WiseTech’s AI jobs sledgehammer – a sign of things to come?

A single blog post this week wiped out hundreds of billions from Wall Street. But this wasn’t a standard analyst report, rather it was a dystopian picture of the US economy in 2028, all thanks to the artificial intelligence boom.

The US research firm Citrini described a grim picture: mass unemployment, a plunge in the stockmarket, and a collapse in the “human-centric consumer economy”.

While it’s a highly theoretical read that shouldn’t be taken too seriously, ASX-listed tech giant WiseTech has now shown why we can’t entirely dismiss those fears, either.

The logistics software maker smashed the ice on Wednesday, becoming the first Australian company to proudly call out artificial intelligence as the reason behind axing 2000 jobs, almost a third of its workforce.

The company’s founder and chair, Richard White, who is no stranger to creating headlines about his personal behaviour, hasn’t massaged his company’s AI message to avoid frightening the horses.

Having announced a 35 per cent drop in half-year profit, WiseTech chief executive Zubin Appoo issued a harrowing warning as he heralded plans to cut the number of customer service staff and software engineers in half.

“I am prepared to say this clearly; the era of manually writing code as the core act of engineering is over,” Appoo loudly proclaimed.

WiseTech has its reasons for shocking its workers and investors. It is among the software-as-a-service providers whose core business is in the firing line for being disrupted by the potential for their customers to use AI themselves and bypass the need for its services.

The sharemarket valuations of thousands of these once valuable companies, including homegrown tech giant Atlassian, which was founded by Australian rich listers Mike Cannon-Brookes and Scott Farquhar, have been decimated over the past nine months.

There is no shying away from the fact that the pace of AI deployment is set to accelerate, and it is nearly impossible to predict how it ends.

If WiseTech’s strategy was to use staff cuts as a circuit breaker, it worked. By lunchtime Wednesday, its shares were trading 10 per cent higher.

But extrapolating the potential for AI-enabled job cuts across business more generally is a different beast.

For many workers in the front line for AI displacement, this technology has become the bogeyman.

The levels of hysteria around potential AI job cuts are rising to a point where AI redundancies are masked or blurred by being lumped into the larger bucket of technology-enabled savings.

Meanwhile, unions are attempting to decode corporate job cut announcements to understand whether they are actually driven by artificial intelligence. In most respects, they are fighting a losing battle.

It can be a fine distinction to make. Some job cuts are not directly the result of AI, but are enabled by AI.

In response to questions about the Commonwealth Bank’s 300 job cuts this week, a spokesperson explained that “AI is changing how some tasks are performed, but it is not the driver of these role changes”.

Qantas also went to great pains to dispute that its recent 30 strong job cuts at its headquarters were not about AI, even if technology played a role.

Australian companies that have been sitting on the sidelines for a couple of years and assessing how AI can be used to improve productivity are now in the early throes of implementation.

CBA dipped its toe in the water last year by using AI bots to replace some customer service roles, only to have the move backfire.

It is now treading more lightly. CBA chief executive Matt Comyn is not shying away from a future in which AI will become more embedded, but is couching the move by insisting it will also involve the upskilling of many of the bank’s staff, rather than becoming a wholesale replacement of workers.

But there is no shying away from the fact that the pace of AI deployment is set to accelerate, and it is nearly impossible to predict how it ends.

At the extreme end of the fear/disruption spectrum, the recent piece of analysis by Citrini conjures a 2028 dystopian picture in which AI-generated unemployment runs at more than 10 per cent and Wall Street’s S&P500 is in freefall. In this scenario, productivity was booming but the “human-centric consumer economy” collapsed.

“AI capabilities improved, companies needed fewer workers, white-collar layoffs increased, displaced workers spent less, margin pressure pushed firms to invest more in AI, AI capabilities improved,” Citrini described the scenario, which would be “a negative feedback loop with no natural brake”.

While it is only one of many pieces of AI-foreboding research published, the timing of its release during a moment of peak AI fear played into a sell-off of the US sharemarket earlier this week.

It is a fascinating read, but highly theoretical as it ignores the experience from other technological revolutions that new skills create new jobs.

But whichever way AI plays out at the salt mine, there will be disruption.

Companies like WiseTech, that are already feeling heat, are the first movers.

Others may be more gradual and with fewer casualties, but there will be significant change. Whether this is utopian or dystopian is anyone’s guess.

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