Companies that rush into artificial intelligence (AI) adoption with the primary intention of cutting labour costs are at risk of simply diverting any additional profits they generate to the tech giants, business group Ibec chief executive Danny McCoy has warned.
Speaking at the organisation’s annual leadership conference at the RDS on Wednesday, McCoy said many employers currently regard AI as an opportunity while many employees view it as a threat, but both could end up losing out if adoption isn’t well planned with the potential benefits clearly identified.
“I think there’s been a bit of a mania towards AI,” he said.
“In the short term, there are instances where AI could be a negative for both the owner and the employee.
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“What you certainly have is cases where employees are becoming fearful. And companies are changing the way they are doing things. But there’s a big question now about whether the investment being made in AI is about doing things better or cutting costs so as to increase profitability.
“And is that all about the short term? I’m sure in the medium term things will work out. But in the short term, are you sure that you’re not actually replacing a dependency on your employees with a dependency on AI?
[ HR bosses predict AI will not cause ‘significant reduction’ in employee numbersOpens in new window ]
“And if your motivation is to shrink your wage bill for more productivity and more profitability, well, the jury is out on both of those things. So are you sure you’re getting the productivity? And are you sure you’re going to hold on to profitability if you become dependent on AI?”
Ultimately, he suggested, there is the potential for employers to go from spending a lot of money on their employees, to replacing the employees and trying to capture the benefit from that “only to hand it on to somebody else”.
“We can replace people with AI. But this kind of thing won’t be linear, and I think there is a kind of a rollback,” McCoy said.
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Asked what the solution is, he said it might be “to make hay, slowly”.
He said the power, or knowledge, imbalance between the tech giants and their corporate customers has become an issue that was undermining the proper functioning of the market and that the problems may only grow if the number of systems providers shrinks and the remaining firms are able to exert a monopolistic power over the market.
Companies who adopted AI, he suggested, could be trapped into paying greatly increased costs.
McCoy said he believes the technology will ultimately help to generate more jobs than it will displace while it will also allow the reorientation of the employment landscape so that more work of direct benefit to people may be done but, he added, it is currently causing a big issue in relation to trust, not just around employment relations but in the wider world at a time of geopolitical uncertainty, diminished trust in the US and the threat of bad actors such as Russia.
“It’s not just the trust between employers and employees. That’s all always been there. It’s actually much more fundamental than that: It’s about whether the system we are operating in is fundamentally fit for purpose.”
