Artificial intelligence adoption could lead to significant job struggles for entry-level workers as companies boost productivity, according to ServiceNow CEO Bill McDermott.
McDermott told “Squawk on the Street” on Friday that unemployment for new college graduates “could easily go into the mid-30s in the next couple of years.”
“So much of the work is going to be done by agents. So it’s going to be challenging for young people to differentiate themselves in the corporate environment,” he added.
Across industries, businesses are slashing costs and cutting jobs with the help of new AI tools.
Last month, Block announced plans to cut nearly half its workforce as AI automates more work. Meanwhile, software firm Atlassian, which has seen its stock dive 54% this year on AI disruption fears, said this week it would lay off about 10% of its workforce to support AI investments.
Compared to previous technological revolutions, experts say AI is chipping away at many white-collar jobs, including coding and marketing roles, and allowing companies to reduce hiring and improve productivity with fewer workers.
Palantir CEO Alex Karp previously told CNBC that he wants to grow revenue by 10 times while reducing headcount. Amazon CEO Andy Jassy said in June that the company will also shrink its corporate workforce with AI tools.
McDermott told CNBC that ServiceNow’s tools will help businesses slash hiring costs, adding that the software firm has already taken out 90% of the use cases that previously relied on humans in customer service. It also allows businesses to maintain headcount while growing free cash flows and revenue.
“I do think it’s coming quicker than people anticipate,” he said.
