Aggressive hiring by AI-driven Alorica exposes myths about job layoffs

Consider Sumit Shah, an Indian entrepreneur who caused uproar last year by boasting that he had replaced 90 per cent of his customer support staff with a chatbot named Lina

Imagine a customer-service centre that speaks your language, no matter what it is. Alorica, a company in Irvine, California, that runs customer-service centres around the world, has introduced an artificial intelligence translation tool that lets its representatives talk with customers in 200 different languages and 75 dialects.

Like for instance, an Alorica representative, who only speaks Spanish can file a complaint about a balky printer or an incorrect bank statement from a Cantonese speaker in Hong Kong. Alorica wouldn't need to hire a rep who speaks Cantonese. Such is the power of AI. And, potentially, the threat: Perhaps companies won't need as many employees if chatbots can handle the workload instead. But the thing is that Alorica isn't cutting jobs. It's still hiring aggressively. The experience at Alorica — and at other companies, including furniture retailer IKEA — suggests that AI may not prove to be the job killer that many people fear. Instead, the technology might turn out to be more like breakthroughs of the past — the steam engine, electricity, the Internet: That is, eliminate some jobs while creating others. And probably make workers more productive to the eventual benefit of themselves, their employers and the economy.

Nick Bunker, an economist at the Indeed Hiring Lab, said he thinks AI “won’t lead to mass unemployment. Technology destroys but also createsnew jobs".

At its core, artificial intelligence empowers machines to perform tasks previously thought to require human intelligence. The technology has existed in early versions for decades, having emerged with a problem-solving computer program, the Logic Theorist, built in the 1950s at what's now Carnegie Mellon University. More recently, think of voice assistants like Siri and Alexa. Or IBM's chess-playing computer, Deep Blue, which managed to beat the world champion Garry Kasparov in 1997.

AI really burst into public consciousness in 2022, when OpenAI introduced ChatGPT, the generative AI tool that can conduct conversations, write computer code, compose music, craft essays and supply endless streams of information. The arrival of generative AI has raised worries that chatbots will replace freelance writers, editors, coders, telemarketers, customer-service reps, paralegals and many more.

“AI is going to eliminate a lot of current jobs, and this is going to change the way that a lot of current jobs function,' Sam Altman, the CEO of OpenAI, said.

The White House Council of Economic Advisers said last month that it found “little evidence that AI will negatively impact overall employment". The advisers noted that history shows technology typically makes companies more productive, speeding economic growth and creating new types of jobs in unexpected ways. They cited a study this year led by David Autor, a leading MIT economist: It concluded that 60 per cent of the jobs Americans held in 2018 didn't even exist in 1940, having been created by technologies that emerged only later. The outplacement firm Challenger, Gray and Christmas, which tracks job cuts, said it is yet to see much evidence of layoffs that can be attributed to labour-saving AI.

At the same time, the fear that AI poses a serious threat to some categories of jobs isn't unfounded. Consider Sumit Shah, an Indian entrepreneur who caused uproar last year by boasting that he had replaced 90 per cent of his customer support staff with a chatbot named Lina. The move at Shah's company, Dukaan, which helps customers set up e-commerce sites, shrank the response time to an inquiry from one minute, 44 seconds to “instant". It also cut the typical time needed to resolve problems from more than two hours to just over three minutes. "It's all about AI's ability to handle complex queries with precision,' Shah said by email. The cost of providing customer support, he said, fell by 85 per cent. “It's like upgrading from a Corolla to a Tesla,' he said.

Similarly, researchers at Harvard Business School, the German Institute for Economic Research and London's Imperial College Business School found in a study last year that job postings for writers, coders and artists tumbled within eight months of the arrival of ChatGPT.

A 2023 study by researchers at Princeton University, the University of Pennsylvania and New York University concluded that telemarketers and teachers of English and foreign languages held the jobs most exposed to ChatGPT-like language models. But being exposed to AI doesn't necessarily mean losing your job to it.

AI can also do the drudge work, freeing up people to do more creative tasks. The Swedish furniture retailer IKEA, for example, introduced a customer-service chatbot in 2021 to handle simple inquiries. Instead of cutting jobs, IKEA retrained 8,500 customer-service workers to handle such tasks as advising customers on interior design and fielding complicated customer calls.

Chatbots can also be deployed to make workers more efficient, complementing their work rather than eliminating it. A study by Erik Brynjolfsson of Stanford University and Danielle Li and Lindsey Raymond of MIT tracked 5,200 customer-support agents at a Fortune 500 company who used a generative AI-based assistant. The AI tool provided valuable suggestions for handling customers. It also supplied links to relevant internal documents. Those who used the chatbot, the study found, proved 14 per cent more productive than colleagues who didn't. They handled more calls and completed them faster. The biggest productivity gains — 34 per cent — came from the least-experienced, least-skilled workers.

At an Alorica call centre in Albuquerque, New Mexico, one customer-service rep had been struggling to gain access to the information she needed to quickly handle calls. After Alorica trained her to use AI tools, her “handle time' — how long it takes to resolve customer calls — fell in four months by an average of 14 minutes a call to just over seven minutes.

Alorica agents can use AI tools to quickly access information about the customers who call in — to check their order history, say, or determine whether they had called earlier and hung up in frustration. Suppose, said Mike Clifton, Alorica's co-CEO, a customer complains that she received the wrong product. The agent can “hit replace, and the product will be there tomorrow," he said."

Now the company is beginning to use its Real-time Voice Language Translation tool, which lets customers and Alorica agents speak and hear each other in their own languages.

Rene Paiz, its vice-president of customer service, said “I don't have to hire externally' just to find someone who speaks a specific language. Yet Alorica isn't cutting jobs. We are still actively hiring. We have a lot that needs to be done out there.”