Could employers use AI to combat worker shortages?

As labour shortages continue to threaten SME growth plans, we explore whether rapid rollout of AI technology could be the saving grace for small employers.

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Written and reviewed by:
Helena Young
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Skilled labour shortages have been making hiring hellish for organisations – and the issue isn’t going away soon. According to a report by the International Monetary Fund (IMF), the tech talent shortage will swell to more than 85 million employees by 2030.

The problem is not just in tech. Hiked staff turnover rates across multiple industries have hit SMEs hard. Hundreds of thousands of people left the workforce post-COVID during the so-called ‘Great Resignation’. Worryingly, the trend looks set to continue.

Worker shortages are a reason to celebrate AI’s rapid expansion. Virtual assistants can perform repetitive tasks – filling hiring gaps and essentially doubling output.

Swapping human workers for cheaper robot counterparts might also be a savvy financial decision for small businesses in today’s poor economy. It would certainly cut down on recruitment and onboarding spend, as well as dramatically reduce payroll costs.

Large employers like IBM have already announced that they will pause hiring for roles that can be replaced by AI. But, with some experts having expressed concern that implementation is too fast, is workforce automation a good idea for SMEs in 2023?

What are the risks of workforce automation for small businesses?

When it comes to digitalisation, rushing ahead without thought is a no-go – regardless of how fast-moving the landscape is.

Here are three things for SMEs to consider before pressing ahead with workforce automation this year:

1. Hiring freeze could backfire amid digital skills gap

Today’s businesses are already struggling to source qualified tech talent. Some 29% of SMEs say the shortage of skilled workers poses a high risk for their business, and companies could soon find themselves short on the manpower to execute more complex AI plans.

Last month, we reported on Salesforce findings that only 1-in-10 small businesses have in-demand artificial intelligence skills. These include programming languages and blockchain.

2. Most roles still require a human touch

On April 30th, the World Economic Forum’s “Future of Jobs” report outlined the two most desirable traits in workers in the next five years: creative and analytical thinking skills.

Machines are also not developed enough to display these traits yet. Yes, they can handle simple administrative tasks, such as in project management. But IBM CEO, Arvind Krishna has already admitted that some functions, such as evaluating workforce productivity, won’t be replaced by AI this decade.

Customers still prefer to speak to real people over machines, as the former naturally has far more social intelligence. A poll by Userlike found that 60% of customers would sooner wait on hold for a human operator, than speak to an AI assistant.

3. Rushed implementation could bring security risks

Just 24 hours after IBM announced that 30% of its staff could be replaced by AI functions, AI expert, Dr. Geoffrey Hinton quit his high-profile job at Google. The so-called ‘godfather of AI’ stated concerns about the speed of development, and the lack of safety and control.

AI is moving very quickly, and progress and protection must be balanced. The government has already announced plans to regulate the AI industry following concerns about the potential for data breaches and cyber attacks.

Companies that buy into AI technology should not introduce it to the workplace without having a secure support infrastructure in place.

Don’t rage against the machine

It’s easy to grow fearful when talking about new technologies. But caution can lead to hysteria, obscuring the ample opportunities that AI will bring to resource-stretched small businesses.

Ensuring that workforce automation has a positive impact on businesses means seeing the computer as a new colleague, not the antagonist in a hostile takeover.

The AI industry contributed £3.7bn to the UK economy in 2022 and is expected to scale massively this year. While perhaps too early for small employers to implement at scale immediately, the tech should certainly be on SME radars – particularly for those struggling to fill vacancies.

IBM’s hiring plans change, for example, represent a slow integration of AI, carried out over a five-year long period. With a similar mindset, small business owners can align the technology with their existing strategies, and take advantage of its significant time and cost savings.

See our list of the Most Innovative UK AI Startups to Watch

Written by:
Helena Young
Helena is Lead Writer at Startups. As resident people and premises expert, she's an authority on topics such as business energy, office and coworking spaces, and project management software. With a background in PR and marketing, Helena also manages the Startups 100 Index and is passionate about giving early-stage startups a platform to boost their brands. From interviewing Wetherspoon's boss Tim Martin to spotting data-led working from home trends, her insight has been featured by major trade publications including the ICAEW, and news outlets like the BBC, ITV News, Daily Express, and HuffPost UK.

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