Episode 952: Is AI just used as an excuse for job cuts? - Commercial Awareness with Watson’s Daily business and financial news

Are Companies Using AI as an Excuse for Job Cuts? Hello everyone, and welcome to this edition of podcast. So we've got a first timer here today, so Emma Dullenkova, who's Watson's daily Ambassador. How are you doing? Speaker 2 I'm doing good, thank you. How are you? Speaker 1 Yeah, not too bad. Thank you. So, you know, be nice. Emma's. Emma's feeling a little bit nervous, but it's all good. I just said this is a conversation. So today what we're going to do, this is going to be slightly different from the, you know, the formats that we've used in the past for this kind of this kind of podcast. In the past, we used to do sort of two pick out two stories from Watson's Daily. We are now going to talk about one story from Watson's Daily. So, and then just, you know, just have a talk around that. So from today's, from today's, you know, Watson's daily, I picked out, you know, the one of the stories I picked out was Amazon to axe 14,000 corporate jobs. You know, I mean, there's certainly seems to be a thing at the moment. They axed those jobs and they basically said that AI is going to be taking, you know, taking things over. So Amazon's CEO Andy Jassi, he said I think a few weeks, a few months ago said that AI is going to change everything, it's going to affect every job, etcetera. And we heard that I think from the Walmart chief as well very recently, virtually exactly the same thing. Now The thing is here is that I, I, I personally believe that that AI is probably at the very least a partly an excuse for jobs that would have been eliminated anyway. Because I think that from an employer's point of view, it's a lot easier to say we have to cut costs. We have to, you know, we have to move with the times and it's AI and stuff rather than actually we're not doing very well. The tariffs that we're, we're getting hit by tariffs. People are, you know, people are spending less. And so therefore, we've got to cut jobs. That's harder to say. So whereas this you just go AIAI and they use it as an excuse. Now, you know, I think that that that's my own personal theory. But you know what, what do you think about that, Emma? Do you do you think it is an excuse? Do you think or do you think that's a, you know, legitimate thing? Nestle Example: Cost Cutting, Not Just AI, Drives Job Reductions Yeah, I do think that it could be an excuse. For example, Nestle recently planned to cut 16,000 jobs and it wasn't because of AI, it was to cut costs and because they were losing market share and they were in 60 billions in debt. So they cut the jobs to prioritize opportunities and their side of the business that had the highest potential return. For example, Nestle has the water side, the vitamin and nutrition side. So they cut these jobs because they were exiting businesses that they're doing weren't doing as well in. So that could be a reason as well. It doesn't just have to be purely because of AII. Think there's definitely other reasons, especially when there's rising cost inflation, tariffs. Speaker 1 Yeah, no, I I agree. I think that's a very, you know, it's a very, yeah, it's a very good point. And actually it does make me wonder whether so this is a bit of a wider thing. I'll come back to, you know, this now. But just as you mentioned it, it feels to me so over the years, so obviously I'm, you know, I'm an old man and I've seen a few things. And what I feel is that the way companies develop over time, they it goes in waves, right. So at one point, so let's say you're a company, you're doing your thing, you, you know, you grow, you do quite well and then you then you decide that you want to grow more so rather than doing your organic growth where which means growing yourself, right? So just doing more of your stuff, you then decide to buy other businesses either related or to that are complementary to your business or as they say, like a bolt on acquisition, which is basically something different, but bolts on to the business. And so over time you, you know, you're growing organically and then you start being acquisitive, right? You buy, you buy different industries and then these companies grow and grow and grow into conglomerates, right, where you are collection of lots of companies and at some stages in the cycle you it's a good thing. Growth is good, big is good, right? And it's seen as like, well, the argument for having a bigger corporate entity is because it's you could say, well, this means we have different revenue streams. It means that we, it means that it's and takes out the volatility of earnings because if the idea is if one thing does really well, that one thing does really badly, another thing does really well and it sort of balances out. So anyway, so at some stage of the cycle, it's really good to be big and buying and it's all good, right? For then it seems that things start to go a bit wrong. Losses get bigger and then people, shareholders buying, you know, investors say hold on a minute. If you're too big, you're