Did AI Take Your Jobs?

The headlines seem to say AI has eliminated hundreds of thousands of jobs around the globe. Every week sees a major company announcing layoffs, and the job boards are thin, even for cybersecurity professionals. Is AI really to blame? No, there isn’t a single reason the current business atmosphere is dark. There are several. 

First, Fortune 500 companies have a tendency to load up on personnel when business in good. In 2018, before the flu went around, business was booming. Many companies, seeing bottom lines expand, quickly hired more than enough people to stay ahead of increased profits and needs. Once the flu hit and business sharply dropped, many smaller companies trimmed their headcount. Major corporations received substantial government assistance to keep the workforce they had, and they did. Only after the funding dried up in the last three years did we see major layoffs around the world. Why? Employees are a company’s greatest expense, which in times of higher profit or government funding, can make the bottom look better for compliance and taxes. When markets and sales slip, only then are companies forced to reduce headcount.

AI did not take your jobs. However, many big companies are pouring millions into immature AI tools and software, hoping it will eventually reduce headcount. Unfortunately, AI is not mature enough to replace just anyone. Most AI that might affect employee paychecks are in the Information Technology department and not really supplanting anyone. That’s just not what AI does. To learn what AI really is, read this article. In fact, many companies are hiring back laid-off workers they thought AI could replace once they learned it could not. But is AI reducing headcount? Only if the job included menial, repetitive tasks could AI possibly learn over time to perform the actions. Seriously, even the most advanced AI trains for specific functions. It’s not a magic pill, as most salespeople would have you believe. 

Neither of these has prevented companies from posting ghost jobs. If you are unfamiliar with the term, read this article. Ernst & Young came under fire from regulators after posting jobs for positions they laid off in the same week. Many companies defend the practice, saying they want to keep a pool of qualified candidates until the pendulum swings back to better times. According to modern HR logic, having a stack of resumes somehow saves time in the future. Skeleton-crew HR departments relying on, surprise, AI-driven resume review systems also exasperated it. How? AI is trained to sort resumes by keyword. You cannot expect a human to infer your experience. You must literally spell it out. Now you know why you aren’t receiving any feedback on your resume.

On top of all of this, companies worldwide are in preservation mode. When thousands receive pink slips, it’s hardly time to splurge on a new multi-million dollar building or marketing software. It doesn’t sit well with investors that a company undergoes major restructuring internally to reduce costs only to add them elsewhere as a capital expenditure. Some verticals are obviously exempt from such things, like health care or luxury goods. But nearly every other company out there today is asking its remaining employees to do more with less. AI is simply a convenient cover story. Board members and investors aren’t saavy enough to see through the sham. So how do you stay ahead in a down market?

No company can turn down replacing a capital expense (CapEx) with an operating expense (OpEx). If you really want to understand the difference, the US Chamber of Commerce has this great article. The example is Company A will layoff 90% of its IT staff (capital expenditure) to hire an off-shore company (operating expenditure) at 80% of the cost to fill the roles. This business philosophy almost always fails. Why? Human nature. You take people who are physically in the company, who might actually care about the quality of their output, and replace them with emotionless outsiders. Basic psychology says this will fail. Off-shore workers, or any outsourced company, cannot provide the same level of support at anywhere near the same cost. Morale suffers. IT is the single worst department to outsource. When employees speak with soulless AI or struggle to communicate with unaffected resources on the other side of the planet to resolve what took Joe only 5 minutes to fix before, no one is happy. 

What’s the answer? Major corporations will always make choices based on financial outcomes, especially those companies with outside investors. The only positive is that at some point, the poor performance of AI and outsourcing will affect the bottom line, forcing the company to change strategies. But tech sales teams parade slide after slide in front of companies touting the cost savings and revenue potential. Middle managers and board members with zero understanding of the technology need to listen to anyone not with sales in their title to make the final decisions. Unfortunately, until they do, those employees left behind must struggle with the new order of things. Or, find an industry for their talents unaffected by outside investors or the swings of global financial markets.