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Times
3 days ago
- Business
- Times
AI has barely begun, but there are already winners and losers
The artificial intelligence revolution may one day prove a boon for all mankind but for the moment it is creating winners and losers. The handful of US tech firms whose market value has risen by hundreds of billions of dollars are clearly the big winners. Companies that make the kit for data centres have also enjoyed a boom in their business and their share prices. The losers are less obvious, but more broadly spread. Even those most bullish about the long-term benefits of AI admit that it will eliminate huge numbers of jobs, though most say (and perhaps believe) it will create more than it destroys. We are starting to see the first signs. It is clear that some of the 6,000 job cuts announced by Microsoft recently were due to AI. Many of the cuts were in software engineering, which is unsurprising given that Microsoft says nearly a third of its code is already written by AI. Most tech experts say that AI will soon take over the bulk of routine software development and job adverts for software engineers in the US are at a five-year low. But the picture is mixed. AI is also generating new jobs and in PwC's latest CEO survey more bosses said they had increased headcount because of AI than had cut it. At least one firm that saw AI as a replacement for human staff has had second thoughts. Sebastian Siemiatkowski, chief executive of 'buy now, pay later' firm Klarna, has been outspoken about the cost-saving potential of AI and introduced a hiring freeze last year. But he recently admitted that this had affected customer service and Klarna has started hiring again. One area of the job market that has been hit by AI is graduate recruitment. Competition for graduate jobs has increased sharply in the past couple of years for a number of reasons. During the post-Covid economic bounce many companies, particularly in financial and professional services, went on a hiring spree. When activity slowed they found themselves overstaffed. At the same time, fewer employees were leaving for other jobs. But recruiters say technology is also a factor behind the drop in graduate hiring, with employers believing they will need fewer junior staff because of AI. Competition for jobs is said to be particularly fierce in IT and consulting. There is hot demand for graduates with AI skills but those with more traditional technology backgrounds are finding things much tougher. A wide range of companies are already seeing business suffer due to AI. Technology suppliers say that customers are shifting budgets towards AI investment and away from more conventional spending. According to a recent survey by Boston Consulting Group, companies are planning to fund increased spending on AI by reducing investment in traditional software areas and by extending the life of hardware. Some manufacturing companies are said to be delaying investment as they wait to see whether current systems will be overtaken by rapid advances in AI. Yet overall capital spending in the UK is still showing reasonable growth. • Silicon Valley's techies are building the AI that could replace them Shifting patterns of spending are also being felt in services. Sir Martin Sorrell, the veteran advertising mogul who now heads S4 Capital, says that clients are prioritising capital investment in AI over operating expenditure, such as marketing. This partly explains the 11 per cent fall in the company's first quarter revenues, he says. Advertising is one field that is already being transformed by AI, which can dramatically reduce the cost of producing advertising text and images. Industry insiders say this is causing uncertainty among clients, prompting some to pull-back on placing new contracts. It seems to be a similar story in professional services, including management consulting. US technology giant IBM has blamed slowing growth in its consulting arm on clients prioritising AI projects. In the past couple of years there have been job cuts at many of the leading consultants including the Big Four accounting firms. McKinsey has reduced its workforce by more than a tenth in 18 months. There are other pressures on these firms and their leaders dismiss the idea that their business model is fundamentally challenged by AI. They point out that there has been huge growth in demand from clients for their advice on AI. But consultants at other firms say that clients are showing the same uncertainty as they are over their marketing budgets. 'Clients are trying to figure out what AI means for them, how much they should be paying for what sort of advice from which consultants and how much they could do themselves,' said the head of one firm. At the same time, consultancy firms are investing heavily in AI capacity forcing them to look for savings elsewhere, including in headcount. All the big consultancies have staffed up with AI expertise and are winning increasing amounts of AI-related work. But they are also losing some contracts to firms that are seen as specialists in AI, insiders say. Fiona Czerniawska, chief executive of professional services consultancy Source Global Research, says some firms are making the mistake of emphasising to clients how much the use of AI can reduce their fees. This makes clients nervous about quality and reluctant to give them more business, she said. The more successful firms tell clients they can now do a better job, more quickly thanks to AI — and it can be a bit cheaper, too. But she adds that even the best firms are losing some business as clients find that AI allows them to do more of the work themselves. Company bosses who are seeing soft demand tend to blame acute geopolitical uncertainty, including the impossible to predict outcome of Donald Trump's tariff obsession. Yet many businesses are also suffering from the impact of AI. The hope is that the uncertainty surrounding US trade policy will peak before long. But for the winners and losers from AI, the revolution has barely begun. David Wighton, a former business editor of The Times, is a Dow Jones columnist
Reuters
14-05-2025
- Business
- Reuters
China says to accelerate financial support for sci-tech innovation
BEIJING, May 14 (Reuters) - China said on Wednesday it would further enhance capital market support for science and technology innovation enterprises and would expand bank credit support for the firms. China would expand its pilot programme for financial asset investment companies (AICs) that aims to bring more equity investment to tech innovation firms, according to guidelines jointly released by seven authorities including China's science and technology ministry. China would also support tech innovation firms to list abroad, the guidelines said.
