At the height of the pandemic, RingCentral, a communications software company, hired 4,000 people to deal with a surge of clients as remote working took hold.
But over the past two years, the company has cut its pandemic-era human resources team of 300 by nearly half. Head of HR Alvin Lam has told his superiors he cannot lose more people. But, if it came to it, he says he probably could cut back again.
Artificial intelligence tools such as the company’s HR chatbot Ringo would probably allow him to “figure out a way to continue to produce the same level of service [for] all our stakeholders and still be able to deliver”.
Lam’s admission goes to the heart of the challenges facing companies as they grapple with the possibilities of generative AI. Executives in all areas are examining how, and how fast, they can use the technology in their own teams, while also defending themselves against the assumption that AI agents could perform many of their teams’ duties more efficiently and more cheaply.
RM Block
The removal of humans from human resources is emblematic of what could happen across many more corporate functions.
It is still relatively early days. US census bureau second-quarter data on 1.2 million companies show just over 9 per cent reporting they had used generative AI in production of goods and services, though that figure is rising quickly.
Chief executives at large companies such as Salesforce, Amazon and JPMorgan Chase, however, are increasingly vocal about how jobs will be lost and productivity will improve as AI changes the nature of work.
Executives are trying to resolve the tension between the need to comply with such top-down corporate productivity goals and the risk that AI could hollow out vital operations. In the rush to apply the technology, one fear is that the core of important corporate activities such as HR will be delegated prematurely to the equivalent of RingCentral’s Ringo and other administrative automata.
[ If the world’s HR staff disappeared tomorrow, would anyone care?Opens in new window ]
Laszlo Bock, former head of people operations at Google and a serial founder of HR technology companies, says the big economic question is whether AI’s productivity benefits are claimed by capital – feeding through to bigger profits or higher executive pay – or shared with labour, in the form, say, of shorter working hours or higher salaries.
Where people managers come down in this debate is “the ultimate test”, he says, of whether HR executives are “the secret police of corporations [or], as they claim to be, champions of employees ... Post-Covid, it’s the best opportunity they’re going to have to prove who they are.”
By January 2024, nearly two-thirds of organisations using AI in HR were applying it to “talent acquisition” (that is, recruitment) according to a survey by the Society for Human Resource Management, which represents HR professionals. Leadership and development – such as training courses or coaching – and performance management were the next most common areas of application.
Companies were using automated screening before OpenAI’s release of ChatGPT to general users in November 2022, in part to overcome the risk of human bias. Now they are also having to use AI to fight fire with fire, because candidates have learned how to deploy generative AI to draft convincing applications and résumés, and submit them automatically at scale.
Inside many companies, AI chatbots now respond to common staff inquiries about the location of specific policies or how to book time off. At IBM, 94 per cent of such queries are handled by its tool AskHR, which, since August 2024, has used generative AI to produce answers based on a vast pool of HR policy documents.
HR’s use of AI is hemmed in, however, by a tangle of regulation. It includes existing data protection measures, but also new legislation such as the EU’s AI Act, which deems some HR-related AI activity to be “high risk” because such systems “may have an appreciable impact on future career prospects, livelihoods of those people and workers’ rights”.
Litigation is already looming. In the US, technology worker Derek Mobley has sued Workday, alleging an algorithm in its ubiquitous candidate-screening software discriminated against him on the basis of age, race and disability, throwing out his applications for more than 100 posts at different companies since 2017.
The potential implications for the whole HR technology industry as it rolls out more sophisticated tools have “got everyone scared”, according to Stacia Garr, co-founder of RedThread Research, a HR technology research consultancy. (Workday has said the suit is “without merit”.)
Bock, the tech entrepreneur, says HR should also defend its role within companies, by submitting clearer evidence of the return on its investment in AI, such as the relative performance of employees recruited via an AI-enabled screening process against those hired by human recruiters.
As for the impact on jobs, recruitment site Indeed’s index of postings in big economies such as the US, UK, France and Germany shows hiring for HR departments has slowed more than the overall jobs market since the advent of generative AI. But it is hard to disentangle such data from general business trends, let alone link the decline to the advance of technology.
While IBM will not give precise numbers, there are now fewer people in the IBM HR function than there were in 2016. The amount IBM spends on HR has dropped by 40 per cent over the past four years, including savings made by cutting nearly 9 out of 10 of the systems the department was using.
That there is scope for more efficiency is not in doubt. A March report on the state of AI by McKinsey puts HR in the top four of business units that reported cost reductions from generative AI use in the second half of last year, above marketing and sales and product development, the two areas where generative AI use is most widespread.
HR heads pioneering AI use say that as well as saving money, the technology is helping them improve the mix of work done by their teams and, in some cases, the rewards for taking on more complex tasks. IBM HR staff told Lester: “If I’m too busy answering queries, managing data, I’m too busy to do my own job better.” He says they now have “space to think”.
Human resources teams’ adaptation to, and integration of, AI suggests five main ways other divisional heads might tackle the unbending top-down mandate to improve productivity.
First, implementation of AI, like the previous wave of digitisation, has to be handled strategically.
Second, the simplest savings can come in support and administrative functions. Just as HR is introducing automation of internal queries, companies are upgrading customer service chatbots with AI, making them more conversational, and simultaneously shrinking their call centres.
Third, senior executives must be engaged in the roll-out of internal AI tools. Fourth, AI can be used to blur the boundaries between different divisions and make visible previously unseen inefficiencies. Fifth, AI requires a redesign of how work is done.
Evidence of AI-induced job losses is so far largely anecdotal and has had only a small effect on macroeconomic statistics. Automation could also lead to increases in jobs in some areas, and may create new, as yet unimagined, roles as workers acquire new skills.
In human resources, Bock, formerly of Google, predicts that 80 per cent of functions will end up being automated. But that last fifth of tasks will always be handled by a core group, “not necessarily because machines can’t do it”, but because in some critical cases “people will just prefer to deal with people”. – Copyright The Financial Times Limited 2025
