IBM's Bold Move: Replacing 7,800 Jobs with AI Automation

0:00Since the launch of ChatGPT, there have been a number of different predictions. People have been saying this is going to wipe out massive industries, it's going to take over tons of jobs. And to this point, we haven't really seen a lot of these ramifications. However, just recently, some news has broken that sees a little bit, that is bringing us a little bit closer to this whole situation that people have been concerned about. So we're going to talk about that today and we're going to talk about some of its implications and what we think is going to happen to the labor market. So the news out of Bloomberg is that IBM decided to halt hiring for about 7 ,800 jobs that they had open.

0:39And they said that they're halting hiring for these 7 ,800 jobs that could be replaced by AI. So the CEO of IBM said that he believes roughly 30 % of their backend roles can be replaced in the next five years by ChatGPT and different AI tools. roles. And so because of this, they're being really thoughtful with who they're hiring, how they're hiring, and if they need to even hire someone for that role. He said that roles in human resources and non-customer facing jobs are going to be the ones that are the impacted the most essentially. And so this is a pretty, this is a pretty big area. I think IBM as a whole is talking about, you know, these cuts, which they'll, they're primarily impacting, you know, those areas of non-consumer or non-customer facing roles.

1:28And he said that all in all, that's a division that accounts for around 26 ,000 workers at the company. So it is interesting to think too, right? Like if this is the way they're going right now with AI kind of in its infancy, like where does this go? They might be chopping 7 ,800 jobs right now, but there's 26 ,000 jobs that are currently there, how many of those will eventually all just be automated in the future? And, you know, he also talks about easily, he said he could see 30 % getting replaced by AI. But I mean, what's the what are the odds that as this thing gets better, it gets more automated, you need less humans to run it?

2:09What are the odds that that climbs, I think, more something like 90 % of these jobs could be getting replaced by AI and just having a very small number of humans that are managing them. Now, I know that that sounds like a, you know, a pessimistic take on the whole thing. And, you know, like there definitely are some concerns along with all of this. And there's also some questions of, you know, like this isn't something super uncommon, there's always these technological advancements and innovation always causes disruption and different jobs become not needed anymore, eliminated roles become eliminated.

2:45But it's interesting because I think one of the big controversies right now with AI isn't just the fact that, you know, there's this new disruption that's eliminating jobs. I mean, honestly, that just happens. And, you know, is it hard for people that that was their job before? Of course. Do we have empathy for them? Of course. That is, you know, very difficult. But, you know, these things happen. There's no stopping them, really. And so I think the bigger so that but that's just that is just what it is. And that's been like that for a long time. Now, the bigger criticism with AI right now that people are complaining about is just the pace.

3:16I think we can all agree that the pace of this AI that has been rolled out in recent years is just astonishingly fast in recent months, right? Always, every single new day, there's an update that is coming through on AI. And I think that's what a lot of people are criticizing. We see people like Elon Musk call for a six-month ban, but then, of course, he's going to launch his own AI tool. So that ban would have definitely helped him out to catch up. I don't really know if, you know, there is any really any stopping it. Because inevitably, whether we institute a six month ban through litigation or through laws or whatever, other countries aren't going to listen to it.

3:56So I don't really know if that's a very effective method. In any case, it's definitely an open debate that people are having right now. So it'll be interesting to see where that goes. Now, with all that being said, IBM employs about 260 ,000 people. And earlier, it cut about 1.5 % of its workforce. So I do believe that there is going to be a pretty significant cut in jobs coming in the future. And I think what's interesting, too, is a lot of people are talking about like, oh, you know, ChadGBT or AI is going to be taking jobs and whatnot in the future. I think beyond just taking jobs, I think it has a very real impact on a lot of businesses that might not just be like the roles.

4:38So an example of that is that recently, the CEO of Chegg, so Chegg is like a homework helping company. And they recently came out and said that since you know, ChatGPT has been out there, people are a lot less likely to pay their$15 a month for their kind of homework helpers. I remember in college, Chegg, you know, you would search the answer to like a quiz question. And there's like, there's always like a chegg response but if you clicked on it it was behind a paywall so like you can never actually see it and uh you know they wanted people to pay so you could see like um for quiz prep and for i think it would have like essay examples and all sorts of like homework help um in any case you had to pay for it and when chatgbt first came out they said that they didn't see a significant um change in their new user subscriptions so that was all good uh their stock kept plugging along But then in March, apparently, they said they have noticed a real downturn in new users.

5:36And they believe it's because everyone is just using ChatGPT to write their essays and answer questions about everything. And so they're not really that needed. So when this happened, the CEO just talked about this recently, and their stock plummeted about 42%, which is a pretty massive crash in a stock price. and you know this is you know the ceo that's pretty open right now talking about this all all ceos all companies are going to have to be pretty honest about this in the future i see this as a as a big area right there's just a lot of um companies that are in kind of the crosshairs of open ai and chat gpt and what it is how it's kind of revolutionizing content and inevitably those companies are going to see um they're going to see a pretty massive uh crash in stock prices or in sales or whatever.

6:24And I know that this whole thing is going to get a lot of hate, obviously, from people that are affected by this. And I have, you know, the deepest empathy for them there. That being said, though, technological innovation always does come around. And if there's a way to do things faster and cheaper, usually that overall helps the global standard of living as we're able to buy more things, create more things. and so while this is rough and this is definitely gonna be a big time of transition I think we're gonna see two camps set up there's gonna be the people that are resisting the change and trying to slow it down there's gonna be people that are embracing it and trying to run forward with it at the end of the day you know there's probably a good balance between the two things but the thing that I think is certain is there is no stopping you know this innovation and this advancement in AI and the disruption that it's having there is no stopping it's gonna happen inevitably so people can try to slow it down or push it off or whatever they try to do through laws or other things, right?

7:17Like Italy just banning it for different reasons. But inevitably, it's happening. It's moving forward. The technology is there. And so I think at this point, people just need to learn how to embrace it. Use it in your current role at your current company. Use it. Find out how this thing makes you better at whatever you do and how you can harness it. And I think at the end of the day, that is going to be the solution that helps ensure job security for people in the long term and helps continue to let us, you know, not all lose our jobs to the AI, but rather be augmented and become more skilled because of it.