too complicated, you can't move with the market. So you've got to focus. And then when you're in that stage of the you then start selling stuff off and you narrowing. I mean, we've seen this, we see this now with just you're saying about Nestle, just then also seeing, you know, you've seen that like consumer goods companies, like Unilever, record bank Keys, yeah, all these different places, they're all trying now to slim down. And so we're we're in that cycle. And not only that, you've got on top of that, you've got the whole AI thing, which means that you're trying to you know, you're then justifying cutting, you know, the, the, the, the number of people. How AI Enhances Legal Efficiency Without Replacing Lawyers So, so anyway, so bringing it back, bringing it back to this, you know, I mean, have you had, I mean, you've had some experience, sort of experience yourself, haven't you, you know, recently or we've heard some things yourself. I mean, because I know that you're, you know, you're, you're looking to, to get into the legal profession. And if any big law and any law firms are listening to this, you must give Emma a training contract immediately. But it's totally bypass everything. Just get, get, get the contract straight away. But you know, I mean, what have you in your, in your fields that you're looking at? What have you? What have you seen? Speaker 2 Yeah. So I am interested in commercial law. So I've attended many commercial law firms open days and all of the firms I've been to stress that AI does not replace lawyers, but it improves the work and it makes it more efficient. And it does have, I know that a lot of law firms have their own AI tools, but I've seen, I've heard that some lawyers, although they do use these tools, the AI still gives them cases or statutes that are made-up. So they're still unreliable for looking at cases and statutes. Yeah, legal researchers involved in. Speaker 1 Yeah. I mean, and I mean, I've actually, there's been news over, like, I don't know, the news pops up every now and again and saying, I mean, there was something, wasn't there like months ago where you had a New York judge, you know, they were in a, they're in a court as New York judge and some lawyer basically quoted a case or a statute and or a statute that didn't exist. Yeah. And you know, there are instances of that that we've seen from time to time. I mean, the other thing, I've got to say this because I managed to catch the end of this last week, but for any of you that are interested in this, there's a very good documentary on Channel 4 Dispatches, which is called Will AI Take My Job? Now, I only caught the end of it. So I saw that there was the ones I saw, there was a composer and there was a lawyer and the composer had to compose some music to a film. I think it was like dolphins or something, had to compose music to match the film. And then the lawyer had to review, I thought contracts or something. And, and then they had a judge like who like, and they were just given, you know, the AI output and then they were given the human output. They weren't told who did what. And they would say, which is the one that they'd like to, to go for. And, and the, you know, fortunately, I mean, the, the, the, the composer guy was, looked like he was really sweating and very, very nervous about the whole thing. But he won because his music matched the film more closely. And the lawyer did well as well because she, you know, the, the judge said the judge of this, it wasn't a judge judge, but the judge of the competition said, and you know that this, this experiment said that with the human one, there would be less things for a judge to ask. There would be less questions because she covered more of the bases. But she did say that the AI one would have been good enough to go forward. It's just that there would have been some additional things. So if you are interested, that actually is quite interesting documentary. But anyway, yeah. So in conclusion, from your own experiences, you know, in law, there's the, the argument that it will help, it will help people do, do some of the more mundane parts of the job. But then there's still, there's still very much a need for human input. I mean, there's the, there's the other question that goes with that. Client Confidentiality and Billing Concerns with AI in Law Firms And that is from a client point of view, you know, does that mean, I mean, this is what I would want to know is, does that mean my bills are going to be smaller? Because you know, you're not, you're not having to send, you know, you're not having to review things. But with all the, with all the, you know, the vast numbers of people, you can just do it on AI. So if it's only taking you, if it's taking you 10 seconds and not two weeks using 5 junior lawyers, then surely you shouldn't be charging me X amount of money but then. Speaker 2 That is a big question. Speaker 1 Yeah. And then then of course, you can then come back as a lawyer. If I was looking on the other side to lawyers say, yeah, but look at all the intellectual property, look