The good news is that AI is hiring: The bad news is that it’s not us

Klarna CEO Sebastian Siemiatkowski, however, offers no such reassurance. His prognostications verge on the ruthless. Not only has he candidly enumerated the many human jobs already rendered obsolete at his company, he also foresees a near future where machines ascend to such unerring competence that they supplant most human labour—including his own. 

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It is a vision stripped of the platitudes that executives often employ to lull their workforce into a passive stupor. Asked about AI’s impact on jobs, most CEOs dispense banalities: vague paeans to ‘higher-value work’ mixed with words calculated for comfort employees.

Reid Hoffman, whose pronouncements rarely court controversy, maintains that AI shall not steal jobs but merely alter their nature. IBM’s CEO Arvind Krishna assures us that AI is a boon, liberating workers from drudgery for loftier endeavours. But then, he also notes that one of IBM’s HR functions has shrivelled from 700 employees to 50. Microsoft’s Satya Nadella, similarly sanguine, envisions AI raising salaries by bestowing workers with expertise.

Siemiatkowski asserts that AI will neither annihilate nor create jobs in any simplistic binary; it will unmake and remake the very essence of work. Algorithms can conjure photorealistic imagery, read legalese with cold precision and replace an army of customer service agents overnight. Even creative and professional domains once deemed sacrosanct find themselves on the chopping block. 

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Klarna, a fintech company, saved $10 million per annum by discarding human artists, lawyers, media monitors and 700 call centre employees.

Klarna’s boldness arose from desperation. Its valuation crumbled in 2022, sparking investor panic and union strife. Its CEO decided to pitch the company as an AI test bed. Employees had to either adapt or risk irrelevance. The bet paid off.

And yet, a reckoning looms. The rise of agentic AI portends a future in which entire swathes of low- and mid-skilled desk jobs with evaporate. Whispers abound of AI agents that can collaborate with other digital entities, acting as autonomous workers in their own right. 

Parallels with the dotcom boom, though, cannot be ignored. As venture capitalists funnel billions into AI, the air is thick with speculative excess. Sequoia has sounded the alarm, pointing to a large gap between AI’s infrastructure costs and its actual revenue generation. 

Its analysis aligns eerily with the theories of Carlota Perez, whose studies of technological change suggest that each paradigm shift creates a financial bubble.

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The cycle begins with exuberance: barriers to entry collapse, speculative investments reach dizzying heights and firms race to outpace rivals. Then comes a crash that curdles the dream into disillusionment. Yet, the wreckage left behind (hardware, software and human capital) becomes the foundation for a real tech revolution.

India, with its vast pools of back-office talent, has long been the engine room of the global service economy. But AI does not require sleep, sick leave or a salary. India’s outsourcing boom stands imperilled. 

One need only look at India’s vaunted IT sector, where murmurs of job cuts grow louder by the day. Call centres, legal process outsourcing firms and financial services all find themselves in AI’s crosshairs. The unspoken truth is that AI shall render many career paths untenable.

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Amid this tempest, a curious contradiction emerges. AI is both over- and under-estimated, a paradox encapsulated in Amara’s Law, which states that the short-term effects of technology are exaggerated while their long-term ramifications are grossly miscalculated.

AI’s true inflection point lies ahead, unseen yet inevitable, but most CEOs, wary of spooking shareholders or inviting a populist furore, persist in their fiction that AI won’t kill jobs. But an upheaval is nearing.

Some of the future is already coming into view. Lack of pricing power and low entry barriers mean competition will drive prices down, making AI adoption a necessity. Skill depreciation will force workers to either re-train or risk obsolescence in the industries that AI infiltrates. 

In general, however, the benefits of AI to society at large will be immense, as AI-driven efficiencies will reshape healthcare, finance and manufacturing. All this will come at a steep cost: massive job displacement.

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Economic bubbles get inflated by exciting new technologies when investment capital is drawn into what Perez calls ‘the casino economy.’ This pattern is common to every transition from one technological regime to another. So too in the global shift underway from a petroleum-powered mass-production economy to an AI-driven, digitally interconnected future.

The prevailing wisdom that AI bots and agents will join the workforce without an upheaval is a myth. AI is not just another tool. It is a force that will redefine the very structure of employment. Those who underestimate it will pay a price. AI won’t just disrupt, it will rewrite the rules of the game.

The authors are, respectively, professor at Columbia Business School and founder of Valize; and co-founder of Medici Institute for Innovation.