Abstract:
Former Google CEO Eric Schmidt believes that as artificial intelligence takes over administrative and management tasks, large enterprises can operate as usual with about 20% fewer employees. Citing the example of a hypothetical company with 10,000 employees, Schmidt said: "My guess is that a few thousand of them are actually unnecessary."
In a podcast broadcast this week, Schmidt spoke with Nicolai Tangen, the head of Norway's sovereign wealth fund, and pointed out that when employees' positions are no longer necessary, companies must find ways to complete the transition of personnel in a "legal and humane" way.
Schmidt believes that large companies waste a lot of time coordinating work among employees, departments and managers.
He recalled that while leading Google, he spent 12 hours a day in meetings. He believes that artificial intelligence (AI) agents have the potential to eliminate much of this coordination work.
“These AI platforms can eliminate most of these ‘coordination costs,’” he said.
Businesses still need outstanding inventors, salespeople, leaders, and people responsible for dealing with the government, he said.
Schmidt mentioned a friend who laid off 20% of his staff even as his company was growing rapidly.
Schmidt said the layoffs were aimed at so-called "glue employees" - those who do "some kind of planning work, orchestrating data." The executive later told him he had received death threats.
Schmidt did not name the friend, but he mentioned that he had written about the layoffs in a newspaper article.
This description fits well with Cloudflare CEO Matthew Prince, who has written an article explaining the company's reasons for layoffs.
Despite revenue growth of 34%, Cloudflare in May announced plans to cut more than 1,100 jobs as part of the company's transition into artificial intelligence (AI).
Prince described most of the laid-off employees as "measurers" - those responsible for management, compliance and administrative tasks.
In an interview in September, Prince mentioned that there had previously been a team of about 20 people who spent two weeks preparing investor-related documents before the financial report was released. Artificial intelligence shortens the process to just three minutes, he said.
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