at all the expertise that has gone into training this model and that comes from us and that comes from and you're paying for that as well as our human, you know, expertise. So so I think, you know, I mean, that's definitely but that question is going to keep coming up, especially when recently there was that guy that he started an AI firm, didn't he? He started like is it called Garfield an AIA law firm? You know, that's an AI law firm and I saw recently might have been on LinkedIn even, you know, a couple of guys from AI think they were from a magic circle firm. They set up an AI, you know, law firm as well. So it's all the interesting stuff, but. Speaker 2 I do think law firms will need to be very transparent with their clients about AI use though, especially if inserting. If they're inserting client information into AI, for example, when they're reviewing, I don't know, 15,000 documents, they will need client confirmation to submit that information into AI. But at the same time, even if they have the client confirmation, there's still the issue of data protection, confidentiality and even cybersecurity with all these breaches happening at the moment. So it still comes with risks. Speaker 1 Yeah, fair enough. And yeah, I mean, I, I, yeah. Why Human Interaction Remains Key in Customer Service and Finance So what do you do you have any thoughts on? You know what which which careers are maybe affected more or less by? You know which which which careers are safe, safer than others, do you think? Speaker 2 Safer, I think those that require human interaction and for example, customer service. I know that there's chat bots that are now being used for customer service. And I think particularly in the financial services sector, those banks that won't, that won't use the chat boards and they stick with human customer service will stand out more and will customers will be more appeal to these banks than those who do use chat boards. Because for example, in the finances customers, because it concerns their finances, they would feel more secure talking to people, talking to humans rather than the AI. Because if something goes wrong, they want to hold someone accountable. And because it concerns their finances, that's very confidential to them. And with all these data breaches, they don't want something to go wrong. And also, humans can make that advice more tailored to the person and their feelings and the context. Speaker 1 No, I agree. I mean, you said you saw something recently, didn't you? Yeah. Speaker 2 Yeah, I saw an ad by Handel's Banking and there was a massive sign that said tired of chat bots and it immediately caught my eye. So I, I looked at their recent website and because of the fact they caught my eye, I'm sure I caught other people's eyes too. And they're using, they're clearly using this to stand out. I looked at their website and they said that they researched into this and they found that customers would rather deal with a person than an automated system when it concerns their finances. And they estimated that national banks lost £9.3 billion in revenue due to customer frustration with chatbots. Speaker 1 Yeah, I mean, that is interesting and I am, I, I think that, I mean this is, this is a a few years ago now, but I remember there was a trend for financial companies to they call robo advice. So the idea was like you get financial advice like fairly standardized. Now The thing is, is that most people, so I'm I'm assured this by my wife. My wife is a a financial advisor for high, high net worth individuals. So clearly I'm not a client, but she said that most people's financial situation is quite straightforward. Most of the time, you know, you've got a mortgage and you've got, you know, some other bits and pieces, but not very much. And in those kinds of cases, you don't need that. You know, you can get away with less advice, you know, less actual advice because it's pretty standard. It starts getting more complicated the more someone has because then you know, maybe they have shares, maybe how they, you know, they own a company, maybe they've got like a, a house in Switzerland or some, you know, they've got other properties. That's where it starts getting very complicated. And I think that actually going to your handles banking example, I would suggest with that that's probably quite canny because I reckon that that is going to catch the eye, as you say of the older people. So people who are very au fait with with AI and all right with it and they don't mind it. You know, that advert is not going to talk to them, but I would argue that those people are going to be younger and arguably have less money, whereas that advert speaks to people who are probably older who are a bit either they don't like AI, they don't like the idea of AI and so and these older people, we be people who have more money. So so anyway, so I think this is quite, you know, it's quite interesting. And by the way, I would also add that, that, that with, as far as finances are concerned, people are of, you know, understandably very protective of, of