Blasé Capital All In, All Out

As the debate rages across the world, whether AI will create net jobs or destroy tens of millions of existing ones, the news seems to swing towards the negative side. Tech giant Oracle announced layoffs of 20,000-30,000 people, who are located globally, and were told about their sackings via email. Over the past month or two, according to several media reports, other tech biggies such as Meta, Microsoft, Disney, and others have pink-slipped thousands of employees. In India, data that emerged from Q4-26 results show that in several IT firms, the net number of employees has come down, despite additions of freshers. No one is safe anywhere. The cuts in Oracle, for instance, include the employees based in India, the US, Canada, and Latin America. In effect, they cut across economies and geographies, and include both the emerging markets and developed economies. Even the so-called low-cost, high-productive individuals are under the scanner.

More importantly, as the Indian scenario shows, with the intake of thousands of first-timers, even as overall numbers fall, and as speculation grows in the Western world, the senior, highly-skilled, and obviously higher-paid employees are more at risk today. According to some media reports, the Oracle layoffs include those who had worked in the firm for more than three decades. According to speculations by one such employee, “an internal algorithm may have flagged off senior individual contributors and mid-level managers,” and some of those with “outstanding stock options could have been among those targeted.” This raises two interesting, and seemingly counterintuitive issues. The first is that possibly AI, or an algorithm driven by it, is choosing the names of those who will be sacked. AI sacks humans, who will be replaced by AI. Second, there was an initial assessment that AI will take over low-quality, low-productive, and easily transferable jobs, and drive away the lower-level employees. But the Oracle incident seems to imply that the seniors are at risk. The use of AI may not be just to drive up productivity but lower costs, and get rid of the expensive individuals. This seems more believable because of the mention of stock options.

Maybe this succeeds similar trends in other knowledge-based, and knowledge-driven segments, and sectors. In the past, tech coupled with youngsters, who were savvy with tech and cost a lot less, replaced senior and more experienced employees across sectors. Indeed, business models were built around a clutch of a dozen, even half-a-dozen, seniors, who would control, train, and manage hundreds of youngsters, who were faster to use tech to reduce time and costs. AI may do the same, and in a similar fashion. IT firms, and global tech firms may wish to hire skillful youngsters, with knowledge about AI and its use, train them over weeks or months, and deploy them in large numbers. A few senior managers, or team leaders will oversee them. This happened in the case of IT, when onshoring gave way to offshoring, and outsourcing, and Indian campuses were loaded with dozens of mid-levels, or even young team leaders, who handled dozens of people each. Today, with the aid of AI, the senior team leaders can handle hundreds, if not thousands, thereby dismantling the mid-layer, and part of the upper layer. Thus, firms will be full of freshers, and first-timers, along with a small set of seniors, who are critical, or are founders.

But, at present, one is not sure about the business models, especially related to HR and workforce, which will evolve later. Today, along with the seniors, and mid-levels, even the freshers are facing problems. This is because, as many youngsters lament in places such as Pune, Bengaluru, Hyderabad, and Chennai, the IT firms have either reduced or frozen intake at the lowest levels. This is especially true about the top Indian firms, and MNCs, and most of the jobs available are with the start-ups, which largely work, ironically, in AI-related fields. According to some people, while AI influences the people at the mid-level and senior-level, it “erodes the bottom layer.” The truth is that firms need less people at every level. As we said earlier, no one is safe. Possibly, the only safe people today are youngsters with AI- and tech-specific skills so that firms can employ them to use AI and tech at cheaper costs. Thus, costs matter as much as skills and experience, as we said earlier. In fact, according to some observers, youngsters seek some limited experience, even in smaller firms, to gain the confidence to launch their own firms. Everyone wants a start-up; the dream days are over.

However, there is another side to the knowledge sector’s story. Across segments, past decisions to combine tech with youngsters failed to deliver the goods. Only the founders, and some of them, survived. In contrast, business models that combined tech, human experiences, and young blood did much better, if the workloads were divided fairly and firmly among the three workhorses. There were things that tech can do independently, and some that it can do with the help of either youngsters or seniors. There are things that seniors can do, with or without the help of tech, and some that juniors can do with tech.