International Business Machines expects to pause hiring for roles it thinks could be replaced with artificial intelligence in the coming years, chief executive Arvind Krishna has said.
Hiring in back-office functions — such as human resources — will be suspended or slowed, Mr Krishna said in an interview.
These non-customer-facing roles amount to about 26,000 workers, Mr Krishna said.
“I could easily see 30 per cent of that getting replaced by AI and automation over a five-year period.”
That would mean about 7,800 jobs lost. Part of any reduction would include not replacing roles vacated by attrition, an IBM representative said.
As artificial intelligence tools have captured the public imagination for their ability to automate customer service, write text and generate code, many observers have worried about their potential to disrupt the labour market.
Mr Krishna’s plan marks one of the largest workforce strategies announced in response to the rapidly advancing technology.
More mundane tasks such as providing employment verification letters or moving employees between departments will probably be fully automated, Mr Krishna said.
Some HR functions, such as evaluating workforce composition and productivity, probably will not be replaced over the next decade, he said.
IBM currently employs about 260,000 workers and continues to hire for software development and customer-facing roles. Finding talent is easier today than a year ago, Mr Krishna said.
The company announced job cuts earlier this year, which may amount to about 5,000 workers once completed. Still, Mr Krishna said IBM has added to its workforce overall, bringing on about 7,000 people in the first quarter.
Mr Krishna, who has been chief executive since 2020, has worked to focus the century-old company around software and services such as hybrid cloud.
He has divested lower-growth businesses such as managed infrastructure unit Kyndryl and part of the Watson Health business. The company is currently considering selling its weather unit.
Armonk, New York-based IBM topped profit estimates in its most recent quarter due to expense management, including the earlier-announced job cuts.
New productivity and efficiency steps are expected to drive $2 billion a year in savings by the end of 2024, chief financial officer James Kavanaugh said on the day of earnings.
Until late 2022, Mr Krishna said he believed the US could avoid a recession.
Now, he sees the potential for a “shallow and short” recession towards the end of this year.
However, the company’s strong software portfolio, including acquired unit Red Hat, should help it to maintain steady growth despite worsening macroeconomic concerns, said Bloomberg Intelligence’s Anurag Rana last week.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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