” he wrote.
• Bank of America CEO Brian Moynihan told Bloomberg that widespread use of AI in banking would lead to a smaller workforce industry-wide. 
• At IBM, AI agents have replaced hundreds of workers in the human resources department, CEO Arvind Krisna told The Wall Street Journal. Nonetheless, total employment has gone up at the company, he said.
• Shopify CEO Tobias Lütke in April instructed employees, before they request new hires, to explain why AI isn’t sufficient to help them meet their goals. While this policy doesn’t inevitably lead to fewer jobs, it exerts pressure in that direction.
• Williams-Sonoma CEO Laura Alber told investors on an earnings call that the retailer planned to use AI to avoid adding new employees. This year, the company will “focus on using AI to offset headcount growth,” she said.

Yes, but: Several studies in recent years have shown that AI is likely to increase, not reduce, the number of jobs.

• Researchers at European Central Bank found that employment in occupations affected by AI has risen over nearly a decade. A job’s exposure to AI was associated with greater employment in some cases, and it had little effect on wages.
• The U.S. government determined that employment grew in 9 out of 11 occupations that may be subject to automation.
• The accounting firm PricewaterhouseCoopers analyzed nearly 1 billion job ads internationally and found that job availability grew 38 percent in roles that were more exposed to AI. (This growth rate was lower than that of less-exposed occupations.)

Why it matters: Technological advances typically create more jobs than they destroy; an estimated 60 percent of U.S. jobs in 2018 did not exist in 1940. An explosion of machine learning engineers, AI application engineers, and data engineers is highly likely! In the short term, though, AI is poised to impinge on a wide variety of roles including many that once were considered immune to automation: knowledge workers, creative people, and so on. Executives have a responsibility to prepare their companies for a coming wave of AI-driven applications, and many expect to hire fewer employees.

We’re thinking: When executives speak, it’s hard to differentiate those who are sincerely trying to navigate change from those whose primary aim is to reassure shareholders, drum up publicity, attract talent, or what have you. Regardless, professionals of all kinds who embrace AI will be much more productive and significantly outperform those who don’t. Jassy said it well in his message to Amazon employees: “As we go through this transformation together, be curious about AI, educate yourself, attend workshops and take trainings, use and experiment with AI whenever you can, participate in your team’s brainstorms to figure out how to invent for our customers more quickly and expansively, and how to get more done with scrappier teams.”