IBM CEO Arvind Krishna rocked his company and the industry when he said AI could replace many back-office jobs, but his plan isn’t living up to the hype.

In May 2023, Krishna said he anticipated AI replacing thousands of IBM jobs.

“I could easily see 30% of that getting replaced by AI and automation over a five-year period,” he said at the time, speaking specifically of back-office roles. With 26,000 employees, 30% translates to roughly 7,800 jobs.

Krishna later backtracked, at least somewhat, saying he didn’t plan on axing any programming or development roles.

“I don’t intend to get rid of a single one,” he said. “I’ll get more.”

Unfortunately, it seems Krishna’s plans may not be going quite the way he anticipated. According to The Register, the company’s AI has not been up to the task of replacing people. To make matters worse, despite Krishna’s promise not to lay off developers and programmers, IBM has evidently done just that.

“I always make this joke about IBM,” said Alex, one of three pseudonymous sources for The Register’s report. “It is: ‘IBM doesn’t want people to work for them.’ Every six months or so they are doing rounds of [Resource Actions – IBM-speak for layoffs] or forcing folks into impossible moves, which result in separation.”

“With AI tools writing that code for us … why pay for senior-level staff when you can promote a youngster who doesn’t really know any better at a much lower price?” he added. “Plus, once you have a seasoned programmer write code that is by law the company’s IP and it is fed into an AI library, it basically learns it and the author is no longer needed.”

IBM’s strategy appears to be backfiring, with it no longer having the right personnel it needs to fix the issues it’s having with AI.

“The whole outsourced to AI thing is a myth that somehow our upper echelon of execs believes exists right now,” Casey, the second source, told The Register. “The truth is that Watsonx [IBM’s generative AI offering] isn’t even available to employees to attempt to try and help automate some meaningless task. It’s so far behind OpenAI and ChatGPT that it’s not even close.”

“A WatsonX chatbot is years behind ChatGPT,” Blake, the third source, said. “Its web interface was horribly broken to the point of being unusable until July 2024, and no one in the entire organization uses it.”

“Watsonx Code Assistant technically knows PHP, but it is very inferior to GitHub Copilot,” added. “Still, it’s better than nothing. The CEO keeps imploring developers to use it. No one does, except maybe one or two people.”

IBM’s troubles illustrate the issues companies are facing in their efforts to make their AI investments pay off.

IBM’s Issues Exacerbated By Shifts In the Industry

IBM’s challenges are made worse by a fundamental shift in the industry. According to The Register’s sources, senior software engineers are no longer being developed around the world, with retirees outpacing up-and-coming ones.

“Senior software engineers stopped being developed in the US around 2012,” Blake said. “That’s the real story. No country on Earth is producing new coders faster than old ones retire. India and Brazil were the last countries and both stopped growing new devs circa 2023. China stopped growing new devs in 2020.”

“Senior software engineers stopped being developed in the US around 2012,” he added. “That’s the real story. No country on Earth is producing new coders faster than old ones retire. India and Brazil were the last countries and both stopped growing new devs circa 2023. China stopped growing new devs in 2020.”

Given IBM’s penchant for letting senior programmers go, and its insistence on replacing personnel with AI, the company may simply not be able to solve the issues it’s currently facing anytime soon.