AI Impact on Boston Job Market

A number of companies in the Boston area report that they are beginning to reduce hiring in some departments because of the increasing use of artificial intelligence. According to local executives, companies ranging from software developers to online health providers are using the technology to not only improve capabilities but also lower expenses and improve efficiency.

The question of whether AI will revolutionize technology and boost productivity, or whether it is simply an over-hyped waste, has been hotly debated among economists. Some predict significant job losses in at-risk industries, while others foresee the creation of more new positions than are lost. DraftKings CEO Jason Robins stated at an investor conference this month that the online gambling company intends to “basically replace what would have been human hires with AI agents and also reduce [workers] in certain areas as well.” According to Robins, a new DraftKings policy dictates that “you can’t hire anybody next year unless you’ve already proven you can’t do the same job with an AI agent.”

Robins and other CEOs in technology, finance, and other industries are increasingly facing questions about AI and cost-cutting, especially after Salesforce leader Marc Benioff announced in September that AI had helped him eliminate 4,000 positions. Though neither Robins nor other local executives have announced specific layoff plans, AI applications are already capable of handling repetitive tasks like answering customer inquiries and putting together documents, which means they could potentially replace workers. In the tech sector, AI coding assistants have the potential to lessen the demand for programmers. A programmer can use an AI assistant to write code that, in the past, might have needed several people, although a veteran programmer must still review it.

AI Adoption Across Industries

According to a McKinsey survey that was released in March, approximately 78% of businesses stated that they were utilizing AI in at least one area of their operations. Resume.com conducted a survey of 1,000 employers, and 37% of those employers said they anticipated using AI to replace staff members the following year. According to Brady Lewis, senior director of AI innovation at the consulting firm Marketri, technology companies have been at the forefront of incorporating AI capabilities across numerous domains. Lewis stated that “It’s very, very significantly impacting the tech industry,” but also added that “Some of it’s working, some of it’s not.”

Company-Specific Approaches

American Well, an online health company based in Boston, has reduced its workforce by approximately 350 positions, or 35%, this year. CFO Mark Hirschhorn made the announcement during a Morgan Stanley-hosted conference. Hirschhorn stated, “We’re investing significantly in AI ... to replace what we have or the cost structure,” and added, “We have been an innovation shop for many years, but that innovation was at the cost of several hundred individuals,” he said. “And when we started this year, we had over 1,000 employees. We’re currently at about 650. We continue to see areas of opportunity in limiting that cost structure.” Hirschhorn declined to be interviewed but stated in a statement to the Globe that American Well is providing AI training to its employees in an effort to improve productivity. “We are looking at how AI can allow us to continue gaining efficiencies, do more with less, reduce costs, and ultimately create the best experience for all stakeholders.”

At PTC, a Boston-based software company, CEO Neil Barua stated at a Citigroup conference that AI has been “of value in terms of cost avoidance” for the customer support division. “But we’ve got more work to do before we say that this is the lever that’s going to create huge cost savings for the company.” PTC, a design software company with over 7,000 employees worldwide, including at its Seaport headquarters, stated that it is utilizing AI across numerous departments. According to a company representative, “We believe AI will fundamentally transform how work gets done, and we’re optimistic about its long-term impact on employee productivity, cost savings, and decision-making.”

Tripadvisor CEO Matthew Goldberg stated at a Goldman Sachs event that the Needham-based company, which had about 1,000 employees in the US at the close of the previous year after multiple rounds of layoffs, is also investigating AI to achieve cost reductions. “This is the first year where we’ll go in to make AI efficiency and advantage as part of our annual planning,” Goldberg said. “It’s what everybody is doing.” (The company did not respond to a request for comment.)

Akamai Technologies, an internet company located in Cambridge, is conducting approximately 50 internal AI experiments to ascertain whether the technology can boost efficiency or produce other advantages, according to chief HR officer Anthony Williams. The company, which helps internet sites and streaming services distribute content, employed almost 5,000 people in the US and close to 6,000 abroad at the end of last year. Williams stated that Akamai's developers are utilizing AI to expedite the process of creating software for customers. He said that the objective is to educate employees on how to use AI effectively, rather than to replace them. “We believe AI can and will enhance our products and the capability of our people,” he stated. “We’re fully embracing the movement.”

At DraftKings, cofounder and president Paul Liberman stated that jobs displaced by AI would enable the business to broaden positions in other fields. Liberman stated in an interview that they are not trying to get rid of jobs, but rather, they are trying to figure out how to use AI to make teams more efficient. For instance, the business has utilized AI to lower expenses by producing video material for customizing advertisements for various cities. He stated that some operations that formerly took weeks or months can now be finished in minutes or hours. DraftKings is also searching for new personnel who are more knowledgeable about the newest AI applications. “It doesn’t get rid of the need for new folks out of school,” he said. “It really just changes the requirements by which we select our talent.”