their information. And you'd say, well, you don't want to talk to a chat bot because why should I train, train a chat bot with my information? You know, I would, I want to talk to a human who's going to think about it and is going to do that. And, and, you know, and they're not, there's not some chance that my information is used to train, you know, ChatGPT or something. So it's very, yeah, it's, it's very difficult. The Debate: Self-Checkouts, Human Staff, and Shoplifting in Retail It's a very difficult area, but yeah. But do you have any other points you wanted to make at all? Speaker 2 I was just going to add that I know a lot of shops have replaced checkouts with humans and self checkouts but like I was in the shop today and even self checkout still have staff showing you how to use it. Like I went to the self checkout and the lady still came up to me and told me how to use it. So yeah, who knows when, yeah. Speaker 1 Yeah, I, I, yeah, it's funny, isn't it? I mean, I, I'm, I guess I'm old fashioned in, in the sense that whenever I go to places, especially the bank actually, but just generally I do try to use the human, you know, go to the human person, because I think, you know, I've done that. You know, I've, I've been, I've done checkouts and stuff. And like, I want them to keep their job. I don't want to them to be sitting there and not doing anything. And then then they think and then the, you know, the manager comes along and look, takes a look at and sees how much they're doing and things actually, we don't need them. We can replace them. I think that that's, you know, that's sad and I don't want to be a part of that. So that's why it goes the human. I do think it's also interesting as well there. I mean, there's a sort of anecdotal thing that I think that I think it was M&SI think M&S has done this. So they went through a real thing of, you know, having these cashierless tills and stuff, but then actually they found that people preferred the human, you know, they wanted the human ones there. And the other thing of course with that is this whole shoplifting pan, you know, sort of problem that's that has been hitting three turners. Because of course, if you've not got a human right in front of you, it's arguably a lot harder to sorry, it's arguably a lot easier to do shoplifting, engage in shoplifting. And so that's another thing to think about. You think well is the cost? That we're saving by having a load of automated stuff is that is that more than what is being, you know, walking out of the door with with the shoplifters. Staying Ahead: Adapt Your Career to the Evolving AI Landscape So it's, you know, it's difficult really, but, but anyway, yeah, OK, Well, look, I think we'll we'll leave it there. But I think the sort of general conclusion of that is that is that may, you know, maybe the AI thing is being used as an excuse. I do think that possibly, you know, maybe AI, there'll be a lot of, you know, AI stuff coming in, but maybe the pendulum will swing back towards the humans because people will value it more. At the moment, they probably take it for granted, but maybe they will value it more when it's not, you know, when it's not there. And yeah, and, and yeah, I think that in some cases the humans are, are definitely going to be better for a long time. I think though, just to just some just final, final, final thing, just final thought on this is that I do think that with a, with the advent of AI, everyone's going to be looking over their shoulder constantly with regard to their job. Because they're, I think, and if you're not, you should. I think it's, it's one of those things where you, you're doing your job, you should always be thinking, could AI do this? Could AI do this now? Could they do it in a year? Could they do it in five years? And then maybe try to act accordingly, you know, try to add new skills, do something, maybe even change career, you know, so that you make sure that you're always ahead of the curve rather than sit there and wait for it to happen, you know, and, and so you can, you can try and do that. So of course, in order to do that, you need to read Watson's daily because that is what you have that you know, you know what the trends are, you can see things coming. And I think it's a good, it's a good thing. So you know if you're. Speaker 2 Not I definitely agree, yeah. Speaker 1 So if you're not subscribed to Watson's Daily, what are you doing? Get subscribed, stay ahead of the curve and take advantage of the fact that I spend about at least five hours every day writing this, this, this thing that takes you 10 minutes to read. So you know it's all there. Anyway, thank you so much, Emma. It's very kind of you to do this. And you know, I, I hope it was have been a positive experience for you and. Speaker 2 Thank you so much for having me on, it was so fun. Speaker 1 No, no problem at all. Anyway, thank you very much and thank you very thank you everyone for listening or watching. However you're consuming this and will be the podcast will be back again very soon. OK, thanks. Bye. Speaker 2 Bye.