The Herald
12-05-2025
- Business
- The Herald
Lessons from Armenia to engineer a better future for youth
Armenia is a West Asian country that is a bit like Lesotho. Like Lesotho, it is landlocked and not super-endowed with natural minerals. It has a population of 2.7-million people, while Lesotho has about 2.2-million. Like Lesotho's working people, most Armenians leave their home country to seek jobs elsewhere. Armenia has done something spectacular: it teaches its children mathematics. Before the collapse of communism 35 years ago, it was one of the mathematics hubs of the Union of Soviet Socialist Republics (USSR). It continued the traditions in the post-Soviet era and is known for 'exporting' mathematicians, engineers, scientists, programmers, coders and other tech boffins across the globe. Now, listen to this carefully: The BBC reported recently that, 11 years ago, Armenia launched a school programme, in partnership with the private sector, called 'Armath' (which means 'root' in English). It teaches children programming, robotics, coding, 3D modelling and other subjects. There are now 650 Armath laboratories in schools across Armenia, with more than 600 teachers and 17,000 students writing code and inventing apps and gadgets of all kinds. Armath started because the country wanted 'to see Armenia becoming a tech centre powerhouse that delivers utmost values to Armenia and to the world'. And in just 11 years it is headed there: Armenia, with just 2.7-million people, has 4,000 tech firms (SA has 650). 'One floated in New York in December 2024, and is now worth more than $10bn (R182.1bn),' the BBC article said. What does this tell us? A country needs a vision, a strategy and the political will to see that strategy through. Armenia had that will, hence the success of the programme. Last week, I came across a story that broke my heart. We come across so many of these heartbreaking stories in SA and the world these days that we tend to ignore them. They have become normalised. I came across one such story last Thursday, and it reminded me that we must not stop raging against such betrayal of SA's poorest and most vulnerable. The story is particularly cutting because it is an assault on our children, the people who will inherit this place. It showed how we are robbing them of a future. Depressingly, there is no outrage, no noise, no shock or horror at this story. The ministry of education announced last week that 464 public schools do not offer mathematics to their pupils. Yes, 464 schools do not offer maths to pupils. Of these schools, 135 are in KwaZulu-Natal, 84 in the Eastern Cape, 78 in Limpopo and 61 are in the Western Cape. The rest are in Gauteng and the North West (31 schools each), the Northern Cape with 19, the Free State with 14 and Mpumalanga with 11. It's not as if this is a new problem: the percentage of pupils opting for maths declined from 46% in 2011 to 34% in 2023. In 2024, only 255,762 pupils registered for the subject, down from 268,100 in 2023. The education ministry said 'schools may not have sufficient resources or demand to offer both mathematics and mathematical literacy'. Let us be perfectly clear and honest with each other here. This is not about lack of teachers. This is about leadership. Our political 'leaders' have for 31 years not cared about the education of our children and still do not care today. If they cared, then education, and maths education in particular, would have been top of their agenda. As these statistics show, they do not care. Over the past 30 years, our political leaders sent their children to 'formerly white' schools and abandoned township and rural schools. Local councillors, teachers, principals, packed their children into dangerous minibus taxis to schools in the formerly white suburbs. Township and rural schools were left to rot without teachers to lead pupils in maths or science. This lack of leadership, this lack of a plan to make every school in rural areas and in townships a centre of excellence, is where we failed. This is a spectacular failure of vision, strategy and leadership. Many of our politicians run around telling poor people to kick out foreigners who run shops in townships. What these politicians don't say is that we have stripped many of our own children of the ability to run their own spaza shops. They can't count, add, multiply or divide, let alone determine a profit margin on a packet of sweets. We tell our children to be entrepreneurs, yet we strip them of the ability to even start. That this is not a national emergency underlines just how awfully inadequate and ill-equipped for leadership our politicians are. We are faced with a disaster here. This is how countries collapse. This is why teeny-weeny countries like Armenia manage to wipe the floor with us in every way. We are led by people who have no clue what it takes to build a successful, prosperous and durable country.
Reuters
06-05-2025
- Business
- Reuters
Hong Kong launches new measures to attract more tech, bio listings
May 6 (Reuters) - Hong Kong launched a scheme on Tuesday to offer smoother listings for tech companies on its stock exchange, as it looks to capitalize on Chinese companies' growing appetite to raise funds offshore. The new "technology enterprises channel" will make new listings easier for specialist technology and biotechnology firms, the bourse operator and Hong Kong's Securities and Futures Commission said in a joint statement. Under the scheme, the exchange, a unit of Hong Kong Exchanges and Clearing, ( opens new tab will provide guidance on the eligibility and suitability for listing for prospective companies. Applicants can confidentially file for initial public offerings, as disclosures of their operational strategies may pose heightened risk compared to other industries, the statement said. It also allows tech firms to list with a weighted voting rights (WVR) structure, which allows companies to hold shares that carry extra voting rights, provided they meet certain requirements. Hong Kong is the main destination for mainland Chinese firms looking to raise capital offshore, and bankers have said that mainland firms, mainly those in the tech sector, are accelerating plans to raise money offshore. Hong Kong authorities had first announced the technology enterprises channel in February.
