New Delhi: Increased adoption of artificial intelligence at workplaces is often accompanied by layoff fears. But a new study suggests that using AI doesn’t necessarily mean that the company will fire people. Instead, firms who invest heavily in AI tend to increase headcount.
For the research, financial technology company Ramp and workforce intelligence firm Revelio Labs looked at AI spending and employment records of 21,559 US companies between 2021 and 2026.
It was found that the number of white-collar workers increased by 10.2 per cent at firms over two years after they adopted AI. Entry-level headcount increased even faster — by 12 per cent — after the companies turned to AI.
However, this growth is attributed to high-intensity adoption of AI, where companies invested an average of $33.67 per employee. Those firms that spent only about $2 per employee didn’t witness any significant change in their headcounts.
“There’s clearly some kind of learning curve — the [headcount] gains don’t show up for at least six to 12 months — and it’s subject to a minimum threshold. You only get these gains if you are a high-intensity adopter, and that typically comes with a decent amount of investment, beyond a couple of dollars a month on ChatGPT,” said Ara Kharazian, chief economist at Ramp and co-author of the study.
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Uneven distribution of gains
Researchers highlighted that AI adoption and the gains that it produces are unevenly distributed. This is because firms that invest heavily in AI tend to be already big, engineering-intensive, and mostly venture-backed. Once they adopt AI, their growth accelerates even further.
“We find that these gains are concentrated in Information and, at present, are statistically significant only in that sector group, which includes many software, internet, and media firms,” the study observed.
Kharazian acknowledged that the growth in workforce was observed in tech companies and the research included only white-collar employees, leaving out workers like drivers who can be rendered jobless due to self-driving cars that use AI.
The authors of the study clarified that the findings aren’t proof that AI is directly linked to an increase in hiring. Instead, it should be seen as evidence that companies that adopted AI are growing faster than others.