Why Big Tech Is Still Losing Money Even After Replacing Thousands of Workers With AI
Layoffs reduced payroll, but AI introduced an entirely new wave of expensive challenges.
Replacing people with AI may seem like an obvious way to reduce costs, but in practice, it is not always as easy as it seems.
When a company lays off 10,000 employees, it indeed reduces its expenditure on salaries. However, the same company has to invest billions of dollars in AI data centers, chips, electricity, cloud storage, and training new AI models that would eventually replace these 10,000 workers. These sums will almost certainly exceed the savings from cutting jobs.
AI is expensive to build
For example, if a company replaces a cash register operator with a self-checkout machine, it will save on wages. However, the company will have to buy such machines, release funds for their maintenance and technical support, and so on. The development of AI is similar to this process, except that instead of a cash register, the company buys thousands of graphics cards.
Competition is forcing companies to spend
Moreover, companies do not want to be behind their competitors, so they are investing huge amounts of money in the development of AI.
Profitable companies are willing to sacrifice current profits to remain relevant in the future. The fear of being left behind increases the pressure on companies to invest even more heavily in AI development.
In addition, when a company lays off workers, it has to cover additional expenses: training new employees, motivating them to stay with the company, and maintaining AI systems. These costs are justified when, for example, a self-checkout machine breaks down and needs to be repaired. It would be premature to say that AI systems have eliminated the need for human operators at the cash register. A lot still depends on specialists to ensure that the machines work correctly.
Thus, AI systems change the way companies allocate financial resources rather than eliminate spending. The companies that will derive the most benefit from this wave of automation will appear in a few years. Right now, everyone is spending large amounts of money on development, waiting for AI to pay off.
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